free ride – Techdirt (original) (raw)

Wicker Bill Eyes Forcing ‘Big Tech’ To Pay ‘Big Telecom’ Billions For No Coherent Reason

from the stop-letting-Comcast-write-legislation dept

A bipartisan coalition of Senators including Roger Wicker (MS), Todd Young (IN), Mark Kelly (AZ) and Ben Ray Luján (NM) are poised to reintroduce legislation supported by telecom monopolies that could ultimately result in tech giants paying telecom giants billions of dollars for no coherent reason.

The soon to be reconstituted FAIR Contributions Act, word of which was first leaked to Axios, would direct the FCC to issue a report on “the feasibility of collecting USF contributions from internet edge providers”:

“It is important to ensure the costs of expanding broadband are distributed equitably and that all companies are held accountable for their role in shaping our digital future,” Wicker said in a statement to Axios.

While it’s true that FCC programs like the USF are facing a budgetary shortfall, the idea that “Big Tech” should be the one that pays for this shortfall has been a telecom industry dream policy since the net neutrality fight first heated up in 2003. But while forcing tech companies to pay for the telecom industry’s networks might be “feasible,” that doesn’t mean it makes actual sense.

Big Telecom has tried desperately for decades to force Big Tech companies to pay them billions of additional dollars for no coherent reason. It’s what began the net neutrality wars. This has largely involved falsely claiming that companies like Netflix and Google get a “free ride” on the internet, and should therefore be forced to pay telecom giants billions of dollars to fund broadband expansion.

It’s effectively double dipping.

Telecom giants want to monopolize an essential utility, and work tirelessly to erode both competition and regulatory oversight. This in turn has allowed them to skimp on broadband expansion and drive up prices for absolutely everybody in the chain. They also to gobble up billions in subsidies for networks they almost always fail to uniformly deploy but rarely face consequences for.

At the same time, they have long believed that tech giants owe them money for… simply existing.

This bogus claim that tech companies “aren’t paying their fair share” is decades old. Both Mike and I have debunked variations of it more times than I can count. Yet the free ride claim pops up again here, this time by Luján in his prepared comments, unchallenged by Axios:

“This report will examine how the largest tech companies can pay their fair share. The future is online, and it’s critical that essential broadband programs receive robust funding,” Luján said.

Again, the claim that tech giants “don’t pay their fair share” is a false telecom industry talking point, and policymakers and reporters should know it by now. Companies like Netflix and Google spend untold billions not only on bandwidth, but on cloud storage, transit routes, content delivery networks (CDNs), undersea transit lines, and in Google’s case, even a major last-mile broadband ISP (Google Fiber).

You can usually tell when a Senator is doing heavy lifting for the telecom sector on this subject. One, they’ll repeat the false “fair share” claim. Two, they’ll avoid talking about how the best way to shore up broadband funding problems is to implement meaningful reform of existing subsidy programs. Or that the FCC as a whole could do a hell of a lot better job standing up to monopoly power.

Most U.S. policy makers literally can’t even acknowledge that telecom monopolies exist and cause widespread problems despite decades of very obvious evidence.

If you want to fix broadband funding shortfalls, it starts with policing the untold billions we throw at local monopolies like Comcast, Frontier, or Charter for networks they always, mysteriously, half deploy. It starts with policing companies like AT&T accused of ripping off existing school broadband programs without penalty. We’re about to throw $45 billion dollars at broadband as part of the infrastructure bill, and you can be damn certain that giants like Comcast will already be getting the lion’s share of that money for broadband deployments that may or may not ever actually arrive.

Without telecom subsidy reform and increased accountability for telecom monopolies, you’re just throwing billions upon billions of dollars at an industry with a multi-decade history of widespread subsidy fraud and abuse. But you’ll notice this is never even mentioned by folks pursuing this new Big Tech telecom tax, or the major press outlets covering the policy. Not even as fleeting context.

Despite the entire proposition being stupid, telecoms have had consistent luck in getting captured or otherwise stupid policymakers to support this kind of push. In part because it helps politicians seem like they’re tackling the ever nebulous “digital divide,” a problem telecom monopolization effectively created.

There’s a big, renewed debate over exactly these disingenuously named “fair share” proposals over in the EU. South Korean regulators also implemented a similar regulatory environment that has resulted in ISPs suing Netflix just because shows like Squid Game were popular. It’s a dumb policy, and any costs borne by tech giants will just get passed on by consumers, and thrown at telecom giants with a history of fraud.

I’ve debunked this gibberish so many times now I feel like I’m living in a weird purgatorial space where historical context and factual reality simply no longer exist. These relentless efforts by the telecom lobby to tax tech giants aren’t being conducted in good faith, and any politician or news outlet that parrots them while ignoring historical context is part of the problem.

Filed Under: ben ray lujan, broadband, double charging, fair contributions act, fcc, free ride, high speed internet, mark kelly, monopolies, net neutrality, roger wicker, sender party pays, telecom, todd young

‘Big Telecom’ Still Wants ‘Big Tech’ To Give Them Billions Of Dollars For No Coherent Reason

from the troll-toll dept

Fri, Jul 1st 2022 06:29am - Karl Bode

For literally twenty-five years now, telecom monopoly executives the world over have been trying to force big tech companies billions of dollars for no coherent reason. It began with AT&T’s attempt to double dip on Google; which spurred the entire net neutrality war. The complaint by telecoms has long since moved global, as they try to get gullible politicians to try and force tech giants to give them billions.

The (false) argument always involves some variation of the claim that tech giants are getting a “free ride” on the internet or somehow not “paying their share,” despite the fact that companies like Google pay billions of dollars not only for their own bandwidth, but increasingly own all manner of core internet and telecom infrastructure, from fiber transit lines to undersea fiber runs (Google even runs a residential ISP).

The argument by telecom lobbyists (and the regulators and politicians paid to love them) is ever present in the U.S., but has heated up in Europe the last few months, as the EU debates the digital policy trajectory that will shape tech policy across the EU for the next decade.

The gambit, as it did in the EU again last week, always involves a telecom lobbyist getting some politician or regulator to push the idea as if it’s just a good faith gambit to conquer that pesky “digital divide”:

The EU executive’s chief officials on digital policy, Commission Executive Vice President Margrethe Vestager and Commissioner Thierry Breton hinted at the plans in recent weeks. In an interview last month, Breton told Les Echos newspaper that telecoms operators weren’t getting “the right return on investment” from maintaining the networks, and it was time “to reorganise the fair remuneration of the networks.”

It doesn’t take much for a telecom giant lobbyist to get entire teams of politicians cheering in favor of giving their employer billions of dollars… just because:

In a letter sent to Vestager and Breton last week and obtained by POLITICO, five leading members of the European Parliament from center-left to right groups called on the Commission to step up their efforts to remove hurdles that prevent the telecoms industry from investing in infrastructure and to incentivize “the roll-out of high-speed electronic communications networks” in Europe.

This is the exact same argument being recently made by FCC Commissioner Brendan Carr here in the States. Carr has rubber stamped every big telecom policy since being seated, including the wholesale demolition of broadband consumer protections. He’s incapable of admitting the U.S. broadband sector even has a competition problem, yet is first in line cheering to subsidize industry giants further.

These arguments always (intentionally) ignore some things; namely that telecoms receive untold billions in taxpayer subsidies, tax breaks, and regulatory favors for networks that always, quite mysteriously, wind up half completed. If a policymaker is serious about shoring up access, cracking down on waste and fraud in telecom oversight would be the very first place to start. The omission is usually fairly telling.

When it comes to telecom monopolies the world over, nobody gets a free ride. Everybody pays, and pays, and pays some more. And when said telecoms control the policymaking apparatus (which is the case in most countries), politicians, who should be working for the public interest, but are, instead, in the telecoms’ pockets, are usually easy to spot by their tendency to want to throw billions more at the problem without functional reform.

Filed Under: broadband, digital divide, eu, free ride, high speed internet, subsidies, telecom

Big Telecom Continues Its Global Quest To Tax Big Tech For No Good Reason

from the troll-tolls dept

Wed, Dec 1st 2021 09:37am - Karl Bode

A few months back we noted how FCC Commissioner Brendan Carr had taken to Newsweek to dust off a fifteen year old AT&T talking point. Namely that “big tech” companies get a “free ride” on telecom networks, and, as a result, should throw billions of dollars at “big telecom” for no real reason. You’ll recall it was this exact argument that launched the net neutrality debate, when former AT&T CEO Ed Whitacre proclaimed that Google wouldn’t be allowed to “ride his pipes for free.” Basically, telecom giants have long wanted somebody else to fund network builds they routinely leave half finished despite billions in subsidies.

While this dumb argument originated with AT&T, it has been adopted by countless international telecoms over the years. Like this week, when a coalition of 13 large European telecom companies signed a joint letter demanding that U.S. tech giants pay them more money for no coherent reason:

“Large and increasing part of network traffic is generated and monetized by big tech platforms, but it requires continuous, intensive network investment and planning by the telecommunications sector. This model?which enables EU citizens to enjoy the fruits of the digital transformation?can only be sustainable if such big tech platforms also contribute fairly to network costs.”

Again, this is the idiotic argument that just never dies. We had an entire fifteen year net neutrality debate over this that nobody appears to have learned much from.

Tech giants like Google already pay for not only bandwidth, but they own billions of dollars worth of transit routes, undersea cables, and other infrastructure (Google even runs its own residential ISP). Consumers also pay an arm and a leg for bandwidth thanks to heavily monopolized telecom markets. This idea that anybody in this chain gets a free ride is absolutely ridiculous. Telecom giants regularly enjoy fat profits thanks to limited competition and largely feckless government oversight. They’re also endlessly subsidized to finish networks routinely left mysteriously undercooked.

Telecom is basically just trying to exploit its market power in a bid to nab an unnecessary troll toll. Yet despite being in bad faith with little merit, it doesn’t take much for telecom giants to dust off the dumb argument and re-inject it into the discourse every few years. That’s thanks in large part to unskeptical news outlets like Reuters that parrot the claims in good faith, without including any important context. For example, Reuters frames the entire debate like this:

“The call by the CEOs comes as the telecoms industry faces massive investments for 5G, fibre and cable networks to cope with data and cloud services provided by Netflix and Google’s YouTube and Facebook.

Reuters doesn’t deem it worth mentioning that it’s consumers demanding access to those services. Consumers that already pay their regional telecom monopoly an arm and a leg for broadband. This demand isn’t somehow “big tech’s” fault. Nor is it somehow big tech’s responsibility to pay an extra troll toll if an ISP fails to meet consumer bandwidth demand despite bloated revenues. Reuters (much like telecom allies like the FCC’s Brendan Carr) also somehow omits how global telecom giants routinely underinvest in network upgrades despite billions of dollars in tax breaks, subsidies, and regulatory favors over a period of decades.

It’s just uncanny how telecom just keeps trotting out the same dumb argument that it deserves to be paid extra for no coherent reason, and the majority of news outlets parrot the request as if it’s actually being made in good faith.

Filed Under: brendand carr, fcc, free ride, internet services, internet taxes, net neutrality, telcos

Telecom, Broadcasters Convince FCC To Explore New Taxes On 'Big Tech'

from the this-probably-won't-go-well dept

Wed, Oct 27th 2021 06:29am - Karl Bode

Earlier this year, we noted how FCC Commissioner Brendan Carr had launched a bad faith effort suggesting that “big tech” gets a “free ride” on the internet, and should be forced to fund broadband expansion. Carr’s argument, that companies like Google and Netflix somehow get a free ride (they don’t) and should “pay their fair share,” is a fifteen year old AT&T lobbyist talking point. AT&T’s goal has always been to “double dip”; as in not only get paid for bandwidth by consumers and businesses, but to get an additional troll toll simply for, well, existing.

AT&T has long tried to offload its (often neglected or half-completed) network build and maintenance costs to somebody else to make investors happy. That somebody else is usually taxpayers, who’ve thrown billions in pointless tax breaks and dubious regulatory favors at the company in exchange for fiber networks that are always (so mysteriously!) left half completed and jobs that never arrive. Now AT&T (and their broadcaster allies) want tech giants to pay as well.

Over at the right wing Washington Examiner, you can see how this effort is framed in order to sell it to the public and regulators:

“The Federal Communications Commission is looking to hit Big Tech companies with new regulatory fees related to their high use of broadband facilitated by the agency ? a sign of Washington’s growing skepticism of Silicon Valley wealth and power.”

You’re given no indication that this is a telecom (AT&T) or broadcasting (the National Association of Broadcasters) bad faith political play. Carr (read: AT&T’s policy folks) had originally suggested in a carefully seeded editorial that tech companies should be forced to pay into the Universal Service Fund, which helps fund broadband expansion to schools and low-income communities. Now, Carr’s argument has also been piggybacked onto by broadcasters, who want tech companies to pay a tax simply to use unlicensed spectrum (like Wi-Fi hardware). Fortunately, the Examiner at least includes experts who point out the idea is stupid:

“Unlicensed spectrum was first established by the commission in 1985, and allows the general public to freely use, without a license, services such as Wi-Fi networks, Bluetooth waves, garage door openers, and other wireless technologies.

?The FCC is asking the public if we think fees on unlicensed spectrum is a good idea or not,? said Harold Feld, a telecom policy expert and lawyer at the consumer advocacy group Public Knowledge. ?And I?m here to say it?s a bad idea. In the spirit of Halloween, I plan to take a chainsaw to it.”

So I think the FCC is considering this route because it’s true the USF needs more money if we’re going to help make sure low-income kids and schools have decent connectivity. The problem is that the FCC’s proposal is written in such a way that it sounds like you could potentially be seeing annoying new taxes on Wi-Fi networks, Bluetooth devices, garage door openers, and more. The other problem is the core motivation here is by telecom and broadcast companies who simply want to offload their costs to somebody else. If they’re the ones writing the proposal (and it sounds like they are), the end product isn’t going to be particularly balanced or productive.

But to me the bigger problem is that if we’re genuinely interested in shoring up broadband funding and expanding access, we should first be targeting the billions upon billions in tax breaks, regulator favors, merger approvals, and other perks we give to telecom and broadcast giants (in Comcast and AT&T’s case one in the same) in exchange for jack shit. The idea that we waste billions by throwing it mindlessly at regional monopolies seems like a good place to start if you’re serious about reform. But please take a moment to notice that this idea never gets mentioned by folks like Carr. That’s fairly telling.

Nothing gets fixed in U.S. broadband (especially affordability and access issues) without addressing regional monopolization and the state and federal corruption that protects it. But not only do we not do that, if you watch regulators and lawmakers on both sides of the aisle, they can barely even candidly acknowledge it’s even a problem. As a baseline (and it has been the baseline for 30 straight years) that’s not a great recipe for success.

Filed Under: big tech, brendan carr, broadband, broadcasters, fcc, free ride, net neutrality, subsidies, taxes, telcos, universal service fund
Companies: at&t, facebook, google

from the good-luck-with-that dept

Wed, Oct 20th 2021 09:37am - Karl Bode

For years telecom executives, jealous of internet services and ad revenue, have demanded that content and services companies pay them an extra toll for no reason. You saw this most pointedly during the net neutrality fracas, when AT&T routinely insisted Google should pay it additional money for no coherent reason. Telecom execs have also repeatedly claimed that Netflix should pay them more money just because. Basically, telecoms have tried to use their gatekeeper and political power to offload network investment costs to somebody else, and have spent literally the last twenty years using a range of incoherent arguments to try and justify it with varying degrees of success.

While these efforts quieted down for a few years, they’ve popped back up recently thanks to, of all things, Netflix’s Squid Game. In South Korea, ISPs have demanded that Netflix pay them more money because of the streaming demand the popular show places on their networks. As we noted then this makes no coherent sense, given ISPs build their networks to handle peak capacity load; what specific type of traffic causes that load doesn’t particularly matter. It’s just not how network engineering or common sense work.

That’s not stopping telecom executives around the world, of course. Across the pond, British Telecom Chief Executive Marc Allera has trotted out the same argument there, claiming that a surge in usage (during a pandemic, imagine that) is somehow Netflix’s problem:

“Every Tbps (terabit-per-second) of data consumed over and above current levels costs about ?50m,? says Marc Allera, the chief executive of BT?s consumer division. ?In the last year alone we?ve seen 4Tbps of extra usage and the cost to keep up with that growth is huge.?

An overwhelming majority of day-to-day usage, up to 80%, is accounted for by only a handful of companies such as YouTube, Facebook, Netflix and the games company Activision Blizzard.”

But again that’s not how any of this works. ISPs build out network infrastructure based on managing peak demand. It doesn’t matter whether that demand originates from Squid Game or video gaming. As an ISP it’s your responsibility to meet consumer and enterprise demand, since that’s what they already pay you an arm and a leg for. Consumers and businesses alike already pay ISPs for bandwidth and transit; often accompanied by a steady array of consistent price hikes. ISPs are effectively asking for yet another additional troll toll, you know, just because.

Whether talking about Netflix or Google, one core component of this telecom executive argument is always that tech companies are “getting a free ride”:

“A lot of the principles of net neutrality are incredibly valuable, we are not trying to stop or marginalise players but there has to be more effective coordination of demand than there is today,? he says. ?When the rules were created 25 years ago I don?t think anyone would have envisioned four or five companies would be driving 80% of the traffic on the world?s internet. They aren?t making a contribution to the services they are being carried on; that doesn?t feel right.”

But nobody gets a “free ride” in telecom. Consumers and companies alike pay increasingly more money for bandwidth. And in the case of companies like Google and Netflix, they pay billions of dollars for expedited transit, undersea cable routes, CDNs (which Netflix provides ISPs for free), and even (in Google’s case) their own residential ISPs. Netflix also has a long history of providing users different tools to limit streaming so it doesn’t run afoul of user broadband caps.

Suggesting they somehow get a free ride and should pay another troll toll just because makes absolutely no sense. It’s a dusty old talking point that originated with AT&T nearly twenty years ago that began the net neutrality debates. Its origins are simply greed. Telecom execs are simply trying to offload the costs of network investment (their job) to somebody else to make investors happy. This somehow gets dressed up into something far more elaborate than it actually is.

Filed Under: bandwidth, free ride, internet, marc allera, net neutrality, squid game
Companies: bt, netflix

from the troll-tolls dept

Mon, Oct 4th 2021 05:37am - Karl Bode

We’ve noted for a while how the world’s telecom executives have a fairly entrenched entitlement mindset. As in, they often tend to jealously eye streaming and online ad revenues and assume they’re inherently owed a cut of those revenues just because at some point they traveled on their networks. You saw this hubris at play during AT&T’s claims that “big tech” gets a “free ride” on their networks, which insisted that companies like Google should pay them significant, additional troll tolls “just because” (which triggered the entire net neutrality fight in the States).

AT&T pretty solidly established this entitlement mindset domestically, and I’ve watched it slowly exported overseas. Like this week in South Korea, where South Korean broadband provider SK Broadband sued Netflix simply because its new TV show, Squid Game, is popular. Basically, the lawsuit argues, because the show is so popular and is driving a surge in bandwidth consumption among South Koreans watching it, Netflix is somehow obligated to pay the ISP more money:

“South Korean Internet service provider SK Broadband has sued Netflix to pay for costs from increased network traffic and maintenance work because of a surge of viewers to the U.S. firm’s content, an SK spokesperson said on Friday.

The move comes after a Seoul court said Netflix should “reasonably” give something in return to the internet service provider for network usage, and multiple South Korean lawmakers have spoken out against content providers who do not pay for network usage despite generating explosive traffic.

Except that’s not how any of this works. ISPs design their networks for maximum potential peak load. It’s completely irrelevant how popular some content traveling over your network is. Your job as a telecom operator is to design networks that easily flex to handle a surge in capacity, regardless of traffic type. If you’re failing to do that, it’s because you’re not designing your network and investing in capacity properly. It’s not suddenly the content company’s job to pay you more money to fix a problem you created.

Notice how SK Broadband also trots out the “Netflix doesn’t pay for bandwidth” trope, which is a deeply entrenched talking point in telecom lobbyist circles and also… simply isn’t true. Consumers pay ISPs for bandwidth. Streaming companies like Netflix pay ISPs for bandwidth. The idea that Netflix is somehow getting a “free ride” on telecom networks is just not based on any factual or technical reality. That hasn’t mattered to the South Korean courts, which have been leaning toward the telecom point of view in rulings the last few years:

“the Seoul Central District Court ruled against Netflix in June, saying that SK is seen as providing “a service provided at a cost” and it is “reasonable” for Netflix to be “obligated to provide something in return for the service”.

SK estimated the network usage fee Netflix needed to pay was about 27.2 billion won ($22.9 million) in 2020 alone, the court document said.

Netflix has appealed against the ruling, court records showed, with fresh proceedings to start in late December.

The South Korean courts, shockingly, are wrong. South Korean telecoms have convinced some in the South Korean legal system that content companies should pony up additional cash if something is popular “just because,” even if that makes no technical sense from a network design standpoint. It’s the kind of bizarre legal outlook AT&T dreams of here in the U.S., and the “big tech is getting a free ride” concept is the foundation of the argument, despite not actually being true.

In addition to paying for bandwidth, companies like Netflix and Google also spend massive fortunes on their own transit networks, underseas cables, and in some cases (Google Fiber) their own residential ISPs. In Netflix’s case, the company also operates a Content Delivery Network which helps greatly improve streaming efficiency and overall load, the hardware for which is provided to ISPs around the world, for free. Netflix has also been pretty flexible when it comes to designing adjustable tiers of service to help users on bandwidth caps (which, to be clear, are also bullshit cash grabs) avoid additional bandwidth fees.

So when you see a telecom (or one of their captured regulators, consultants, think tankers, or policy wonks) arguing that somebody is getting a free ride and should be throwing more money at them, what they’re really saying is “we’re too cheap to adequately invest in our networks and want you (Netflix, whoever) to give us money for no reason.” That the South Korean courts have bought into this argument (largely because the content companies in question are U.S. based), is unfortunate.

Again, this whole bumbling, bad faith argument was a cornerstone of the origins of net neutrality, a battle that was (in part) about preventing regional telecom giants from exploiting their gatekeeper power to demand obnoxious, arbitrary troll tolls. Pushed by AT&T, some U.S. regulators (most notably and recently the FCC’s Brendan Carr) are still pushing some variation of this dumb argument today. And the folks pushing it are generally hopeful you’re too dumb to realize that it makes absolutely no technical sense.

Filed Under: bandwidth, free ride, internet, net neutrality, network traffic, south korea, squid game, streaming
Companies: netflix, sk broadband

FCC's Carr Still Pushing A Dumb Telecom Tax On 'Big Tech'

from the misdirection-ahoy dept

Mon, Sep 20th 2021 06:24am - Karl Bode

A few months back we noted how FCC Commissioner Brendan Carr had taken to Newsweek to dust off a fifteen year old AT&T talking point. Namely that “big tech” companies get a “free ride” on telecom networks, and, as a result, should throw billions of dollars at “big telecom” for no real reason. You’ll recall it was this exact argument that launched the net neutrality debate, when former AT&T CEO Ed Whitacre proclaimed that Google wouldn’t be allowed to “ride his pipes for free.” Basically, telecom giants have long wanted somebody else to fund network builds they routinely leave half finished despite billions in subsidies.

Carr, who has been trying to seed this idea in the press and policy circles for months, was back at it again last week, pointing to a new Oracle-funded study that suggests funding broadband expansion via a tax on advertising revenue:

As usual with Carr, there are a few problems here.

The study in question took a look at the FCC’s USF system, which helps subsidize broadband expansion and provides some small broadband, wireless, or phone discounts (a paltry $9.25 per month, to be specific) to low income Americans. At no point does the study actually suggest companies like Google get a “free ride” on the internet. Nor does it suggest “big tech” alone is responsible for funding the program. It does recommend that taxing bloated adtech revenues in general might be a good way to shore up lagging USF contributions.

But the study also recommends several other things, like helping ensure broadband subsidies are useful by raising the FCC’s current pathetic definition of broadband (25 Mbps down, 3 Mbps up) to something modern and useful, something Carr has actively opposed. Why has he opposed it? Because the telecom industry opposes it. Why does the telecom industry oppose it? Because a higher standard would reveal market failure, a lack of competition, and how that results in substandard and expensive service. It’s a story as old as time at this point.

There are a few things that are true. One, the USF does need more funding. As the report notes, the flatlining level of broadband subscriber growth (because of a saturated market) means that just levying USF fees on broadband and phone lines doesn’t scale with funding needs. It’s not unreasonable to consider expanding the contribution base to the profit-rich adtech sector in general, but again that’s just one idea of several. And Carr distorts it in strange ways that signal he’s not really approaching any of this in good faith.

One, the idea that Google gets a “free ride” on the internet is a bullshit, antiquated talking point telecom giants have been pushing for years. A company like Google spends billions of dollars on their own transit, cloud, and broadband infrastructure. Hell, Google even owns its own residential ISP (Google Fiber). And as the freshly unredacted version of Epic’s antitrust lawsuit against Google shows, Google has (stupidly, frankly) been paying wireless carriers billions of dollars since 2009 simply to not compete with its app store. There’s no free ride with U.S. telecom. Ever. Claims to the contrary are just nonsense.

If you’re familiar with telecom problems and serious about fixing them (and again, Carr is not), your first impulse should not be “make Netflix and Google throw money at it.” Your first topic of discussion should be the endless tax breaks, subsidies, and regulatory favors (see: killing net neutrality) we throw at telecom giants for little to nothing.

Time after time after time entrenched telecom giants promise they’ll cover the world in cheap, next-generation broadband and amazing jobs if only they get “X,” be that merger approval, more subsidies, deregulation, whatever. And time after time after time those promises prove absolutely hollow. Hell, Carr and Trump’s FCC majority is fresh off a scandal in which it doled out more than $9 billion dollars to companies that were gaming the entire FCC process, nabbing huge sums of money by making promises that made no coherent sense.

Carr not only doesn’t bring any of that up here, he never brings it up. He always actively ignores all of telecom’s warts, including the indisputable fact that U.S. broadband is heavily regionally monopolized, resulting in high prices that harm everybody, particularly low income Americans. Like Trump FCC boss Ajit Pai, he’s literally incapable of acknowledging the telecom sector has any such flaws, which should set off alarm bells. If you’re a telecom regulator who can’t admit the telecom sector has major flaws, yet is always incessantly fixated on the flaws of companies telecom has a beef with and you don’t regulate (Pai had this very same mysterious habit), I’d say that’s a pretty solid warning sign you may not be operating consistently and objectively as a policymaker.

Again, I think the telecom and media (Rupert) industries have been working hard in DC for several years to exploit the recent (and usually very valid) animosity against big tech to push several agendas. One is to saddle companies whose ad revenues they covet with additional layers of obligation and regulation, while removing oversight of their own sectors (see: the elimination of media consolidation and net neutrality rules by Carr and Pai). The other is, which is a 20 year old ploy at this point, to push the idea that other companies and industries should be giving them billions in additional dollars for networks that mysteriously always wind up only half deployed.

Filed Under: advertising, big tech, brendan carr, fcc, free ride, net neutrality, tax, universal service fund
Companies: facebook, google, oracle

AT&T Gets Loyal Lawmakers To Push A Broadband Tax For 'Big Tech'

from the you're-not-helping dept

Tue, Jul 27th 2021 05:01am - Karl Bode

Hoping to capitalize on legitimate animosity against “big tech,” AT&T lobbyists and policy makers have been busy recirculating a fifteen-year-old talking point. Namely, that big tech companies should throw billions of dollars at big telecom companies to subsidize their broadband deployments. The argument that AT&T has been pushing since 2004 or so is that since big tech companies get a “free ride” on telecom networks (which has never been true), they should pay telecom giants billions of additional dollars… just because.

The argument never made any coherent sense. Tech giants like Netflix and Google pay not only billions of dollars for bandwidth, they also spend billions of additional dollars on cloud, transit, undersea cable, CDN, and other broadband infrastructure. U.S. consumers and businesses alike also pay an arm and a leg for bandwidth courtesy of limited competition. When it comes to U.S. telecom, nobody gets a free ride.

Telecom giants like AT&T also invest billions of dollars in telecom infrastructure. But they also receive billions upon billions in taxpayer subsidies, dubious tax breaks, and regulatory favors in exchange for network upgrades that are always mysteriously half-delivered. There’s not a day that goes by where some telecom company isn’t getting ridiculous sums of money for projects that don’t make sense or simply never get deployed. So if you were serious about reforming the FCC’s USF or subsidy systems used to expand broadband access, that would be the place to start.

Instead, AT&T has asked captured regulators like FCC Commissioner Brendan Carr to push for a broadband tax on tech giants. Carr recently pushed the idea in a an editorial over in a Newsweek Op/Ed, and since then outlets from CNET to Axios have been parroting the idea as if it’s a good faith effort. It’s not. It’s an AT&T policy and lobbying missive being dressed up as a legitimate idea by corrupt lawmakers and regulators.

Now, Senators Roger Wicker, Shelley Moore Capito, and Todd Young have introduced a doomed bit of legislation dubbed the Funding Affordable Internet with Reliable (FAIR) Contributions Act. It too suggests that “big tech” has gotten a “free ride” on US telecom networks and should be subject to a new tax to fund broadband deployments:

“For too long, Big Tech has been able to profit off of the critical infrastructure used for common day-to-day activities while not helping at a sufficient level to improve those capabilities with broadband investment in states like West Virginia. With communications platforms moving away from telephone networks toward internet heavy platforms, it?s important now more than ever that we start looking at ways that Big Tech can step up and help close the digital divide and secure true universal service for West Virginians.”

Again, the gross irony here is that for the better part of twenty years, West Virginian lawmakers have been in persistent thrall to regional telecom monopoly Frontier Communications. This generally involves doing everything the telecom giant asks, then throwing billions in unaccountable subsidies at the company in exchange for jack shit. The same problem is repeating itself in most states across America. So to come out and suggest the country’s broadband shortcomings are Google’s, Netflix’s, or Amazon’s responsibility to fund and fix is fairly laughable.

Our broken and corrupt telecom regulatory approach is precisely why US broadband is so expensive, patchy, and slow by global standards. Yet you’ll note that the AT&T loyal Republicans (and some Democrats) pushing this stuff never acknowledge the need for reform of the telecom industry and the subsidies we throw its direction. They’re usually not even capable of acknowledging the sector has any problems.

Josh Hawley and friends have spent several years hyperventilating over “big tech monopolies” but rarely (if ever) acknowledge the problems with regional telecom or energy monopolies. They’re using legitimate concerns about “big tech” to push policies of interest to “big telecom.” But with very few exceptions, the modern GOP is genuinely not interested in fixing any problems. They’re interested in keeping campaign contributions from the likes of Comcast and AT&T flowing. And their only interest in “big tech” is finding leverage that will force them to carry race-baiting disinformation, a cornerstone of modern GOP power.

That’s not to say “big tech” doesn’t have ample problems that need fixing. It’s also not to say that the subsidy and FCC funding mechanisms propping up our feeble broadband efforts aren’t in dire need of reform. But this “big tech gets a free ride and therefore should throw billions at the telecom industry” is not a serious argument, and anybody treating it as such hasn’t been paying attention to more than fifteen years of telecom history. If you want to fix the US broadband industry and improve service the path is obvious: tackle regional monopolization and the corruption that enables and protects it.

Filed Under: big tech, brendan carr, fair share, fcc, free ride, universal service fund

AT&T Has DC Pushing The Idea That 'Big Tech' Should Give 'Big Telecom' Billions For No Coherent Reason

from the we've-been-over-this dept

Fri, Jul 2nd 2021 09:27am - Karl Bode

Last month we noted how FCC Commissioner Brendan Carr had taken to Newsweek to dust off a fifteen year old AT&T talking point. Namely that “big tech” companies get a “free ride” on telecom networks, and, as a result, should throw billions of dollars at “big telecom” for no real reason. You’ll recall it was this kind of argument that launched the net neutrality debate, when former AT&T CEO Ed Whitacre proclaimed that Google wouldn’t be allowed to “ride his pipes for free.” Whitacre was effectively arguing that in addition to paying him a premium for bandwidth, tech giants should pay him a troll toll. You know, just because.

Telecom lobbying and policy folks have done a great job capitalizing on the legitimate animosity over “big tech” to reseed this idea in the press using captured lawmakers and unskeptical news outlets. For example here’s Axios this week parroting GOP claims that they genuinely want to address the shortfall in broadband subsidy funding by… having technology giants pay for it:

“It’s just simply asking them to pay a fair share and start contributing on an equitable basis for these networks that they benefit from so tremendously,” Carr told Axios.”

Again, this is a self-serving 20 year old AT&T policy argument parroted by captured regulators and politicians. Namely that tech giants are mean old freeloaders, and should be throwing billions of dollars at telecom giants. Telecom giants that have long coveted Silicon Valley ad revenues, but have repeatedly proven too incompetent to develop their own modern media and advertising alternatives. So instead, they come up with creative ways to game DC’s revolving door regulators and campaign cash slathered lawmakers in a bid to obtain money they legitimately believe they’re “owed.”

But it’s all bullshit. For one, nobody gets a “free ride” when it comes to US telecom. Companies like Amazon, Google, and Netflix all pay billions of dollars in total for undersea cable runs, massive cloud storage, transit routes, and content delivery networks. Hell, Google is even a residential ISP. That’s on top of the money consumers, businesses, and Silicon Valley giants pay for their own bandwidth, which in the US is often some of the highest in the developed world thanks to regional monopolization and captured regulators (precisely like those quoted in the Axios piece).

Axios, like many outlets, has also helped push the narrative that the modern GOP is genuinely interested in “antitrust reform”:

“The interest in taxing Big Tech coincides with some GOP support for antitrust bills that would prevent the companies from buying up smaller rivals or favoring their own products.”

I’m in the minority in thinking the GOP’s support for “antitrust reform” (with a tiny few exceptions) is populist, performative bullshit. In reality, they’re just generally pissed that some wealthy Californians belatedly (and sloppily) prevented them from spreading disinformation and racist dog whistles on the internet. So they’re looking for any leverage over those companies they can find. They’re also listening to the siren calls of AT&T and Rupert Murdoch, who want their competitors in “big tech” saddled with additional scrutiny as they successfully obliterate government oversight of their own sectors (media and telecom).

I’m not saying tech giants haven’t engaged in dodgy business practices or that we don’t need meaningful reform. But I am saying that a lot of corrupt, bad actors have capitalized on the public’s legitimate animosity over big tech to push idiotic, self-serving ideas via corrupt lawmakers. And while the FCC’s broadband subsidy (E-Rate, USF) systems do need a funding overhaul, there are plenty of ways to accomplish that that don’t involve forcing Netflix to pay AT&T billions of additional dollars for no reason.

Axios doesn’t bother to mention it, but the FCC’s broadband subsidy programs are a broken mess that routinely dole out billions of dollars for network build-outs that make no coherent sense. We also throw billions in tax breaks, subsidies, and regulatory favors (like killing net neutrality) at companies like AT&T in exchange for jack shit. Those genuinely interested in shoring up broadband funding gaps should probably start looking at the vast, unaccountable subsidy trough that gives giants like AT&T untold billions in exchange for perpetually half-completed fiber networks.

Filed Under: brendan carr, fcc, free ride, net neutrality, networks
Companies: facebook, google

CNET Amplifies FCC's Carr's Attempt To Force 'Big Tech' To Pay 'Big Telecom' For No Reason

from the troll-tolls dept

Tue, Jun 8th 2021 09:38am - Karl Bode

So last week we noted how FCC Commissioner Brendan Carr had taken to Newsweek to dust off a fifteen year old AT&T talking point. Namely that “big tech” companies get a “free ride” on telecom networks, and, as a result, should throw billions of dollars at “big telecom” for no real reason. You’ll recall it was this kind of argument that launched the net neutrality debate, when former AT&T CEO Ed Whitacre proclaimed that Google wouldn’t be allowed to “ride his pipes for free.” Whitacre was effectively arguing that in addition to paying for bandwidth, tech giants should pay him a troll toll, just because.

As we noted last week, this claim that technology giants (or anybody, really) gets a “free ride” when it comes to US telecom networks is laughable. Companies like Amazon, Google, and Netflix all pay billions of dollars in total for undersea cable runs, massive cloud storage, transit routes, and content delivery networks. Hell, Google is even a residential ISP. That’s on top of the money consumers, businesses, and Silicon Valley giants pay for their own bandwidth, which in the US is often some of the highest in the developed world thanks to regional monopolization and captured regulators (precisely like Carr).

In reality, the argument that “big tech” gets a “free ride” has long been a flimsy proxy for telecom providers who believe it’s their God-given right to get a cut of massive Silicon Valley ad revenues, even if that makes no coherent sense. It has popped up again and again for fifteen straight years, usually out of the mouths of those prodded into making it by telecom policy and lobbying organizations.

So when it popped up again last week I was fairly sure it would be ignored. Until CNET grabbed Carr’s column believing it was in good faith, and amplified it to even more people:

“In a follow-up interview with CNET on Friday, Carr said companies like Facebook, Amazon, Apple and Netflix have been enjoying a free ride on the internet infrastructure, while millions of Americans have been paying what amounts to an additional tax on their telephone bills for broadband service.

“It’s time for Big Tech to pay its fair share,” Carr said.

CNET barely challenges Carr’s assertion that these companies get a “free ride,” even though you can’t go five feet without running into an announcement where a company like Google is spending big bucks on telecom infrastructure. While Carr is right that the existing FCC USF and subsidization model does need fixing as contributions drop, Carr’s not actually coming at this argument in good faith. If he were, he’d be able to mention in passing the billions we throw at telecom giants for fiber networks they routinely half deploy, or the countless examples of outright subsidy fraud that have plagued the telecom sector for years.

Instead the onus for funding America’s unfinished broadband deployments is for whatever reason thrown at the feet of Silicon Valley, something Carr rambles on at length about, as if telecom sector monopolization/corruption and FCC incompetence is somehow Silicon Valley’s fault:

“When it comes to deciding which companies should contribute to the fund and how much they should be required to pay, Carr suggests that legislators look at companies that benefit the most financially from the use of internet infrastructure.

…”For instance, Google’s ad revenues — I think those are fair game for looking at a charge to support the network,” he said. “The same with Facebook or Apple’s App Store, maybe even iPhone cloud services and certainly the streamers.”

But again, this presumes that these companies don’t already pay massive amounts of money for bandwidth and telecom infrastructure. Or that telecom giants have somehow received an unfair shake, despite gleaning untold billions in tax cuts, subsidies, merger approvals, and regulatory favors in exchange for network investment and job promises that routinely never show up. CNET does at least point out this is all not new, though it’s framed in the “he said, she said” view from nowhere journalistic approach that usually leaves readers wondering which side is telling the truth:

“This is an argument that large internet service providers have been pushing for years,” former FCC Chairman Tom Wheeler said in an interview. In 2006, AT&T’s former CEO Edward Whitacre was among the first to suggest publicly that companies such as Google shouldn’t be given a “free ride” on his network. The comments ignited more than a decade of debate over net neutrality regulations.

CNET then proceeds to quote the telecom lobby, trotting out Rick Boucher, one time fair use champion turned AT&T lobbying and policy prop:

“Groups representing the telecommunications industry largely support Carr’s proposal. The Internet Innovation Alliance, which represents AT&T along with telecom equipment makers like Alcatel Lucent, Ciena and Corning, says it makes sense. “Requiring Big Tech to help close the digital divide is an obvious and attractive solution to the Universal Service Fund (USF) crisis,” former Rep. Rick Boucher, an honorary chair of the organization, said in a statement. “It makes sense for the Amazons, Googles, Apples and Facebooks of the world — that depend upon and benefit from Americans being online — to back efforts to achieve universal broadband. It’s in their interest, as their user bases would be bolstered.”

But it doesn’t make sense in the broader context of the fact that US taxpayers have thrown countless billions already at telecom giants for fiber networks that mysteriously only wind up half deployed. That’s not Amazon, Netflix, or Google’s responsibility to fix, however much justified animosity you may have at these companies for dodgy behavior on numerous other fronts.

The story ends with Carr getting the last word about how he’s just looking out for the little guy. But there’s been no indication, at any point in Carr’s long history of questionable claims, that this is actually true. What’s more likely is that companies like AT&T, worried about the Biden broadband plan driving competition into their markets, want to capitalize on the animosity toward “big tech” by once again trotting out a lame argument that the real solution lies not in holding legislators, regulators, or telecom giants accountable for years of fraud and wasted money, but in taxing Silicon Valley. And Carr, never one to see a telecom argument he doesn’t breathlessly support, was more than happy to amplify it.

Filed Under: big tech, brendan carr, fcc, free ride