FCC's Carr Thinks 'Big Tech' Should Subsidize His Pals In 'Big Telecom'

from the do-not-pass-go,-do-not-collect-$200 dept

Way back in 2005, former AT&T CEO Ed Whitacre whined incessantly about how Google was getting a “free ride” on his company’s “pipes,” and that they should be charged an additional toll (you know, just because). As we’ve discussed countless times in the years since, Whitacre’s argument made absolutely no sense, given that Google not only pays plenty for bandwidth, but the company owns billions in international and oceanic fiber runs, data centers, and network infrastructure. Despite making no sense, this idea that Google was some kind of free ride parasite and should be throwing millions in additional money at telecom giants has been a talking point for global telecoms for years.

While the feeble argument had taken a vacation for a while after the net neutrality debate, it popped up again this week in a clumsy, logic-optional op-ed over at Newsweek by FCC Commissioner Brendan Carr. In it, he argues that we should do away with existing flawed but important low-income and school broadband subsidy programs like E-Rate, and instead have “big tech” pay for everything:

“It is time to fundamentally rethink how we fund our high-speed networks. That is why I am proposing a third way. We should start requiring Big Tech to pay its fair share. 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. Indeed, one study shows that the online streaming services provided by just five companies?Netflix, YouTube, Amazon Prime, Disney+ and Microsoft?account for a whopping 75 percent of all traffic on rural broadband networks.

So, as we’ve noted the last fifty times this flimsy argument has been trotted out, streaming video giants like Google, Amazon, and Netflix pay millions of dollars for connectivity. Not only that, they run vast fiber routes that stretch around the planet and operate their own massive content delivery network hubs to ensure it’s all delivered as efficiently as possible. For Christ’s sake, Google is an ISP. The fact their popular video products make up the majority of overall internet traffic is an utterly meaningless stat in this context, thrown in there by Carr (or more likely his intern) to make his argument sound semi-coherent and scientific.

But the reality is these companies aren’t getting anything even vaguely resembling a “free ride.” When it comes to the heavily regionally monopolized US telecom market, nobody gets a free ride. Consumers, schools, and enterprise customers alike often pay some of the highest prices in the developed world for bandwidth thanks to limited competition and regulatory capture. But for literally 20 years the telecom industry has employed a rotating crop of sock-puppets and dollar-per-holler experts who employ the “free ride” argument for one reason: big telecom wants an even bigger handout.

It looks like the GOP tried to make this lame argument go viral yesterday, but be well aware, this is an AT&T message being parroted through the mouth of their most trusted, captured regulators:

That’s not to say we shouldn’t be reforming our existing and often quite broken subsidy programs. But something Carr (coincidentally, for sure!) forgets to mention is that if anybody is getting a free ride in this equation, it’s regional telecom giants. They’ve received countless billions from taxpayers over the years for networks that always mysteriously wind up half deployed. Time after time after time after time, “big telecom” nabs billions in subsidies, regulatory favors, tax breaks, and other perks in exchange for half ass, half completed fiber networks.

Not only does Carr intentionally avoid mentioning the telecom industry’s long and obvious history of taxpayer fraud, waste, and abuse, he attempts to flip everything on its head and suggest only large tech companies are the beneficiaries of “corporate welfare”:

“Ending this corporate welfare is more than fair. It is consistent with the network compact that has prevailed since the earliest days of the Ma Bell telephone network. Historically, the businesses that derived the greatest benefit from a communications network paid the lion’s share of the costs. For instance, the fees that businesses paid for local and long-distance calls provided the key funding stream to build the traditional telephone network.”

Big tech has ample issues that need addressing, but that’s not really what’s happening here. What’s happening here is the telecom lobby is trying to piggyback on valid complaints about Silicon Valley giants just so they can grab a chunk of their ad revenues. Revenues AT&T, Comcast, Verizon had friend have coveted for years. The problem is we’re talking about broadband, and when it comes to broadband as it pertains to “free rides,” the problem is these telecom giants themselves.

Carr must have forgotten about how AT&T got a $42 billion Trump tax cut in exchange for big promises of boosted network investment and jobs that never happened. Not only did they not happen, AT&T has laid off an estimated 54,000 employees since 2017. I think folks are smart enough to see through Carr’s arguments here. After all, this is a guy that has never seen a giant telecom merger, handout, regulatory favor, or subsidy he didn’t like. He’s about as clear of a captured regulator as you’re likely to see in the wild, and the idea he’s interested in genuine reform given his track record should be laughed at.

Telecom giants like AT&T have always lusted after the immense advertising revenues Silicon Valley has enjoyed, and have always somehow believed they’re owed a slice of those revenues just because much of this traffic touches their own networks. But “big technology companies should pay us billions in additional dollars for no reason” has never been a real argument. It’s just a flimsy telecom monopolist pipe dream repeatedly propped up by captured regulators and corrupt politicians who lost the plot years ago.

So why is it popping up suddenly now? My wager is telecom lobbyists want to provide their trusted DC allies with talking points to help them justify their opposition to Biden’s $100 billion $65 billion broadband plan. Messaging along the lines of: “spending money to expand broadband competition isn’t really necessary! Wouldn’t it just make more sense to have Google, Netflix and Amazon throw billions of dollars at AT&T for no reason?” But Google, Netflix, and Amazon are already paying for it. We’re all paying for it. Over, and over, and over again. And the reason we’re still paying for it in 2021 is because too few DC officials have the courage to stand up to regional telecom monopolists in the first place.

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Companies: at&t, facebook, google, netflix, verizon

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Comments on “FCC's Carr Thinks 'Big Tech' Should Subsidize His Pals In 'Big Telecom'”

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38 Comments
This comment has been deemed insightful by the community.
MathFox says:

Telecom should pay...

I think that "big telecom" should pay "big tech" because "big tech" generates the content that drives bandwidth usage, enabling the ISP to sell high-bandwidth connections to their customers… (and collect fees for exceeding the bandwidth cap…)

If there was no YouTube, Steam, etc. everyone could still get by with a dial-in modem.

This comment has been deemed insightful by the community.
Anonymous Coward says:

Re: Telecom should pay...

The datacaps are stupid because they’re pretending like it costs them more to push more data around, but they don’t credit you for all the data you didn’t use the month before. Remember when cell phone companies would give you minutes back from previous months when you didn’t use all your minutes? If it costs them more then costing them less should get you a discount or refund or credit. Weird how it only benefits them, almost like datacaps are completely greed-driven bullshit.

This comment has been deemed insightful by the community.
Thad (profile) says:

Re: Telecom should pay...

If there was no YouTube, Steam, etc. everyone could still get by with a dial-in modem.

My dude, the total size of all the elements on the page you’re looking at right now is about 782 KB. Not including Insider Chat or any of the elements that my browser’s uBlock Origin and Privacy Badger extensions are blocking.

Under ideal conditions, this page would take nearly two minutes to load at 56Kbps.

If you think we could get by on dialup if not for video streaming and multi-gigabyte file downloads, you are sorely mistaken and, I suspect, not old enough to remember how slow dialup really was.

This comment has been deemed insightful by the community.
Bobvious says:

Re: Re: Telecom should pay...

"If there was no YouTube, Steam, etc. everyone could still get by with a dial-in modem."

Perhaps if it said BACK WHEN "there was no YouTube, Steam, etc. everyone could still get by with a dial-in modem." that might have been clearer. Language is quite spongy.

This comment has been deemed insightful by the community.
PaulT (profile) says:

Re: Re: Telecom should pay...

"You are either too young to remember 14,4k modems"

I’ll be honest, I don’t remember those, I started online with 33.6k and moved quickly to 56k. Not that it makes the comment more correct in the face of how basic website design not assumes a minimum of broadband, but dial up to many people doesn’t go back far enough to be taking about baud rather than k…

Thad (profile) says:

Re: Re: Re: Telecom should pay...

Even with a 56K modem, I rarely got a 56K connection speed. It was pretty typical for me to dial in and get a 38400 connection.

Downloading the latest version of Netscape could take upwards of 20 minutes. And it was a good idea to use a download manager, in case you lost the connection in the middle of the download.

Scary Devil Monastery (profile) says:

Re: Re: Re: Telecom should pay...

"I’ll be honest, I don’t remember those, I started online with 33.6k and moved quickly to 56k."

Sure you do. You may have dialed in using a state-of-the-art US Robotics modem at the blazing speed of 56k…but pot odds are at least some switches on the route would be bottlenecking you right down to 14,4k even if the wire operator didn’t throttle you down to that speed artificially.

I recall this being a big issue of contention in the university computer society I attended where there was plenty of swearing about piggybacking on a T1 and still having to rely on routing which provided 14,4k speeds, especially when you were trying to go visit stateside URL’s.

Anonymous Coward says:

so basically teloc is angry big tech is paying only a finite number of ISP bills, and/or they are angry about peer-ing requirements.

"Yes I do indeed think that any users of internet bandwidth, regardless of if they are our customer, or if the traffic crosses our network, should be paying us." –what every telco CEO wishes they could argue, probably.

This comment has been deemed insightful by the community.
Anonymous Coward says:

skipping out on the billions of dollars in costs needed to maintain and build that network

Hmm… I thought that the billions of dollars needed to maintain and build the network came from direct customers, and from interconnection fees. Are you saying that customers are paying for no particular reason other than to line your pockets?

This comment has been deemed insightful by the community.
Digital C says:

Restaurants and Big Box stores should pay for roads

By this logic, the Big Box stores and restaurants should pay for the roads. If the incentive to use the road is a service that is down the road, have they been getting a free ride?

And of course, politicians should pay out of pocket for the voting infrastructure!

ECA (profile) says:

ya, ya, ya.

Google and the others have faught the other ISP’s for years.
trying to get then KEEP what they have gained.

Lets reverse all of this and ask a question.
What would happen if we GAVE all of the tier 1 access, to google. free services across the USA or just Better prices for cellphone, cable TV/Sat, Full internet access to every one.

But in all of this we have lost our privacy? Even with the OTHER companies we have LOST our data and privacy. google just does it in a better(?) way. Consider All the things the other corps COULD be doing that they ARE NOT. Create competitors to EVERY OTHER SERVICE, that is doing better then they are. But they dont. They TRY for the instant development idea, by buying up other companies and THINK they can have instant money and advancement as well as a competitor to Google and the others that weathered, all the BS from the past.

What in hell can these other corps DO, to compete or challenge Google, FB, Amazon? UPGRADE? Make cheaper services? Most of them think that the only way is to Fight directly with them. NOT create something equal or better. They just dont want to share the money with PROGRAMMERS that will do the work. They are Blind as bats on the sunny side of the moon.
There are people out here that would Love to re-create a NEW better FB. Programmers that HAVE great ideas and WATCH what IS’ and what they Could make. But the corps dont see this. They dont want to Share the money they are Already making to Advance.

The current corps tend to NOT like advancement. They Make it work then walk away. They wont do anything Unless the Gov. Pushes it and PAYS for it 10 times over. We are no longer in the era of Making the USA the greatest place and improving life. We are in the age of stagnation.
The strange thing is, can Anyone say that MaBell is gone? Its been a game of hide the pea. Tons of small companies being bought up, back and forth, to hide Who owns who. Even yahoo was in this mess.
The control over the tier 1, parts of the backbone, MEANS ALLOT. and the Major corps bought into it for CHEAP, it was already there. Still ask if it Has been upgraded, at least to the last mile. I Do have a funny feeling it isnt totally done. Then comes the thought that Most rural areas should be fairly easy to update, using the sewer systems, until they get to out lying area. But whats going on with the major cities? Wellllll They really aint done much past Downtown, and the major buildup areas. They would rather goto Condensed Population and the Corps, with Short lines, then to touch anything else. It dont make enough money. But the Gov. has paid them 2-3 times, which isnt enough, as its not NEAR the 10x price they want to charge. Remember they Bought the Tier 1(the top of the backbone, After it was installed), and fixing and upgrading WASNT part of the deal in thier opinion. They Just wanted it to Work.

The fun part in this, is in the rural areas, how many times has your Cable dealer changed hands or changed names?? How much have these companies repaired and upgraded what was/is in the area? We are getting some great speeds, IF’ you want to pay the price. But the larger corps seem to be having more problems then most of the smaller companies. And they are the ones Being paid by all these smaller sections.

What are the odds, that they arnt being truthful about how much they are Really making?

This comment has been deemed insightful by the community.
That Anonymous Coward (profile) says:

"It is time to fundamentally rethink how we fund our high-speed networks."

So your gonna do away with USF as none of those dollars have built any high speed networks by any laughable stretch of the metric of high speed?

"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"

So Skippy, I has a question, then why the fsck is my bill so damn high and the speeds never get better?

"Ending this corporate welfare is more than fair. It is consistent with the network compact that has prevailed since the earliest days of the Ma Bell telephone network"

Ah yes, that thing that was broken up because it was abusing its position & not only gets more handout and government protection of its monopolies??

People in the 3rd world enjoy higher speeds at lower prices than we pay, perhaps maybe consider that you have failed in your job to make the pet monopolies actually live up to a single promise & not hand them free billions because they want it without doing anything to actually earn it.

How the FSCK did someone get put on the FCC when they have no understanding of the basics of bandwidth work & ignored that ATT refused to pay Googles bandwidth bill for 1 month.

Stop protecting shitty companies and put us first for a change you corporate shill.

This comment has been deemed insightful by the community.
Samuel Abram (profile) says:

Re: Re:

How the FSCK did someone get put on the FCC when they have no understanding of the basics of bandwidth work & ignored that ATT refused to pay Googles bandwidth bill for 1 month[?]

You answered your own question, That Anonymous Coward. They were put on the FCC to rubber-stamp mergers and let the telecom monopolies do as they please, not to serve the taxpaying public.

This comment has been deemed insightful by the community.
That One Guy (profile) says:

As I’ve seen it put before if someone wants to claim that companies like Youtube and Netflix are ‘getting a free ride’ and ‘not paying their fair share’ then the person making that argument should offer to pay those companies internet bills, since by their own argument the amount would be minuscule if not zero.

The real complaint isn’t that online platforms aren’t paying ‘their share’, they most certainly are, but rather than they are making a lot of money and the ISP’s really want an even bigger cut of it, because for some people/companies there is no such thing as ‘enough/too much money’.

This comment has been deemed insightful by the community.
Anonymous Coward says:

That dishonest asshats are allowed to stand in the same circles as the well reaserched and the honest folks is why every few days idiocy like the free ride argument gets thrown about and seriously discussed rather than immediately dismissed for its dishonest inaccuracy and their proponents properly shammed and shunned away from the public discourse.

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