Connect with us

Big Tech

FCC Commissioner Carr Argues For Big Tech Contribution To Broadband

Brendan Carr said big tech companies have benefitted from the internet — so they should contribute.

Published

on

May 25, 2021 – Federal Communications Commissioner Brendan Carr wrote in an op-ed in Newsweek on Monday that tech firms that benefit from the internet should contribute to it.

It is what Carr calls a fundamental rethink in the way the country finances broadband infrastructure programs and closes the digital divide, which is increasingly reliant on a broadband fund that obtains contributions from voice services.

Carr argues that Congress should seek to pass legislation that “ensures Big Tech contributes an equitable amount.” He offers a variety of revenue streams that could sufficiently provide the needed funds, including video streaming services, online advertising agencies like Google and Facebook and online gaming platforms like Microsoft’s Xbox Live gaming service.

He also believes the FCC should aim to end its tax on monthly telephone bills.

“Ending Big Tech’s free ride on the internet would represent a long-overdue return to the historic compact under which the businesses that benefit from a network pay their fair share for it,” Carr says.

“It would lower monthly bills for millions of Americans. And it would secure a funding model that can support the long-term investments needed to close the digital divide—a result that will allow businesses and consumers alike to prosper.

The debate on contribution to broadband funding

Experts have debated the merits of possible avenues for broadband funding to expand basic telecommunications services to all Americans. A recommendation that is picking up steam is to draw the funding from general taxes, which Carr calls antiquated.

A better option, he says, is to shift the costs onto private entities profiting off of the provided infrastructure, such as large technology companies.

AT&T’s assistant vice president of regulatory affairs said at a debate earlier this year that while the company prefers general taxation for broadband funding, expanding the base to include other technology companies would reduce the contribution burden on individual companies.

The present method, which draws $10 billion a year, used by the FCC to finance the Universal Service Fund — which provides money to connect Americans in un(der)connected areas like rural territories — is through telephone service providers, who either pay the amount from their own reserves or pass on the cost to customers as a line item on their monthly bill.

Revenues associated with traditional telephone services have fallen sharply from around $80 billion in the 2000s to less than 30$ billion today as more and more services, such as Facebook’s WhatsApp, are delivered over the internet. Still, the FCC relies on revenues of the shrinking market to fund its current internet projects. That contribution rate has surged above a record-setting 30 percent of voice revenues.

“This is like taxing horseshoes to pay for highways,” Carr says. “This is not sustainable; relying on this model to fund additional infrastructure would strain the system well past its breaking point.”

Shifting the Burden Away from Taxpayers

“Big Tech has been enjoying a free ride on our internet infrastructure while skipping out on the billions of dollars in costs needed to maintain and build that network.”

Imagine a business charging clientele for its services while the clients are also taxed in order to provide the physical capital needed for the business to operate. That’s how the current system of broadband deployment operates.

Carr says that 75 percent of all traffic on rural broadband networks are directed to just five companies—Netflix, YouTube, Amazon Prime, Disney+, and Microsoft. Similarly, he added, approximately 77-94 percent of total network costs are related to supporting the delivery of those streaming services.

Big Tech collects great value from these publicly provided services, having generated nearly $1 trillion in revenues in 2020 alone. It would take just 0.009 percent of that revenue to eliminate the current 30-plus percent contribution levied by the FCC on service providers, who then pass that on to consumers.

Support

In a series of tweets responding to Carr’s op-ed, the conservative think tank Free State Foundation said Carr has presented a “persuasive case” for big tech contributions. It said the old system of taxation was rationally applicable to the market 20 years ago, when these big technology companies were “infants.”

They needed protection and couldn’t be expected to front the burden of providing infrastructure themselves, the FSF said, adding that decades later, they are hardly infants anymore.

Editor’s Note: A prior version of this story stated that the Free State Foundation was a “political” think tank. Rather, Free State Foundation is a non-partisan, conservative-oriented think tank under Section 501(c)(3) of the Internal Revenue Code. The story has been updated.

Reporter Tyler Perkins studied rhetoric and English literature, and also economics and mathematics, at the University of Utah. Although he grew up in and never left the West (both Oregon and Utah) until recently, he intends to study law and build a career on the East Coast. In his free time, he enjoys reading excellent literature and playing poor golf.

Antitrust

American Innovation and Choice Online Act Advances to Senate Floor With Bipartisan Alliance

Klobuchar was able to rally Democrats and Republicans to support her bill, but its future depends upon a shaky alliance.

Published

on

Sen. Amy Klobuchar

WASHINGTON, January 21, 2022 – Senators on the Senate Judiciary Committee have formed a tenuous, bipartisan alliance to curb allegedly anticompetitive behavior by large tech companies.

During a Thursday markup, the Senate Judiciary Committee voted 16-6 to send the American Innovation and Choice Online Act, S. 2992, to the Senate floor. The bill would prohibit certain companies with online platforms from engaging in behavior that discriminates against their competitors.

There is a laundry list of violations and unlawful behaviors enumerated in the bill, including unfairly preferencing products, limiting another business’ ability to operate on a platform, or discriminating against competing products and services.

This bill would only apply to companies with online platforms that meet one of the following criteria:

  • Has at least 50,000,000 United States-based monthly active users on the online platform or 100,000 United States-based monthly active business users on the online platform
  • Is owned or controlled by a person with United States net annual sales or a market capitalization greater than $550,000,000,000, adjusted for inflation on the basis of the Consumer Price Index and is a critical trading partner for the sale or provision of any product or service offered on or directly related to the online platform

Sen. Amy Klobuchar, D-Minn., the sponsor of the bill, referred to the bipartisan effort as “the Ocean’s 11 of co-sponsors,” featuring a diverse line-up of legislators, from Sen. Josh Hawley, R-Miss., and Sen. John Kennedy, R-La., to Sen. Dick Durban, D-Ill., and Sen. Richard Blumenthal, D-Conn.

Senators embrace specific and direct targeting of Big Tech

Klobuchar spoke directly about the need to target large companies, “We have to look at this differently that just startup in a garage – that is not what they are anymore. They may have started small, but they are [now] dominant platforms,” she said. “For the first time, the monopoly power is going to be challenged in what I consider to be a smart way.”

At the outset of the meeting, there were more than 100 amendments proposed by members of the committee, but by its conclusion, more than 80 of them had been withdrawn.

One of the amendments that worked its way into the bill was a markup that exempted subscription-based services from complying with the legislation, allowing services like Amazon Prime and Netflix to promote their own content above others’.

“The bill strikes the right balance between preventing the conduct that hurts competition, while also ensuring that platforms can continue to provide privacy and data security features to their users, compete against rivals in the United States and abroad, and maintain services that benefit consumers,” Klobuchar said.

A fragile alliance between read-meat Republicans and progressive Democrats

Though there were big names on both sides of the aisle supporting the bill, the alliance seemed fraught. Despite being supportive of the bill, Kennedy made it clear that his support was conditional. “I am a co-sponsor of this bill, but this bill is going to change – it is going to change dramatically,” he said. “I hope to be in the room when those changes are made, otherwise I will be off this bill faster than you can say ‘Big Tech.’”

Some of Kennedy’s criticisms harkened back to Section 230 issues raised by former President Donald Trump – calling some of the targeted companies “killing fields for the truth,” and stating that “their censorship is a threat to the first amendment.”

Despite his criticisms, Kennedy echoed other senators, both Republican and Democrat, who emphasized that they did not want the perfect to become the enemy of the good. “All we have done [for five years] is strut around, issue press releases, hold hearings, and do nothing. So, this is a start.”

Klobuchar also received push-back from members of her own party, with Sen. Dianne Feinstein, D-Calif., stating that she was critical of the bill because it is designed to specifically target large tech companies, many of which are based out of California (though she ultimately voted to advance the bill to the Senate floor).

Hawley rebuffed Feinstein in his comments, stating that he supports the bill for the same reason Feinstein refuses to. “[Feinstein] pointed out – I think rightly – that this bill is very specific and does target specific behavior – anti-competitive behavior – in a specific set of markets. I think that that’s a virtue and not a vice.”

The measure must be passed by the full Senate, as well as the House, before it goes to the president for his signature.

Continue Reading

Free Speech

Former GOP Congressman and UK MP Highlight Dangers of Disinformation and Urge Regulation

Will Hurd and Member of Parliament Damien Collins say disinformation on social media platforms a worry in midterm elections.

Published

on

Photo of Will Hurd from March 2016 by Paul Morigi used with permission

WASHINGTON, January 11, 2022 – Former Republican Rep. Will Hurd said that disinformation campaigns could have a very concerning effect on the upcoming midterm elections.

He and the United Kingdom’s Member of Parliament Damien Collins  urged new measures to hold tech and social media companies accountable for disinformation.

Hurd particularly expressed concern about how disinformation sows doubts about the legitimacy of the elections and effective treatments to the COVID-19 virus. The consequences of being misinformed on these topics is quite significant, he and Collins said Tuesday during a webinar hosted by the Washington Post.

The Texan Hurd said that the American 2020 election was the most secure the nation has ever had, and yet disinformation around it led to the insurrection at the Capitol.

The British Collins agreed that democratic elections are particularly at risk. Some increased risk comes from ever-present disinformation around COVID and its effects on public health and politics. “A lack of regulation online has left too many people vulnerable to abuse, fraud, violence, and in some cases even loss of life,” he said.

In regulating tech and media companies, Collins said citizens are reliant on whistleblowers, investigative journalists, and self-serving reports from companies that manipulate their data.

Unless government gets involved, they said, the nation will remain ignorant of the spread of disinformation.

Tech companies need to increase their transparency, even though that is something they are struggling to do.

Yet big tech companies are constantly conducting research and surveillance on their audience, the performance of their services, and the effect of their platforms. Yet they fail to share this information with the public, and he said that the public has a right to know the conclusions of these companies’ research.

In addition to increasing transparency and accountability, many lawmakers are attempting to grapple with the spread of disinformation. Some propose various changes to Section 230 of the Telecom Act of 1996.

Hurd said that the issues surrounding Section 230 will not be resolved before the midterm elections, and he recommended that policy-makers take steps outside of new legislation.

For example, the administration of President Joe Biden could lead its own federal reaction to misinformation to help citizens differentiate between fact and fiction, said Hurd.

Continue Reading

Antitrust

CES 2022: Patreon Policy Director Says Antitrust Regulators Need More Resources

To find the best way to regulate technology, antitrust regulators need more tools to maintain fairness in the digital economy.

Published

on

Larent Crenshaw (left), head of Patreon's global policy team

LAS VEGAS, January 7, 2021 – The head of Patreon’s global policy team said federal regulators need more resources to stay informed about technology trends.

Laurent Crenshaw told CES 2022 participants Friday that Congress should provide tools for agencies like the Federal Trade Commission to enforce consumer protection standards.

“I’m not going to say that big tech needs to be broken up, but there should be appropriate resources for federal regulators to understand the digital marketplace,” he said. “We’re are still living in a world that is dominated by big actors, and we’re debating about whether to even give federal regulators the power to understand how the marketplace is moving toward digital.”

Crenshaw of Patreon said that more resources were necessary at the FTC in order to understand the digital marketplace. Patreon is a membership platform that provides a subscription service for creators to offer their followers.

Such resources would empower the agency to place appropriate safeguards for smaller technology innovators. “So in 10 [or] 20 years, it’s not just the replacements of the current Google, Apple, or Facebook, but something entirely new,” he said.

Panelists echoed Crenshaw’s point that consumer welfare should guide competition policy. Tyler Grimm, chief counsel for policy and strategy in the House Judiciary Committee, said that antitrust should bend to the consumer welfare standard. “Antitrust should leave in its wake a better economy,” he said.

Continue Reading

Recent

Signup for Broadband Breakfast

Get twice-weekly Breakfast Media news alerts.
* = required field

Trending