Regulators around the world are exploring forcing big tech companies to pay more for the internet they rely on to make billions.
why does it matter: An increasing number of governments believe that tech giants must increase their contributions to the essential internet service that makes their success possible. These funds can support local economies or help bridge the digital divide.
News leadership: The Senate Commerce Committee will vote Wednesday on bipartisan legislation that would instruct the Federal Communications Commission to study the feasibility of charging companies like Google and Netflix to support the agency’s broadband deployment support fund, the Universal Service Fund.
Meanwhile, in Europe, Antitrust chief and executive vice president of the European Commission Margrethe Vestager said at a press conference earlier this month that the “issue of equitable contribution to telecom networks” is something lawmakers must consider “with great focus”.
- “We see that there are players that generate a significant amount of traffic that then enables their business, but they have not actually contributed to enabling that traffic, nor have they contributed to enabling investments in launching connectivity,” she said.
recovery: The idea of taxing big tech companies to ensure funding for the FCC’s broadband, which supports rural internet, schools, libraries and hospitals, gained traction among Republicans last year.
- Currently, you pay phone bills to the Universal Service Fund, but this revenue base is decreasing.
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 competing over who should pay the bill as broadcast costs and popularity grow.
- European telecoms companies argued earlier this month that the European Commission should require big tech companies to pay telecoms companies for broadband infrastructure projects.
- European telecoms companies say social media and tech companies – including Meta, Netflix and Amazon – account for 55% of traffic on mobile and broadband networks, costing them between 15 billion and 28 billion euros a year, according to the Financial Times.
The plot: Netflix is already involved in this fight in South Korea.
- Proposed legislation there would make global content providers pay local network fees, and the streaming giant is resisting in court the local ISP’s fundraising efforts, according to Reuters.
- Gautam Anand wrote that the law being discussed in the Korean National Assembly would incur a “huge extra cost” for YouTube and could have a “direct impact on YouTube’s local business,” making it difficult for YouTube to invest in South Korea’s creator ecosystem. YouTube’s Asia Pacific CEO, in a company blog post in Korean last month (English version provided by Google Translate).
Internet service providers in the United States. They argued that big tech companies should pay the increasing cost of broadband.
- USTelecom CEO Jonathan Spalter said in a statement to Axios that the Senate’s proposal is “crucial to the future of the Universal Service Fund.” “USF has long benefited a wide world of companies — live broadcasting, video conferencing, e-commerce, cloud computing, and more — that don’t contribute much to the FCC’s critical universal service programs. It’s time to step up.”
the other side: “Consumers are currently paying Internet access fees and companies that use additional bandwidth for everything from search to video streaming are already paying Internet access providers additional fees,” said Matt Schroers, president of the Computer and Communications Industry Association, which represents major tech companies. “These digital services help create demand for services sold by Internet access providers.”
- said Angie Cronenberg, senior advocate and general counsel for INCOMPAS, a trade consortium representing smaller broadband companies and big technology platforms such as Google and Amazon.
in the Senate The FAIR Contributions Act was introduced by prominent committee member Roger Wicker (R-Miss.) but now counts Communications Subcommittee Chair Ben Ray Logan (DN.M) as a sponsor.
- “The FAIR Contributions Act will be an important step to help ensure Americans in unserved and disadvantaged regions are not left behind as we work to bridge the digital divide,” Wicker said in a statement to Axios.
- “The same companies that benefit from public funding for broadband connectivity should be willing to support this proposal,” Logan told Axios.
what are they saying: FCC Commissioner Brendan Carr told Axios it’s time to “fundamentally rethink” who pays in the agency’s broadband money.
- “It’s a general idea that people realize that these are the companies that take advantage of these expenses, so why not look at them to pay for them as well,” Carr told Axios.