July 2, 2021 – In May, Federal Communications Commission (FCC) Commissioner Brendan Carr wrote an op-ed in Newsweek calling for “Big Tech” to start contributing to the Universal Service Fund (USF) to help support America’s broadband networks.[1]

He explained how the largest online streaming services “account for a whopping 75 percent of all traffic on rural broadband networks,” and noted the billions of dollars (nearly $1 trillion) in annual revenue Big Tech companies draw from their use of high-speed broadband networks built and maintained by others. Commissioner Carr concluded his article by recommending that Congress and the FCC begin work on finding ways to require Big Tech to contribute money to support universal broadband networks.

How would that work? Well, someone in Congress could introduce legislation to revise Section 254 of the Communications Act to require USF contributions from online streaming services and other Big Tech companies that clog broadband networks. At the same time, the FCC could issue a Notice of Inquiry requesting comment and data on the issue, as well as proposals for moving forward.

For those just tuning in to this issue, there has already been one piece of proposed legislation aimed at requiring online streaming services to support rural broadband networks – the Rural Broadband Network Advancement Act of 2019 (H.R. 2929).[2]

After being introduced in May 2019, it ultimately didn’t make it out of the House Subcommittee on Communications and Technology, but it provides a good starting line for discussing how best to assess a Big Tech user fee on streaming services and other edge providers. Let’s take a look at it.

The legislation would have required edge providers – those that cause data to be transported across rural broadband networks in high cost areas – to pay an equitable and nondiscriminatory network user fee. How would the fee be calculated? It would be based on a rural broadband provider’s costs associated with the transmission of edge provider data, which would include costs associated with initial network deployment, ongoing operation and maintenance; and delivery of services to users (including transit and transport costs from interconnection points).

Edge provider fees would be collected by the FCC (or USAC) and then distributed to rural broadband providers on a quarterly basis to be used only for costs related to the deployment and operation of their broadband networks, or costs related to the delivery of broadband Internet services to users (for instance, network upgrades to handle Netflix movies streamed in 4K). The money collected via the network user fee and distributed to rural broadband providers would be separate and apart from USF support.

The Rural Broadband Network Advancement Act of 2019 (H.R. 2929)

Here is a summary of the most important sections of the legislation:

Purpose: To require the Federal Communications Commission to establish a program to promote the availability and sustainability of robust rural broadband networks in high cost rural areas, and for other purposes.

Congressional Findings – Entities That Use The Network Should Help Support The Network: Congress finds the following: (1) Internet data demands are increasing, and video streaming services represent a significant portion of the growth of Internet traffic today; (2) Broadband network operators must invest in additional capacity to accommodate that data and other traffic generated by third-party online services leveraging underlying broadband networks; (3) These edge providers depend upon the availability of such robust underlying network capacity to deliver their services to users; (4) The costs associated with broadband infrastructure upgrades are significant and growing to keep pace with the online services that depend on these underlying networks; (5) The challenges of investing in and maintaining such robust network capacity are even greater in rural areas due to the significant distances over which networks must be built and operated and the limited densities of the rural communities to be served; and (6) All persons and entities that utilize and leverage networks should share equitably in supporting the availability and sustainability of rural broadband networks. Section 2.

Network User Fee: The FCC shall complete a rulemaking that establishes a program under which each edge provider (with exceptions) that has data transported across the network of a rural broadband provider in a high cost rural area shall pay a network user fee on an equitable and nondiscriminatory basis to advance and sustain broadband-capable networks and broadband Internet service in high cost rural areas. Section 3(a)(1).

Edge Provider Definition: The term ‘‘edge provider’’ means a provider that: (A) provides a service over the Internet – (i) for which the provider requires the user to subscribe or establish an account in order to use the service; (ii) that the user purchases from the provider of the service without a subscription or account; (iii) by which a program searches for and identifies items in a database that correspond to keywords or characters specified by the user, used especially for finding particular sites on the World Wide Web; or (iv) by which the user divulges sensitive user information; and (B) includes a service described in subparagraph (A) that is provided through a software program, including a mobile application. Section 3(d)(2).

Edge Providers Exempt From Network User Fee: The following edge providers are exempt from the requirement to pay a network user fee: (A) De Minimis Amounts – An edge provider or class of edge providers whose assessment of network user fees is determined to be de minimis by the FCC; (B) General Exemptions – Any State, 1local, or Tribal government, elementary school or secondary school (as such terms are defined in section 8101 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7801)), library, hospital, or individual; and (C) Small Business – Any small business concern, as described in section 3 of the Small Business Act (15 U.S.C. 632). Section 3(a)(3).

Calculation of Network User Fee – Costs of Edge Provider Data: The FCC rulemaking shall include a calculation of costs associated with transmission by a rural broadband provider of edge provider data that are not already recovered through user rates that are reasonably comparable to those in urban areas, Federal or State universal service support, or other Federal or State programs aimed at promoting rural broadband deployment or sustaining rural broadband networks. Section 3(b)(1)(A).

Costs of Edge Provider Data: The costs associated with transmission by a rural broadband provider of edge provider data include the following: (i) Costs associated with the initial deployment of a rural broadband network. (ii) Costs associated with ongoing operation and maintenance of such network; and (iii) Costs associated with the ongoing delivery of services to users via that network (including costs of transit and transport between rural service areas and urban or suburban interconnection points). Section 3(b)(1)(B).

Collection of Reasonably Reflective Fees: The fees will be collected from edge providers on a quarterly basis. The FCC shall ensure that the assessment of network user fees on each edge provider is reasonably reflective of the relative proportion of that edge provider’s data transmitted on eligible rural broadband providers’ networks serving high cost rural areas. Section 3(b)(2).

Equitable and Nondiscriminatory Distribution of Fees: Network user fees shall be distributed on an equitable and nondiscriminatory basis to rural broadband providers on a quarterly basis. The FCC shall ensure that the distribution of network user fees to each rural broadband provider is reasonably reflective of the relative proportion of edge provider data as measured and transmitted on that rural broadband provider’s network and by considering other factors such as regional cost disparities, natural disasters, and Federal emergencies. Section 3(b)(3).

Use of Network User Fee Funds: A rural broadband provider that receives compensation through network user fees may only use such funds in connection with any of the following: (A) The deployment of a rural broadband network; (B) Ongoing operation and maintenance of a rural broadband network; and (C) The delivery of broadband Internet services to users in a high cost rural area. Section 3(c)(2).

Fees Are Separate From USF: The network user fees collected by this Act may not be used to support, contribute, or fund universal service under section 254 of the Communications Act of 1934 (47 U.S.C. 254). Section 3(e).

No Offsets: An edge provider may not charge a fee or require any other payment from a rural broadband provider as an explicit or implicit offset to network user fees. Section 3(f).

Rural Broadband Provider Definition: The term “rural broadband provider” means an entity providing broadband in a high cost rural area pursuant to any terrestrial technology, including fixed or mobile wireless or wireline networks, if such entity – (A) provides broadband service in a high cost rural area to fewer than 100,000 locations or subscribers served within a State; and (B) meets the service obligations on speed, latency, and usage allowances as determined by the FCC. Section 3(d)(5).

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[1] Brendan Carr, FCC Commissioner, Ending Big Tech's Free Ride, Opinion, Newsweek.com (May 24, 2021), https://www.newsweek.com/ending-big-techs-free-ride-opinion-1593696.

[2] H.R. 2929, Rural Broadband Network Advancement Act of 2019, 116th Cong., 1st Sess. (intr. May 22, 2019), https://www.govinfo.gov/content/pkg/BILLS-116hr2929ih/pdf/BILLS-116hr2929ih.pdf. The bill was sponsored by Markwayne Mullin, a Republican representing Oklahoma’s 2nd Congressional District. It garnered a total of 12 co-sponsors, three of which were Democrats. The bill was referred to the House Energy and Commerce Committee’s Subcommittee on Communications and Technology, where it died.