by Ailan Evans
FCC Commissioner Brendan Carr believes the agency should require Big Tech to fund internet infrastructure, following the introduction last week of a bill mandating the FCC consider collecting contributions from the tech companies.
The Funding Affordable Internet with Reliable (FAIR) Contributions Act, introduced July 21 by Republican Sens. Roger Wicker, Todd Young, and Shelley Moore Capito, instructs the Federal Communications Commission (FCC) to look into charging major tech companies like Google, Facebook, and Netflix to fund broadband networks. Currently, new internet infrastructure is paid for by the Universal Service Fund (USF), a $9 billion pot of money funded by charges on consumers’ phone service.
“The legislation takes a significant step in the right direction by asking the FCC to look into Big Tech contributing their fair share for the first time,” Carr said in an interview with the Daily Caller News Foundation.
Carr, who had argued for similar legislation in a May op-ed, voiced his support for the bill in a statement, calling the current USF funding mechanism “unfair and unsustainable,” with revenue declining as the tax base shrinks. Under the current model, Big Tech does not pay into the fund at all.
Sens. Wicker, Capito, Young Introduce Bill to Explore Collecting USF Contributions from Big Tech (PDF of bill: https://t.co/3jFkg70pbS [Was this idea in the news recently – oh yeah, @BrendanCarrFCC floated it with an "intriguing" boost from acting FCC Chairwoman @JRosenworcel pic.twitter.com/Hf2LjPZQN6
— Ted Hearn (@TedatPolicyband) July 21, 2021
While Carr viewed the bill as an important first step, he said actions should be taken within the FCC.
“We don’t even need to wait for the legislation. We could go ahead and require some of these companies to start contributing right now,” Carr told the DCNF.
He pointed to proceedings the agency could undertake to examine the feasibility of collecting USF contributions from Big Tech, but said the agency would need legislation to fully implement his desired measures. Carr also said the bill would build momentum and support for the proposed funding model by attracting public attention.
“I’ve been very pleased with the bipartisan support within the FCC for getting Big Tech to fund the USF, and I see it as a positive sign. It’s got a good right-left coalition behind it,” Carr told the DCNF.
FCC Chairwoman Jessica Rosenworcel, a Democrat, was open to the idea, calling it “intriguing” in June.
“We should be open to new ideas,” Rosenworcel said in a statement to Communications Daily. “But it’s clear that this would require action from Congress.”
The USF, which funds programs that provide increased internet access to rural, low-income, and Tribal communities as well as schools, libraries, and certain health facilities, is directly funded by mandated contributions from telecommunications service providers, according to the FCC website. Providers will directly bill many customers to recover the charges, according to the FCC, which often run as high as 30% of a consumer’s phone bill, according to Carr.
“Big Tech is generating billions or even trillions of revenue, but at the federal level we fund it entirely by putting the charge on the traditional telephone bill of consumers,” Carr told the DCNF.
Carr cited a study from the International Telecommunications Society that examined four rural broadband providers, the exact networks the USF is designed to fund, which found that streaming services Netflix, YouTube, Amazon Prime, Disney+, and Microsoft constituted roughly 75% of network traffic. Up to 94% of the total network costs are related to streaming services, the study found.
“Right now 100% of the $9 billion we collect and spend every year comes out of the monthly bills that consumers pay, and that tends to skew towards elderly people,” Carr said. “Big Tech businesses are responsible for roughly 90% of the cost of maintaining these networks, yet all the cost is placed on the backs of everyday Americans.”
While major tech companies don’t fund the USF, they pay internet service providers for bandwidth and often own proprietary internet infrastructure. For example Netflix’s Open Connect is a network of servers and cables that connects directly with the local networks of internet service providers, while Amazon operates a global network of cables and data centers.
Carr’s proposal has drawn criticism, with Will Yepez of the National Taxpayers Union arguing the FCC would be “taxing the internet” and that tech companies would pass on the cost to consumers.
“Some of the Big Tech revenue streams, such as digital advertising, don’t have a consumer-facing charge. Facebook generates billions from that,” Carr told the DCNF.
Though streaming services such as Netflix could raise the price of their subscriptions to cover the cost of USF contributions, Carr argued the cost passed on to consumers would be less than the current tax on phone service.
– – –
Ailan Evans is a reporter at Daily Caller News Foundation.
Background Photo “FCC Headquarters” by Ser Amantio di Nicolao. CC BY 3.0.
