No, 'Big Tech' Should Not Give 'Big Telecom' Billions Of Dollars For No Reason

from the we've-already-been-over-this dept

A few weeks back we noted how FCC Commissioner Brendan Carr had taken to Newsweek to dust off a fifteen year old AT&T talking point. Namely that “big tech” companies get a “free ride” on telecom networks, and, as a result, should throw billions of dollars at “big telecom” for no real reason. You’ll recall it was this kind of argument that launched the net neutrality debate, when former AT&T CEO Ed Whitacre proclaimed that Google wouldn’t be allowed to “ride his pipes for free.” Whitacre was effectively arguing that in addition to paying for bandwidth, tech giants should pay him a troll toll. You know, just because.

The claim that technology giants (or anybody, really) gets a “free ride” when it comes to US telecom is farcical. Companies like Amazon, Google, and Netflix all pay billions of dollars in total for undersea cable runs, massive cloud storage, transit routes, and content delivery networks. Hell, Google is even a residential ISP. That’s on top of the money consumers, businesses, and Silicon Valley giants pay for their own bandwidth, which in the US is often some of the highest in the developed world thanks to regional monopolization and captured regulators (precisely like Carr).

Carr’s right about one thing: we need to reform the USF broadband subsidy system, heavily reliant on income from dying landline phones. But he’s not actually coming at the issue in good faith. He’s using that need for reform to help shovel yet more unearned cash at AT&T, a company that already gleaned billions in utterly pointless tax breaks, subsidies, and regulatory favors under Carr and Donald Trump’s watch.

I’ve covered the telecom beat for twenty years of an adult life, and know what a captured regulator looks like when I see one. But despite the fact AT&T’s argument is coming out of Carr’s mouth, the press somehow keeps taking Carr’s point earnestly. CNET recently took him at face value last week. This week it was Bloomberg’s turn to promote Carr’s idea that Google, Netflix, and Amazon should throw money at companies like AT&T for no damn reason:

“The pandemic has spotlighted the need for fast internet connections for schooling, work and health care and has emerged as an area of agreement as President Joe Biden and lawmakers of both parties grope for ways to support more broadband. Carr, in an interview, said one way to do that is by getting companies such as Amazon, Google and Netflix Inc. to pay. He cited ?businesses that are benefiting from the modern network and paying virtually nothing.”

Bloomberg oddly doesn’t even challenge this argument that Google and friends “pay virtually nothing” for bandwidth, despite the billions upon billions they pay for…bandwidth. You literally can’t stumble five feet without seeing some report about a major Netflix, Google, or Amazon investment in cloud storage, transit, undersea cables, or content delivery networks. Like CNET, Bloomberg also implies that Carr is having an original thought that AT&T just happens to agree with, when the underlying argument is actually AT&T’s:

“AT&T Inc., the largest U.S. phone company by revenue, perked up when Carr laid out his plan in Newsweek.

?Hard to imagine successful reform that does not include some version of this proposal,? Hank Hultquist, vice president of federal regulatory for AT&T, said in a tweet. The company has advocated for appropriations from Congress — an idea opposed by others who fear the subsidy may fall prey to annual funding fights.

Amazing. AT&T planted a dated, dumb argument in a Newsweek article with the help of a captured regulator, then continues to get major outlets to amplify it as if they are just some objective third party. Worse, Bloomberg somehow manages to get interim FCC boss Jessica Rosenworcel to give her tacit approval to socking tech giants with arbitrary troll tolls:

“Carr in a Newsweek editorial suggested lawmakers and regulators could set fees for web companies such as Google, Facebook, Apple Inc. and even Microsoft Corp. for Xbox gaming.

The call from Carr, a Republican, has drawn interest. ?It?s an intriguing idea. And we?re going to need ideas,? FCC Acting Chairwoman Jessica Rosenworcel, a Democrat, told Bloomberg TV on June 11.

I know Rosenworcel is just being polite, but we just had a fifteen year fight (dubbed net neutrality) over applying arbitrary fees on websites and services, then throwing that money at telecom giants for no reason. Yes, the USF and broadband subsidy process needs reform. But that starts with fixing a broken FCC subsidy process that throws billions of dollars annually at politically powerful telecom companies that game the system. You’ll notice this idea never quite crosses Carr’s lips, in large part because such slush funds have historically been of immense benefit to AT&T and friends, his only real constituents.

Carr and AT&T’s argument is popping up now because AT&T, Comcast, Verizon and friends want to pre-empt the Biden broadband plan (which promises to heavily fund local competitors and community broadband efforts) with their own alternative: have “big tech” throw billions at AT&T. AT&T strategy and policy folks want to exploit the justified political and public anger at big tech to seed an idea they’ve been pushing for literally twenty years now. That “big tech” is a bunch of mean freeloaders who should be funding telecom giants’ perpetually unfinished network builds.

In reality you fix/fund US broadband infrastructure like you fund most of the rest of our neglected infrastructure: by actually taxing corporations and billionaires. You then fix the very broken (intentionally) broadband mapping and subsidy process, using that money to fund competitors that meaningfully challenge entrenched local monopolies. Said entrenched local monopolies don’t want that sort of real reform, so instead we get this theater. Theater the unskeptical press then regurgitates because it apparently doesn’t know how this game is played.

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Comments on “No, 'Big Tech' Should Not Give 'Big Telecom' Billions Of Dollars For No Reason”

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That One Guy (profile) says:

Next week on Bloomberg: Is the earth really round? You decide

The only response to ‘tech companies are getting a free ride’ that should be presented is a ‘put your money where you mouth is’, where the one making the claim is challenged to pay even a week’s worth of the tech companies internet bills and shows how much it cost them after it’s done. Consistently do that and I imagine the argument would go away in short order because they either refuse and gut their argument as a result or pay out and have the evidence post-challenge kill their claim at that point.

It seems that these days so many ‘newspapers’ are so eager to print whatever someone hands them that they’ve turned into nothing more than PR firms, so dedicated to ‘neutrality’ that they’re happy to host blatant lying and/or corporate propaganda with nary a comment because obviously it’s not the job of journalists to do any sort of ‘fact checking’ before publishing.

At this point I’m rather surprised that people aren’t pranking serious newspapers on a regular basis, because I’m sure they could be convinced to print a flat-earther screed in all seriousness if someone who presented themselves as an authority on the subject sent it in.

Anonymous Coward says:

I heed these stories, hear the arguments, read the comments. Thats all good and well but it is all basically venting and bitching. What can we do to make an actual difference? Looking at the massive effort it took just to get a few seats in the government for Democrats, what can we the people do to make a change?

Anonymous Coward says:

big telecom have fleeced absolutely billions from various governments, but it’s all been public money! they have been backed by corrupt politicians who line their own pockets as a top priority, ignoring totally the job(s) they were elected to do. how’s about those $ billions be given back? then perhaps they can start stating their cases but atm they are as bad as the corrupt politicians who go out of their way to give them whatever they demand!

ECA (profile) says:

read CNET

"n an op-ed published in Newsweek last week, Carr outlined a new approach for funding the FCC’s Universal Service Fund, which provides money the federal government uses to help subsidize the build-out of broadband in rural areas, phone and broadband service for low-income Americans, and internet access for schools and libraries."

This is PROBABLY a Paid for op-ed. And someone is paying for it, And it would be great if it was the FCC, because I DONT think they are supposed to do this.

That Other Other Guy says:

Monopoly abuse

ISPs charge corporations to send me content and they charge me to receive the content. Only a government-approved monopoly could get away with that.

Imagine if television manufacturers charged TV owners to buy a television AND charged TV stations to get access to the TV sets themselves.

Anonymous Coward says:

Re: Monopoly abuse

What if a post office charged both the sender and recipient of mail, charged excessive amounts, didn’t want to actually provide service in tons of places, recipients couldn’t get mail if they can’t afford it, the post office doesn’t want to keep up its vehicle fleet or pay its own taxes for things like roads, and then also decided to charge whopping gobs extra for bulk rates, instead of less?

ECA (profile) says:

Re: Monopoly abuse

well, they almost do.
Beyond the taxes we pay for products from china, the big corps Charge money to Local broadcasters, who give it free to the consumer with Tons of adverts.
Then Cable is (supposedly) paying the corps for Programming, so they can sell those programs across the cable/sat, along with even MORE adverts. And then end up not paying taxes becasue they can Prove they added to the system, but also had to fire people to keep up the profit.

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