Roslyn Layton: Congress Re-Introduces Bill to End Big Tech's Free Ride on Broadband

Exploding internet traffic strains broadband providers globally, making it hard to recover network investment costs. U.S. policymakers aim to boost broadband investment while keeping prices low, but Big Tech firms (Google, Meta, Amazon, Apple, Microsoft, TikTok, and Netflix) benefit from growing network capacity without contributing financially to recover the costs they create.

A bipartisan group of lawmakers has reintroduced the Lowering Broadband Costs for Consumers Act of 2025 (S. 1651) to address this imbalance. This research note explains the policy, its objectives, and its broader implications. See research note on earlier bill.

Lowering broadband costs for consumers

The Lowering Broadband Costs for Consumers Act of 2025 proposes to reform the $9 billion Universal Service Fund, which supports broadband access in rural and Tribal areas. Sponsored by Senators Markwayne Mullin, R-Okla., Mark Kelly, D-Ariz., Mike Crapo, R-Idaho, and Kevin Cramer, R-N.D., the bill enjoys bipartisan (Republican and Democrat) support from over five national trade associations, 48 state associations, and 350 American rural broadband providers.

The bill updates Section 254 of the Communications Act to include broadband and edge providers (e.g., Big Tech) as USF contributors. Within 18 months of passage, the Federal Communications Commission will conduct a rulemaking to establish equitable, nondiscriminatory contributions from these providers. The legislation limits the FCC’s authority to this specific reform, ensuring a focused approach.

Universal service refers to the principle or policy of making essential public services like telecommunications available to all people, regardless of their location, income level, or other barriers.

Big Tech benefits from USF, but does not contribute

Big Tech firms garner some $200 billion annually in revenue from USF-funded regions without contributing to the $9 billion program. Strand Consult has documented this and other dynamics its report “Ending Big Tech’s Free Ride on USF”, part of a series on USF reform.

Each USF-connected household drives at least $1,500 yearly to Big Tech’s revenue. Firms in USF areas drive an additional $20,000 each in revenue to Big Tech. In a typical rural network, every $1 of Big Tech’s streaming subscription revenue correlates with $0.48 in unrecovered broadband network costs, with up to 80% of broadband network resources and 90% of broadband network costs tied to the top eight internet brands. Since becoming an online company, Netflix has doubled the price of its premium subscription without having to increase its broadband access cost. Meanwhile the price of broadband has fallen dramatically. 

Moreover, 25% of broadband network traffic is advertising, which consumers pay for at the same rate as desired content, even though they do not request it. A similar dynamic is underway with IoT devices and machines which also generate traffic and consume resources; electric vehicles generate some 5 GB per day of sensor data when they plug in to home broadband networks.

Broadband pricing models were enshrined in the pre-video days when traffic consisted of emails and was symmetrical. Today’s traffic is asymmetrical and originates from a handful of firms. For example, a $50 broadband subscription covers access technology, account management, security, and customer service;  it does not necessarily cover the fixed or variable cost related to network deployment or upgrade. Regulation constrains broadband providers from increasing broadband prices to recover Big Tech’s use of the network.

Moreover, broadband providers lack market power and struggle to negotiate cost recovery with Big Tech, whose blocking of market-based solutions exacerbates U.S. infrastructure shortages. The Lowering Broadband Costs for Consumers Act addresses this market failure by mandating equitable contributions from Big Tech, curbing Big Tech’s anticompetitive practices, and stabilizing the Universal Service Fund to support rural connectivity.

Why this bill would work

By assessing revenue from edge providers, the program would become financially stable and equitably designed to reflect the usage of broadband networks. Importantly the bill exempts small providers which constitute less than 3% of total estimated U.S. traffic and earn less than $5 billion in annual revenue. Because of the mammoth size of Big Tech firms, just a handful could be assessed at a low, declining rate to stabilize the Fund.  By expanding USF contributions in this way, the policy aligns with market-based principles that the largest network users pay proportionally for their usage.

Most modern nations have a long-standing policy for universal service, ensuring all have telephony, thus boosting network effects, both socially and financially. US law requires that all have access to advanced connectivity at reasonable prices. The USF was meant for telephony but became de facto broadband support as telecommunications morphed into an internet service.

By aligning the program to the largest users of broadband, USF fees on voice subscribers could end. Today, voice subscribers bear the burden of the fund with rising USF fees (from 1% of $80 billion in 2002 to 36% of $25 billion today). This prompted a Supreme Court challenge from some disgruntled users (Consumers Research v. FCC), who hold that the contribution methodology and its increases were not authorized by Congress. While the court is expected to favor the USF and allow the status quo to continue, enshrining the funding mechanism in law and reducing the financial burden on consumers would largely alleviate the petitioners’ complaint and eliminate statutory ambiguity.

Business models exist to cover costs and to limit externality. Expanding contributions to Big Tech’s business to business (B2B) services online advertising, cloud computing, enterprise software, and so on aligns with their high-growth revenue streams (as much as 700% over the last decade, in part because of artificial intelligence). Importantly, these services are not consumer-facing, preventing cost pass-through to end users.

Closing the digital divide without burdening consumers

Stabilizing the USF ensures rural connectivity without raising consumer costs, aligning with the FCC’s Future of Universal Service report. The bill clarifies contributors and directs the FCC to reduce consumer burdens, addressing the Supreme Court challenge. With bipartisan co-sponsors representing multiple states and USF recipients, the legislation reflects Congress’s commitment to rural America. Without reform, a collapsing USF could limit Big Tech’s rural market access, impacting their revenues.

Broadband policy for the age of AI

The U.S. digital economy, almost $10 trillion annually, would not exist without broadband. About 1000 broadband providers serve America’s 340 million people and 30 million enterprises. A $10 billion USF budget (0.1% of the digital economy) is reasonable, especially as rural areas drive one-fifth of the U.S. economy, including the critical sectors of energy, mining, and agriculture. USF remains a key issue for the current Congress and the coming mid-term election with battleground swing states. 

Requiring edge providers to contribute may face pushback from tech giants, but it levels the playing field for broadband operators. Moreover, such fees come from the classic two-sided market playbook and are used in many industries including energy, financial services, transportation, hospitality, online education, and so on. It is the same model that Big Tech uses to sell cloud service, a payment based on traffic and features. Alternatively, the USF assessment could be likened to a booking or shipping fee, an amount which covers the real-world cost of running a network. 

What it means for the rest of the world

Few countries have implemented effective broadband cost recovery policies. Only policymakers in the U.S., South Korea, the Caribbean, and to some extent Brazil, have engaged with actual traffic, cost, and revenue data to make realistic cost recovery models.

The United States has a long-established regulatory framework to address universal service. The FCC, founded nearly a century ago, has developed structured procedures for ensuring access and affordability. While this model isn’t something most nations can simply copy and paste, its core principle is clear: the largest users and beneficiaries of the networks should help cover the costs they generate.

In an era when legislative and policy momentum has stalled in many places—and Big Tech refuses to come to the table – the proposed U.S. legislation stands out as a meaningful example of regulatory reform in action.

Roslyn Layton, PhD, Senior Vice President of Strand Consult and Visiting Researcher at Aalborg University Copenhagen, is an international technology expert focused on the economics, security, and geopolitics of broadband internet technology. She has testified before the U.S. Congress on competition in wireless technologies, spectrum reform, the security advantages of 5G versus Wi-Fi, and the empirical and ethical case for fair cost recovery for broadband networks. She is also a senior contributor to Forbes, a Fellow of the National Security Institute at George Mason University, and a Senior Advisor to the Lincoln Policy Network. This Expert Opinion was originally published by Strand Consult, and is republished with permission.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.