While much attention has been paid to the large infrastructure bill recently passed in the Senate, and its contribution towards expanding access to rural broadband in particular, the public remains largely unaware of another massive federal expenditure on communications infrastructure known as the “Federal Communications Universal Service Fund.” In a piece in the Tech Policy Press, Hurwitz argues that this “outmoded mechanism for communications infrastructure” is in need of a rethink.
In the article Hurwitz explains that the Universal Service Fund’s structure is a relic of a time when telephone service was central to communications infrastructure. The fund receives its revenue from a tax on telephone companies that exceeds 30%. While the proceeds of the fund have been used to expand access to broadband internet over the course of the last decade, internet service providers that do not provide telephone service are exempt from the tax, as the language of the statute provides that the tax should only apply to “telecommunications carriers.”
Hurwitz cites comments by FCC Commissioner Carr, who notes that “just five companies - Netflix, YouTube, Amazon Prime, Disney+ and Microsoft - account for a whopping 75 percent of all traffic on rural broadband networks. The same study shows that 77-94 percent of total network costs are related to adding capacity or otherwise supporting the delivery of those streaming services. Ordinary Americans, not Big Tech, have been footing the bill for those costs.”
Hurwitz argues that “before we decide how much to spend on (the commitments contained in the recent infrastructure bill) we should discuss, as Commissioner Carr rightly suggests, who should pay for them. While we are at it, we should discuss what should be encompassed by these commitments, as well.”