FCC's Carr Still Pushing A Dumb Telecom Tax On 'Big Tech'

from the misdirection-ahoy dept

A few months 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 exact 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.” Basically, telecom giants have long wanted somebody else to fund network builds they routinely leave half finished despite billions in subsidies.

Carr, who has been trying to seed this idea in the press and policy circles for months, was back at it again last week, pointing to a new Oracle-funded study that suggests funding broadband expansion via a tax on advertising revenue:

As usual with Carr, there are a few problems here.

The study in question took a look at the FCC’s USF system, which helps subsidize broadband expansion and provides some small broadband, wireless, or phone discounts (a paltry $9.25 per month, to be specific) to low income Americans. At no point does the study actually suggest companies like Google get a “free ride” on the internet. Nor does it suggest “big tech” alone is responsible for funding the program. It does recommend that taxing bloated adtech revenues in general might be a good way to shore up lagging USF contributions.

But the study also recommends several other things, like helping ensure broadband subsidies are useful by raising the FCC’s current pathetic definition of broadband (25 Mbps down, 3 Mbps up) to something modern and useful, something Carr has actively opposed. Why has he opposed it? Because the telecom industry opposes it. Why does the telecom industry oppose it? Because a higher standard would reveal market failure, a lack of competition, and how that results in substandard and expensive service. It’s a story as old as time at this point.

There are a few things that are true. One, the USF does need more funding. As the report notes, the flatlining level of broadband subscriber growth (because of a saturated market) means that just levying USF fees on broadband and phone lines doesn’t scale with funding needs. It’s not unreasonable to consider expanding the contribution base to the profit-rich adtech sector in general, but again that’s just one idea of several. And Carr distorts it in strange ways that signal he’s not really approaching any of this in good faith.

One, the idea that Google gets a “free ride” on the internet is a bullshit, antiquated talking point telecom giants have been pushing for years. A company like Google spends billions of dollars on their own transit, cloud, and broadband infrastructure. Hell, Google even owns its own residential ISP (Google Fiber). And as the freshly unredacted version of Epic’s antitrust lawsuit against Google shows, Google has (stupidly, frankly) been paying wireless carriers billions of dollars since 2009 simply to not compete with its app store. There’s no free ride with U.S. telecom. Ever. Claims to the contrary are just nonsense.

If you’re familiar with telecom problems and serious about fixing them (and again, Carr is not), your first impulse should not be “make Netflix and Google throw money at it.” Your first topic of discussion should be the endless tax breaks, subsidies, and regulatory favors (see: killing net neutrality) we throw at telecom giants for little to nothing.

Time after time after time entrenched telecom giants promise they’ll cover the world in cheap, next-generation broadband and amazing jobs if only they get “X,” be that merger approval, more subsidies, deregulation, whatever. And time after time after time those promises prove absolutely hollow. Hell, Carr and Trump’s FCC majority is fresh off a scandal in which it doled out more than $9 billion dollars to companies that were gaming the entire FCC process, nabbing huge sums of money by making promises that made no coherent sense.

Carr not only doesn’t bring any of that up here, he never brings it up. He always actively ignores all of telecom’s warts, including the indisputable fact that U.S. broadband is heavily regionally monopolized, resulting in high prices that harm everybody, particularly low income Americans. Like Trump FCC boss Ajit Pai, he’s literally incapable of acknowledging the telecom sector has any such flaws, which should set off alarm bells. If you’re a telecom regulator who can’t admit the telecom sector has major flaws, yet is always incessantly fixated on the flaws of companies telecom has a beef with and you don’t regulate (Pai had this very same mysterious habit), I’d say that’s a pretty solid warning sign you may not be operating consistently and objectively as a policymaker.

Again, I think the telecom and media (Rupert) industries have been working hard in DC for several years to exploit the recent (and usually very valid) animosity against big tech to push several agendas. One is to saddle companies whose ad revenues they covet with additional layers of obligation and regulation, while removing oversight of their own sectors (see: the elimination of media consolidation and net neutrality rules by Carr and Pai). The other is, which is a 20 year old ploy at this point, to push the idea that other companies and industries should be giving them billions in additional dollars for networks that mysteriously always wind up only half deployed.

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Companies: facebook, google, oracle

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Comments on “FCC's Carr Still Pushing A Dumb Telecom Tax On 'Big Tech'”

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

The problem in question

Carr, who has been trying to seed this idea in the press and policy circles for months, was back at it again last week, pointing to a new Oracle-funded study that suggests funding broadband expansion via a tax on advertising revenue:

[ED: bolding mine]

There’s your answer. It was funded by Oracle, who part of making the narrative against "big tech" a thing. Like Karl Bode has said, the major players are doing bad things (especially Amazon, which is why I largely try to boycott them except for Twitch). However, the animosity against Big Tech could make the internet experience worse, which is why I am a proud insider of Techdirt whose opinions I value.

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Pixelation says:

"Requiring Big Tech to pay a fair share would not only a eliminate a 30% charge from your monthly telecom bill, it would greatly reduce consumers’ costs overall"

Okay, you can have your tax. If our bills don’t drop 30%, you pay the difference. That seems fair to me.

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EGF Tech Man (profile) says:

Who's getting a free ride?

I really don’t think anyone is getting a free ride. Even large companies that don’t have their own infrastructure are paying for their bandwidth at their interconnection points. Smaller businesses and individuals are paying service fees to access the Internet. ..

What happens behind the connection is the carrier’s responsibility, not the end customer’s..I pay my electric utility a connection fee plus the cost of energy used (sometimes demand, based on customer class). I don’t need to make agreements with the all the electric transmission and generation providers, my local distribution utility does that with the fees I pay them. (Yes I know VERY large customers play the power market themselves)..

ECA (profile) says:


If you could get the Corps to pay a $0.01 per Advert Per Person its shown to.
You could BUYOUT the whole of the Telecom corps, 1 at a time, every few years.
Its fun to watch, that the Telecom corps Bought out the Tier 1 section of the internet, the top parts that sell to the Other business’s that sell to Smaller companies, then to the consumer.
SOMETHING the Gov. built, they bought up.
So we Paid for the beginning of the internet. Which created allot of the interconnections of All the phone companies.
We paid the phone companies.
then the Corps buy out the backbone, tier 1 sections as well as the phone sections, and then USE it for the cellphone sections.
With money WE paid them.
These corporations have been paid multiple times to Fix/repair/upgrade the whole of the backbone, AND the last mile in every town and city and Rural areas.
Then the gov. has given the Major corps in this country Tax cuts to advance More business, while they keep cutting employees, not raising wages, and still raising the prices of goods to consumers, over double in the last 20 years.
And still our tax dollars arnt being USED properly? Let alone we are Personally paying them for Services??

We need to go back to the point we started Taxes. it was for people making more then $500 per year. When the avg wage was about $1 per week. That $500 dollars is about $10 per week. Even up till the Early 1900’s and the big wars started, it was FOR THE RICH TO PAY.
Lets all just give our money to the nearest bum, and tell him that he has to pay the taxes. Better yet, not take a wage and everything is free from now on. We have paid for things over and over and over again. Shouldnt we OWN something?

anon says:

"…by making promises that made no coherent sense. "
Bullshit. Were they gaming the badly designed system? Yes. Would the money spent on parking lots and medians be used EVERYWHERE else in their service area? Yes. Would it have been wasted? No.

Should the FCC have offered to pay for broadband in medians and parking lots? I think the answer is yes in the context of a wireless ISP (and I think SpaceX qualifies), but I also think that the FCC should never pay a wireline ISP to wire highway medians if the ISPs also cover the shoulders.

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That One Guy (profile) says:

'Free' means 'not paid for THREE times' aparently, who knew?

As always anyone who wants to claim that tech companies are ‘getting a free ride’ should be told to put up or shut up. Either personally pay a week’s worth of the relevant company’s internet bill or shut up and admit that your argument is grossly dishonest garbage.

This has nothing to do with tech companies getting a free ride and everything to do with the telecom companies thinking that they are owed all the money. They’re already being paid twice for the data in question, first by the customer requesting it and then by the company providing it so far from being burdened by having to strain their networks by unpaid for content they’re trying to argue that they need to be paid three times, propped up by forced subsides by companies that are more successful than them simply because those companies are more successful and have more money.

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EGF Tech Man (profile) says:

Re: 'Free' means 'not paid for THREE times' aparently, who knew?

When you make a unicast IP connection across the Internet, both endpoints are paying bandwidth at their end. No one is getting free bandwidth.

Like I pointed out before, when you get electricity (or gas or water), you only pay the company making your connection, it is their responsibility to pay for the generation and transmission along the way. You don’t hear electric transmission utilities complain that large users are getting a free ride on their wires….

If AT&T thinks they are getting unfair deal, they need to renegotiate their peering agreements with the other carriers – but they know that the other carriers will then want more for AT&T traffic carried on their networks also.

EGF Tech Man (profile) says:

Lets hold the telcos accountable for all tax money given to them

The telcos have been getting government handouts since the 1990s to bring broadband everywhere. First they were supposed to migrate to ISDN (late 1980s), but that never happened. Then they got money to migrate from copper to fiber in the 1990s, but decided instead of do DSL on top of 50+ year old copper instead. They have received numerous "broadband expansion" program dollars since, and really no significant improvements.

The telco coops and small ma/pa operations in small towns around us used their grant dollars to actually replace their systems and all have had fiber to the premise for a decade now, most have retired their copper plants. They also have built dedicated facilities to major peering points like micemn.net , so their service is good throughout. People in farms miles outside of town get 1G/1G service for less than $100 a month. Here in the "hub" city of the area (largest city in the county), CenturyLink can only deliver 1.5Mbs DSL (for $40/month! – and their copper plant is literally rotting away, take a tech a good day to find good pairs to the CO now) and Midco can only do Docsis at like 200M/20M (like $150/month) to typical residential customers. What did CentruyLink (and its predecessors Qwest and USWest) do with all the tax money they’ve received over the decades to expand/improve their service?

EGF Tech Man (profile) says:

Re: Lets hold the telcos accountable for all tax money given to

I remember in the early 2000’s I help a couple of people setup a wireless link so a farmer could get Internet from a friend in the City who had "fast" DSL at the time (the 750kbps throughput wireless link was much faster than the 28.8K or 14.4K the rural phone line could do at that time for dialup) ….

Now we’re at the point I want to build the system for the reverse reason. I want to get the connectivity the rural farmers are getting.

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