Internet service providers in the US and Europe are clamoring for new payments from Big Tech companies.
European broadband providers are much closer to realizing the long-standing goal of payments by tech companies, as the European Union government is holding an official consultation on the proposal. As the EU process unfolds, telecom lobby group USTelecom hopes to nudge the US down a similar but not quite identical path.
In a blog post on Friday, USTelecom CEO Jonathan Spalter argued that the biggest tech companies should contribute to a fund that subsidizes the construction of broadband networks. Spalter wrote that Amazon and internet companies like it should occupy what he called a “conspicuously empty seat at the collective table of high-speed global connectivity.”
Given that “six companies account for half of all global internet traffic… Does it still make sense for the government and broadband providers alone to fund this critical infrastructure? There is no shared obligation by the major financial beneficiaries of these networks, the world’s most powerful corporate Internet?” Spalter wrote.
“We need a modern recovery that shares these financial obligations more equally among those who benefit most from these connections,” he said.
USTelecom members include AT&T, Verizon, Lumen (formerly CenturyLink), Windstream, and other telecommunications companies. It is one of the largest trade groups lobbying for US based internet service providers.
USTelecom: Make tech companies pay the central fund
European telecom companies are pushing for direct payments from tech companies to ISPs. USTelecom instead wants deposits into a central government-run fund.
The Biden administration last month urged the EU to reject proposed forced payments by European ISPs, saying the plan “could give operators a new bottleneck vis-à-vis customers, increase costs for end users and alter incentives for CAP/LTG [content and application providers and large traffic generators] to make efficient decisions on investment and grid interconnection.”
The Biden administration has also said that payments from tech companies can violate net neutrality principles, saying “it is difficult to see how a system of mandatory payments imposed on only a subset of content providers could be enforced without compromising net neutrality.” of the network”.
Nonetheless, USTelecom pointed to the Biden administration’s comments in its proposal to charge Big Tech companies to a central fund like the current Universal Service Fund (USF) run by the Federal Communications Commission.
“We agree with the US government’s position that rather than payments to proposed EU broadband providers, such ‘publicly accountable’ funding schemes can better ensure that resources are dedicated to key policy objectives, such as improve access and strengthen network security, while avoiding discriminatory measures that distort competition,'” Spalter wrote.
Lots of opposition to Big Tech payments
However, the Biden administration’s comments did not require tech companies to put money into a government-run fund. The paper noted that “the US approach to financing broadband infrastructure improvements involves private investment, a national universal service fund, and significant public funding from general appropriations,” but did not advocate any changes to who pays in the bottom.
Meta, Google and Netflix have criticized Europe’s billing claims, saying ISPs are trying to charge twice for the same service. Big tech companies also point out that they invest heavily in content delivery networks that reduce the stress on ISP services.
The Body of European Regulators for Electronic Communications (BEREC) has taken a similar stance, saying it has found no evidence of “free-riding” by technology companies or evidence that ISP costs are not fully covered.
The Biden administration’s comments on the EU proposal also said that collecting revenue from online content providers could harm the global internet ecosystem. “We urge caution in case the EU considers any new funding mechanisms that could disrupt the current internet ecosystem, which has successfully adapted to evolving market and technological conditions over time. Internet traffic is globally, which raises questions about a country’s ability to raise revenue from foreign content providers; if many countries took this route it would likely be unsustainable,” the US government said.
Broadband surcharges fluctuated across the United States
Spalter noted that there is already debate among elected leaders in the United States about whether technology companies should pay into a fund that subsidizes the construction of broadband networks.
Indeed, bipartisan leaders on Capitol Hill are considering just such an approach, examining whether the big tech companies that undoubtedly benefit from America’s broadband infrastructure should adhere to a shared obligation to secure a sustainable future for our nation to universal service,” he wrote. “In fact, the Senate Commerce, Science and Transportation Committee held a hearing and launched a working group just last month on this timely topic.”
But big tech companies paying into a US fund isn’t the only change on the table, and it may not be the most likely outcome. Some groups have called for surcharges on broadband revenues to support the Universal Service Fund and reduce its reliance on declining telephone service revenues. This would likely result in ISPs passing on a new universal service charge to broadband customers, but the addition of the new funding source could reduce the surcharges on telephone bills.
“Telecom revenues funding USF have declined more than 60% over the past two decades, and as a result, the contribution factor has skyrocketed from 6.9% in 2001 to an all-time high of about 30%. of today”, said the industrial group Incompas at the recent hearing in the Senate. “Without intervention, the contributing factor is projected to rise to 40% by 2025. This is unsustainable and threatens the stability of the entire USF.”
Incompas claims to support “competition and innovation in the communications market” and represents a mix of online businesses and networking companies. Its members include some of the biggest online companies, such as Amazon, Google, Meta, Microsoft and Netflix. While Verizon is a member of Incompas, the broadband providers and network companies that belong to the group are mostly small.
FCC authorities a roadblock to the ISP’s proposal
While USF has historically raised money from benefiting telecom services, Incompas stressed that the funding mechanism has never been updated to tap into broadband revenue.
“Historically, services eligible to receive USF funding directly pay into the fund. Broadband Internet Access Service (BIAS) and the networks that provide it may receive USF support directly, but in a break with historical practice the FCC has not yet modernized its funding mechanism to require BIAS to pay into the fund,” Incompas wrote. “The USF contributor would be more reasonable and support the fund for the future simply by correcting this anomaly and following the historical practice of evaluating services eligible for support.”
One benefit of this approach is that “the FCC already has the authority to implement it,” Incompas said.
Conversely, the FCC may not be able to impose ratings on Big Tech companies without specific authorization from Congress. As the FCC said in a report to Congress last year, “there is significant ambiguity in the documents regarding the extent of the Commission’s existing authority to broaden the contributor base.”
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