Big Telecom Wants To Tax Netflix To Pay For Broadband Upgrades ISPs Refuse To Deploy Themselves

from the ride-my-pipes-for-free dept

Last year, FCC boss Ajit Pai repeatedly hyped the creation of a new "Broadband Deployment Advisory Council" (BDAC) purportedly tasked with coming up with creative solutions to the nation's broadband problem(s). Unfortunately, reports just as quickly began to circulate that this panel was little more than a who's who of entrenched telecom operators with a vested interest in protecting the status quo. The panel has yet to really offer up a meaningful proposal, but it has been rocked by several resignations due to cronyism, and at least one member who was arrested for fraud.

As the FCC looks to expand the council's charter for another few years, the panel itself has been pushing a plan that pretty clearly highlights the cronyism intentionally inherent in its design. More specifically, the panel has been pushing the FCC to adopt a new system that urges states to tax Netflix and Google to fund rural broadband deployment:

"A Federal Communications Commission advisory committee has proposed a new tax on Netflix, Google, Facebook, and many other businesses that require Internet access to operate. If adopted by states, the recommended tax would apply to subscription-based retail services that require Internet access, such as Netflix, and to advertising-supported services that use the Internet, such as Google and Facebook. The tax would also apply to any small- or medium-sized business that charges subscription fees for online services or uses online advertising."

To be clear, this is extremely unlikely to come to pass, even in the most myopic of states. Still, if you're playing along at home, this is just an extension of a multi-decade effort by ISPs to force somebody else to pay for network upgrades they refuse to fund, despite having received countless billions to accomplish this goal. In fact this push to have content companies pay for ISP network upgrades is really what began the net neutrality fight back in 2003 or so, when former AT&T CEO Ed Whitacre proclaimed that Google should pay him an additional troll toll just to access his network. You know, just because.

This mantra was long rooted in telecom envy of Silicon Valley online ad revenues, and a belief by telecom executives that they're somehow "owed" a cut of those revenues. Over time it evolved into endless claims by telecom sector allies, think tankers, and other cronies that companies like Google and Netflix were somehow getting a "free ride" on incumbent ISP networks, despite having invested billions into their own global transit and network operations. Over time it became a global telecom executive mantra of sorts, even if it never made coherent sense.

People forget, but it's this telecom industry attempt to "double dip" that truly launched the modern net neutrality debate just about fifteen years ago. That point has gotten lost as ISP efforts to extract unearned rents have gotten more elaborate over the years, but at its heart the fight has always been about monopoly ISPs trying to offload network construction and operation costs off to somebody else, while already earning fat revenues thanks to limited competition.

Of course AT&T, who generally drives most dubious DC telecom policy moves and would reap the lion's share of said tax, had originally tried to insist that the panel's recommendations (and the proposed tax) should apply to pretty much all traffic that touches the internet:

"An AT&T executive who is on the FCC advisory committee argued that the recommended tax should apply even more broadly, to any business that benefits financially from broadband access in any way. The committee ultimately adopted a slightly more narrow recommendation that would apply the tax to subscription services and advertising-supported services only."

The real problem here (or one of many) is that companies like AT&T and Verizon were already given billions upon billions in taxpayer dollars to fund these upgrades years ago. American history is filled with examples of these companies getting massive tax cuts or subsidies to deploy fiber, then using their lobbying prowess to wiggle out from under the obligations after the fact. Had the government ever conducted any real audit, you'd likely find American taxpayers have paid to upgrade the country with fiber several times over, yet still somehow often only have access to pricey, sluggish DSL.

That, nearly two decades later, AT&T's still running a lame variation of the same ploy is equal parts frightening and sad, but seems to be par for the course for a country that refuses to learn from history, and an FCC that has made it abundantly clear it's a glorified rubber stamp for lumbering natural monopolies and their very worst instincts.

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Filed Under: broadband, capital expenditure, capital investment, fcc, fees, internet, taxes, upgrades

Companies: at&t, google, netflix, verizon