Despite years of effort and tens of billions of dollars in subsidies, the United States still faces a stubborn rural-urban broadband gap. It is time for something new. As part of either an overall infrastructure investment package or dedicated rural broadband legislation, Congress should seize the opportunity to make a large, one-time investment in upgrading rural broadband infrastructure. A big injection of capital, if carefully targeted and allocated through reverse auctions, could help expand the footprint of existing networks and fund new deployments in areas previously uneconomical to serve, thereby bridging the rural-urban digital divide.

A large one-time appropriation would also help to transition away from the Federal Communications Commission’s (FCC’s) outdated Universal Service Fund (USF) for high-cost areas. The USF, which is paid for through an ever-rising, regressive fee on telecommunications services, is unsustainable in its current form. Path dependencies in the system have channeled billions of dollars of USF money into small, inefficient firms that make only meager upgrades in exchange for those large subsidies and a guaranteed return—nearly 10 percent—on their investment.1 While no one should begrudge a small company trying to provide broadband to its surrounding community, this is a wildly inefficient way to connect high-cost portions of the country.