Technology tax invited to finance net aid
As more Americans cut the cord on traditional landlines, a government program that subsidizes internet service to poor communities is at risk of collapse because it relies on taxes from falling long-distance calling charges .
This provides an incentive to support the more than 20-year-old Universal Service Fund by tapping into tech companies like Amazon and Netflix that are profiting from the growing use of broadband.
“We tax the telephone networks to pay for the broadband network,” said Brendan Carr, Republican member of the Federal Communications Commission. “It’s like taxing horseshoes to pay for highways.”
The fund, which distributed $ 8.3 billion last year, helps connect schools, libraries and rural health facilities. It also provides a connection subsidy for around 7 million poor households.
But over the past two decades, the use of old-fashioned phone service has plummeted and the revenue on which the tax could be charged has fallen to $ 30 billion, from around $ 80 billion, Carr said. This led to an increase in the rate of the tax, which climbed to over 30% from 5.7% in 2000 and is generally passed on to the reduced number of fixed line users.
The pandemic has highlighted the need for fast internet connections for school, work and healthcare and has become an area of agreement as President Joe Biden and lawmakers on both sides seek ways to further support the high debit.
Carr, in an interview, said one way to do this is to charge companies such as Amazon, Google and Netflix. He cited “companies that take advantage of the modern network and pay next to nothing”.
The proposal adds to the struggles for big tech companies in Washington, where lawmakers and regulators threaten to break down social media providers and deprive them of key legal protections. Now Carr, who once called on the FCC to “do her part to get Big Tech under control”, wants to make the pain worse.
Congress voted $ 3.2 billion in December for an emergency broadband program that offers $ 50 in monthly grants. The program has attracted more than 2.3 million homes. But once it runs out, maybe in a few months, the addiction reverts to the struggling grant introduced in 1997 – which typically pays $ 9.25 per month per household.
Carr in a Newsweek op-ed suggested lawmakers and regulators could set fees for web companies like Google, Facebook, Apple, and even Microsoft for Xbox games.
The call from Carr, a Republican, sparked interest.
“It’s an intriguing idea. And we’re going to need some ideas,” Interim FCC President Jessica Rosenworcel, a Democrat, told Bloomberg TV on Friday.
“Keeping the Universal Service Fund strong is really important to ensure that broadband helps reach rural America, and also provides support for broadband and affordability in urban America,” he said. she declared.
USTelecom says it has “all the political options on the table,” said Jonathan Spalter, chairman of the business group, which includes major operators AT&T and Verizon Communications. Spalter called for “a conversation” that “the entire Internet ecosystem” shares responsibility.
AT&T, America’s largest telephone company by revenue, perked up when Carr outlined his plan in Newsweek.
“It’s hard to imagine a successful reform that does not include a version of this proposal,” Hank Hultquist, vice president of federal regulation for AT&T, said in a tweet. The company has argued for Congressional appropriations – an idea opposed by others who fear the grant may be plagued by annual fundraising struggles.
AT&T CEO John Stankey on Thursday called the system “significantly overloaded.” If the credits are not passed, collecting royalties from “the whole industry that benefits from the Internet” could stabilize the subsidy, Stankey said in an interview with David Rubenstein at the Economic Club of Washington.
K. Dane Snowden, chairman of the Internet Association business group, in an emailed statement called on the FCC to “take a common sense approach and not punish innovative, high-quality streaming services.” . Members of the business group include Facebook, Amazon, Google, eBay, and other online companies.
Because the FCC does not have authority over Web companies, Congress should step in.
“It’s a time bomb, and it’s only getting worse. But I don’t see Congress moving quickly on this,” said Doug Brake, director of broadband and spectrum policy at Information Technology & Innovation Foundation, a non-profit research organization. “Really, almost all of the proposed funding sources are going to be controversial.”
Information for this article was provided by Scott Moritz of Bloomberg News (WPNS).