Your internet bill is subsidizing Big Tech’s bottom line

Rep. Brett Guthrie (R-KY) recently argued that winning the technology race should not come at the expense of American households. Legislation like the Ratepayer Protection Act is needed to ensure that communities are not left paying for the additional electricity infrastructure required to power large technology facilities. The principle is straightforward: if you create additional costs, you should cover them.That is precisely what the proposed bill requires of large data centers, ensuring that extraordinary demands for electricity do not translate into higher costs for ordinary ratepayers. More than 300 companies have signed up to honor the White House Ratepayer Protection Pledge, which originally advanced the policy. The same “pay your way” principle should apply to America’s broadband networks. In fixing the Universal Service Fund, instead of asking consumers to pay more, Congress should ask the biggest beneficiaries of America’s broadband networks to pay their way. For decades, American consumers have financed universal connectivity through the USF. Today, the fund supports connectivity for roughly 130 million Americans at an annual cost of about $8.5 billion. That is a remarkable return on investment for a program that helped make broadband a foundation of American economic life.But the economics of networks have changed dramatically since the USF contribution mechanism was designed. The funding model remains rooted largely in the telephone era, while today’s networks carry enormous volumes of data generated by video, cloud computing, social media, artificial intelligence, advertising, and other data-intensive applications.That creates a fundamental mismatch. Consumers and network providers bear the cost of maintaining and expanding networks, while some of the largest digital platforms derive enormous economic value from them without making a comparable direct contribution to USF.Google, Meta, Amazon, Microsoft, Netflix, Apple, and TikTok have built enormously valuable businesses on top of broadband networks. Strand Consult estimates that the economic value these platforms derive from USF-supported connectivity reaches roughly $200 billion annually. Yet they contribute essentially nothing directly to the program.Meanwhile, broadband network providers must continually invest in fiber, electronics, backhaul, routers, spectrum, and other infrastructure. Connecting a household is not the end of the investment. Networks must expand capacity as traffic grows, applications become more demanding, and consumers expect faster and more resilient service.Consider online advertising, which now accounts for almost a quarter of all downstream internet traffic. Consumers pay for the broadband connection, while sophisticated advertising systems use data centers, algorithms, and network capacity to deliver targeted commercial content. The consumer does not order the advertising. The broadband provider does not create it. Yet the network must carry it.Expanding the USF contribution base to broadband would not solve this underlying problem. It would simply place more of the burden on consumers and businesses that already pay for connectivity. A better approach would require the platforms generating enormous traffic and capturing enormous value from the network economy to participate in its cost recovery.This principle is hardly new. In 2021, then-Federal Communications Commission Commissioner Brendan Carr called for “Ending Big Tech’s Free Ride on the Internet” and argued that the largest users should contribute to sustaining the fund.The bipartisan, bicameral Lowering Broadband Costs for Consumers Act provides a practical template for the USF Working Group. Rather than simply shifting more costs onto broadband customers, the legislation would broaden the contribution base and establish a framework for contributions from both broadband providers and large edge providers, with the goal of reducing the burden on consumers.The USF Working Group has spent three years examining how to put universal service on a sustainable footing. Congress does not need to choose between taxing consumers and doing nothing. It can modernize a funding mechanism built for a telephone-era market and align responsibility with the economics of today’s digital economy.The lesson from the ratepayer debate is straightforward: don’t make ordinary households pay for extraordinary infrastructure demands. Make those creating and benefiting from those demands pay their way.OPINION: META LOST $16.7 BILLION. YOU JUST LOST YOUR DIGITAL PRIVACYIf policymakers want affordable broadband, they should avoid policies that make connectivity more expensive for the people least able to afford it. If they want continued private investment, they should prevent the cost imposed by free riders. And if they want a sustainable digital economy, the companies that capture enormous value from network connectivity should participate in sustaining the infrastructure on which that value depends.Don’t tax broadband. Make Big Tech pay its way on the network.Roslyn Layton is executive vice president of Strand Consult and a digital policy fellow at the Quello Center at Michigan State University.