Regulators around the world are considering forcing Big Tech companies to pay more for the internet service they rely on to earn their billions.
Why is it important: A growing number of governments believe that tech giants should increase their contributions to the basic internet service that makes their success possible. This money could support local economies or help bridge the digital divide.
Driving the news: The Senate Commerce Committee will vote Wednesday on bipartisan legislation that would direct the FCC to study the feasibility of collecting fees from companies like Google and Netflix to bolster the agency’s broadband rollout grant fund, the Universal Service Fund.
Meanwhile, in Europe, Margrethe Vestager, antitrust chief and executive vice-president of the European Commission, said at a press conference earlier this month that “the issue of fair contribution to telecommunications networks” is something that legislators should consider “very carefully”.
- “We see that there are players who generate a lot of traffic that then enable their business, but they haven’t really helped enable that traffic, they haven’t helped enable the investments in the deployment of the connectivity,” she said.
Rollback: The idea of taxing Big Tech to fund the FCC’s broadband fund, which supports internet service in rural areas, schools, libraries and hospitals, gained momentum among Republicans last year.
- Currently, a levy on phone bills pays for the Universal Service Fund, but that revenue base has shrunk.
The big picture: Companies that connect people to the Internet and those that provide what people access on the Internet, such as videos, TV shows and music, are fighting over who should foot the bill as costs and popularity rise. streaming are increasing.
- European telecom companies argued earlier this month that the European Commission should require Big Tech to pay telecom companies for broadband infrastructure projects.
- European telecoms say social media and technology companies – including Meta, Netflix and Amazon – account for 55% of traffic on mobile and broadband networks, costing them between 15 and 28 billion euros a year, according to the Financial Times.
The plot: Netflix is already engaged in this fight in South Korea.
- The proposed legislation would force global content providers to pay local network fees, and the streaming giant is in court to fight a local ISP’s efforts to collect the money, according to Reuters.
- The law being debated in the Korean National Assembly would cause a “huge additional cost” to YouTube and could have a “direct impact on YouTube’s domestic business”, making it difficult for YouTube to invest in the ecosystem South Korean creators,” wrote Gautam Anand, executive vice president for Asia-Pacific at YouTube, in a Korean company blog post last month (English version courtesy of Google Translate).
Internet Service Providers in the United States. argued that Big Tech should pay for the rising cost of broadband.
- The Senate proposal is “essential to the future of the Universal Service Fund,” USTelecom CEO Jonathan Spalter said in a statement to Axios. “USF has long benefited a wide range of businesses – streaming, video conferencing, e-commerce, cloud computing and more – that largely do not contribute to the FCC’s critical universal service programs. ‘they are intensifying their action.
The other side: “Consumers are paying internet access fees right now, and businesses that use extra bandwidth for everything from research to video streaming are already paying extra fees to internet service providers,” said Matt Schruers, president of the Computer and Communications Industry Association, which represents Big Tech companies. “These digital services are helping to create demand for the services that Internet Service Providers sell.”
- “American families are struggling with high gas prices and skyrocketing grocery bills, and the last thing they need is a new tax on online services that gives them competition, choice and economies,” said Angie Kronenberg, chief and general counsel of INCOPAS, a trade association representing both small broadband companies and big tech platforms like Google and Amazon.
In the Senate, The FAIR Contributions Act was introduced by ranking committee member Roger Wicker (R-Miss.) but now has communications subcommittee chair Ben Ray Luján (DN.M.) as a sponsor.
- “The FAIR Contributions Act would be an important step to help ensure that Americans in unserved and underserved areas are not left behind as we work to close the digital divide,” Wicker said in a statement to Axios.
- “The same companies that receive public funding for broadband connectivity should be willing to support this proposal,” Luján told Axios.
What they say : FCC Commissioner Brendan Carr told Axios it’s time to “rethink a lot” about who pays for the agency’s broadband funds.
- “It’s kind of a universal idea that people realize that it’s the companies that benefit from these expenses and so why not look at them to pay as well,” Carr told Axios.