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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.

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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.

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Americans Should Look to Filtration Software to Block Harmful Content from View, Event Hears

One professor said it is the only way to solve the harmful content problem without encroaching on free speech rights.

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Photo of Adam Neufeld of Anti-Defamation League, Steve Delbianco of NetChoice, Barak Richman of Duke University, Shannon McGregor of University of North Carolina (left to right)

WASHINGTON, July 21, 2022 – Researchers at an Internet Governance Forum event Thursday recommended the use of third-party software that filters out harmful content on the internet, in an effort to combat what they say are social media algorithms that feed them content they don’t want to see.

Users of social media sites often don’t know what algorithms are filtering the information they consume, said Steve DelBianco, CEO of NetChoice, a trade association that represents the technology industry. Most algorithms function to maximize user engagement by manipulating their emotions, which is particularly worrisome, he said.

But third-party software, such as Sightengine and Amazon’s Rekognition – which moderate what users see by bypassing images and videos that the user selects as objectionable – could act in place of other solutions to tackle disinformation and hate speech, said Barak Richman, professor of law and business at Duke University.

Richman argued that this “middleware technology” is the only way to solve this universal problem without encroaching on free speech rights. He suggested Americans in these technologies – that would be supported by popular platforms including Facebook, Google, and TikTok – to create the buffer between harmful algorithms and the user.

Such technologies already exist in limited applications that offer less personalization and accuracy in filtering, said Richman. But the market demand needs to increase to support innovation and expansion in this area.

Americans across party lines believe that there is a problem with disinformation and hate speech, but disagree on the solution, added fellow panelist Shannon McGregor, senior researcher at the Center for Information, Technology, and Public Life at the University of North Carolina.

The conversation comes as debate continues regarding Section 230, a provision in the Communications Decency Act that protects technology platforms from being liable for content their users post. Some say Section 230 only protects “neutral platforms,” while others claim it allows powerful companies to ignore user harm. Experts in the space disagree on the responsibility of tech companies to moderate content on their platforms.

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Big Tech

Surveillance Capitalism a Symptom of Web-Dependent Companies, Not Ownership

Former Google executive Richard Whitt critiqued Ben Tarnoff’s argument in ‘Internet for the People’ during Gigabit Libraries discussion.

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Photo of Ben Tarnoff, co-founder of magazine Logic and the author of “Internet for the People”

July 15, 2022 – A former Google executive  pushed back against a claim that the privatization of broadband infrastructure has created the world’s current data and privacy concerns, instead suggesting that it’s the companies that rely on the web that have helped fuel the problem.

Richard Whitt, president of technology non-profit GLIA Foundation and former employee of Google, argued that while the World Wide Web is rife with problems, the internet infrastructure underlying the web remains fundamentally sound.

Whitt was responding to claims made by Ben Tarnoff, a journalist and founder of Logic Magazine, at the Libraries in Response event on July 8. Tarnoff argued – as he does in his recent book, “Internet for the People” – that the privatization of broadband infrastructure in the 1990s has allowed the use and commodification of personal data for profit to flourish (known as surveillance capitalism).

The discussion took place during the Gigabit Libraries Network’s series “Libraries in Response.” The session was titled “If the Internet is Broken, How Can Libraries Help Fix it?”

Privatization, Tarnoff claims, has raised such issues as polarization of ideologies and the “annihilation of our privacy.” As a result, he said, the American people are losing trust in tech companies that “rule the internet.”

Whitt responded that the internet is working well based on the protocols, standardized rules for routing and addressing packets of data to travel across networks, derived at the onset of the internet.

The World Wide Web, a system built on the internet to allow communication using easy-to-understand graphical user interfaces, allowed for browsers and other applications to emerge, which have since perpetuated surveillance capitalism into the governing approach of the web that it is today, said Whitt, suggesting it’s not ownership of the hard infrastructure that’s the problem.

The advertising market that encourages surveillance extraction, analysis and manipulation is, and will continue to be, profitable, Whitt continued.

The discussion follows a Pew Research Center study that found that only half of Americans believe tech companies have a positive effect in 2019 compared to a seventy-one percent in 2015.

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Big Tech

American Innovation and Choice Online Act Has Panelists Divided on Small Business Impact

The bill is intended to prohibit product preferences on tech platforms, with some saying it could harm small companies dependent on those platforms.

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Panel at CSIS event on Thursday

WASHINGTON, July 6, 2022 – Observers are still divided about the effect on small business of legislation that is intended to keep large technology platforms from giving preference to their own products over others.

The Center for Strategic and International Studies hosted experts last month to discuss the American Innovation and Choice Online Act, which was introduced in January. The event heard both support for the bill, as well as concern that it could negatively impact smaller businesses that rely on the larger platforms.

“Existing antitrust law is not going to be enough to rein in the power of the largest tech platforms,” Charlotte Slaiman, competition policy director at public interest group Public Knowledge, said, adding the AICOA is very important for small business competition “to get a fair shot.”

“Fundamentally this is a really important…for competition because this protects small companies that are potential competitors against one of these large platforms,” she added.

Krisztian Katona, vice president of global competition and regulatory policy at the Computer & Communications Industry Association, however, said that after performing a cost-benefit analysis of AICOA, he expects the legislation will hurt business competition.

He said that the legislation would increase operating costs for smaller companies and force these companies to reduce the cost of their services. He predicts that close to 100 companies by 2030 would be negatively impacted by the legislation if it becomes law.

Others agree with Katona. A report in March by the Small Business and Entrepreneurship Council said small business owners felt the AICOA could be detrimental to them, saying it could increase prices. Meanwhile Michael Petricone, senior vice president of the Consumer Technology Association, said in June that small businesses would be affected the most by big tech regulation because they depend on those platforms.

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