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.

Filed Under: brendand carr, corporate welfare, digital divide, e-rate, fcc, free ride, subsidies
Companies: at&t, facebook, google, netflix, verizon