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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Filed Under: big tech, brendan carr, competition, fcc, jessica rosenworcel, subsidies, universal service fund