The FAIR Contributions Act – Legislation Would Require FCC To Examine Collecting USF Contributions From YouTube, Netflix, Google, Amazon, & Other Internet Edge Service Providers
July 21, 2021 – Senators Roger Wicker (R-MS), Shelley Moore Capito (R-WV), and Todd Young (R-IN) have introduced the Funding Affordable Internet with Reliable (FAIR) Contributions Act.[1]
If passed, the legislation would require the Federal Communications Commission (FCC or Commission) to study the feasibility of collecting Universal Service Fund (USF) contributions from Internet edge providers. The FAIR Contributions Act defines edge provider as “a provider of online content or services, such as a search engine, a social media platform, a streaming service, an app store, a cloud computing service, or an e-commerce platform.”[2] This definition would include companies such as Google, Facebook, Netflix, Apple, and Amazon.
As part of the required feasibility study, the FCC would have to seek public comment on 12 USF-related topics which are listed in the bill. The FCC would report its findings, within 180 days of the bill’s enactment, to the Senate Commerce Committee and the House Energy and Commerce Committee. Presumably, after the FCC’s report is submitted, members of the Congressional committees would craft legislation based on the FCC’s conclusions and recommendations.
What’s the end goal? To have Big Tech help support America’s broadband networks. If you reap billions in annual revenue from high-speed broadband networks built, maintained, and paid for by others, surely you can help sustain and even expand the reach of those networks. Here’s how one of the bill’s co-sponsors, Senator Shelley Moore Capito, describes the purpose of the FAIR Contributions Act:
“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. Our legislation is a solid first step in working toward this goal and making this a reality.”
Edge Provider USF Contributions Feasibility Study – Public Comment On 12 Topics – FCC Report To Congress
The FAIR Contributions Act would require the FCC to study and submit a report on the feasibility of collecting USF contributions from edge providers. As part of the process, the bill would require the FCC to issue a Notice of Inquiry and seek public comment on the following 12 issues related to USF contributions:
The class of firms and services on which contributions could be assessed, including an inquiry into the specific sources of revenue potentially subject to contributions, such as digital advertising revenue and user fees;
The equity issues of the current contributions system, including the cost burden on consumers who traditionally purchase legacy telecommunications services;
Equity issues of alternative contributions systems that would create new funding sources for the Universal Service Fund such as Federal appropriations or assessments on edge providers;
Whether a particular contributions system results in progressive or regressive fees;
The size of firms subject to contributions requirements;
The broadband requirements, such as bandwidth and latency, of a particular online service;
Other Federal, State, and local taxes and fees that edge providers may already pay;
Practical issues concerning the calculation of contributions, including which revenues should be subject to contributions, whether a flat or progressive rate is most appropriate, and the logistics of collection;
The effect such a change would have on telecommunications bills of consumers, including low-income, elderly, and Tribal consumers;
The effect such a change would have on the sustainability of the Universal Service Fund, and how to ensure that Universal Service Fund disbursements are consistent and predictable over time;
The statutory authority the Commission would require to enact such a change and how such a change would interact with existing Federal and State law; and
The continued necessity of the Universal Service Fund once advanced telecommunications capability is available to all people in the United States.
FCC Commissioner Brendan Carr’s Statement Supporting The Bill
FCC Commissioner Brendan Carr, who has been leading the charge to require Big Tech companies to pay into the universal service fund, released the following statement in support of the FAIR Contributions Act:
“I applaud Senators Wicker, Capito, and Young for introducing the FAIR Contributions Act. For too long, Big Tech has been enjoying a free ride on our Internet infrastructure. The current funding mechanism for the Universal Service Fund—a regressive tax on the monthly bills for traditional telephone service, both wireless and wireline—is unfair and unsustainable. Indeed, it’s like taxing horseshoes to pay for highways.
“Requiring Big Tech to contribute is more than fair. It is consistent with the network compact that has prevailed since the earliest days of America’s communications networks. Historically, the businesses that derived the greatest benefit from a communications network paid the lion’s share of the costs. I am pleased that the FAIR Contributions Act would call on the FCC to open a proceeding to look at ending the charge on consumers’ monthly telephone bills and shifting a fair amount over to Big Tech.”
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[1] Funding Affordable Internet with Reliable (FAIR) Contributions Act, S. __, 117th Cong., 1st sess. (July 21, 2021), https://www.commerce.senate.gov/services/files/408AD988-08C5-4DE0-9C00-32EBD0DBB041.
[2] FAIR Contributions Act, Sec. 2(a)(4).
