By Rob Dumke
A new study, authored by Ph.D. Economist Hal Singer and Ted Tatos, has examined whether large technology companies should start contributing to the agency’s $9 billion a year program that supports efforts to bridge the digital divide.
It comes following a May 2021 suggestion by one FCC Commissioner that Big Tech should start paying its fair share toward the Universal Service Fund.
In an opinion piece, Commissioner Brendan Carr earlier this year suggested Big Tech should start paying its fair share towards the FCC’s Universal Service Fund. Carr believes the current funding mechanism is a regressive charge placed on consumers that is unfair and unsustainable.
The new study responds to Carr by suggesting two alternative approaches.
First, it looks at assessing revenues from wireline broadband, which would effectively shift the relevant USF fee from the voice portion of consumers’ bills over to the Internet portion of those bills. Second, the study looks at the idea of eliminating that charge from consumers’ monthly bills entirely and replacing it with a fee that large technology companies would pay based on their digital advertising service revenues.
Carr commented on the work of Singer and Tatos, and largely liked what he read.
“As this new economic study shows, requiring Big Tech to start paying a fair share could eliminate entirely this 30 percent charge from consumers’ bills,” Carr concluded. “Rather than artificially raising the cost of Internet service for Americans, assessing Big Tech would sharply reduce consumers’ monthly costs. The study also shows that requiring large technology companies to pay a fee would align incentives given both the bandwidth consumed by digital advertising services and the benefits large technology companies would realize from even greater connectivity.”
The study concludes that the current funding method is not economically sustainable, given the sharp decline in traditional telecom revenues. As to the alternative proposals, the analysis finds that assessing contributions on large technology companies, such as Google and Facebook, based on their digital advertising revenues represents the “best policy option.”
The study finds that this approach would significantly reduce consumers’ costs, properly align incentives, and unlike assessing wireline broadband revenues, would not raise consumers’ monthly bill for Internet services.
