FCC Looking At Internet Fees

A group fighting to expand rural broadband access.
A group fighting to expand rural broadband access.

Aug. 27, 2012 • Back in April the agency responsible for regulating broadband in the United States, the Federal Communications Commission (FCC), went largely unnoticed when it asked for comment on a proposal for funding broadband access in areas of the country that carriers find unprofitable to service. Currently there is a fee consumers pay on their landline and mobile phone bills that is dedicated to the purpose of generating $4.5 billion for the Connect America Fund. But that fee is tied to interstate phone calls, and the number of such calls is falling precipitously year after year. Rather than increase this Universe Service Fee to compensate, the FCC is looking at more direct methods. On the table is a fee assessed on current broadband subscribers. But other options such as attaching a fee to text messages, virtual private networks, or one-way VoIP service, were also proposed. The commission has not announced any preference, only that it was looking for comment on the overall concept. Large carriers such as AT&T and Sprint have reportedly offered support for such a change. In its filing with the FCC, Google Inc. concluded: “The FCC should embrace a new, forward-looking contribution mechanism based on physical connections, including broadband Internet access. This approach best reflects technological and marketplace trends and promotes continued broadband usage and innovation.” Consumer groups are only now trying to raise public awareness of what they are characterizing as a looming Broadband Tax.

Impact: If children paid their own cell phone bills then the prospect of assessing fees on text messages might have merit as a deterrent to rampant texting by the young. The FCC’s Connect America Fund intends to connect seven million rural Americans to broadband in six years, and all 19 million unconnected rural citizens by 2020 – a necessary and worthwhile goal for the nation. Parsing which Internet activities are most popular in an attempt to develop a fitting fee schedule is a cumbersome prospect opening up too many opportunities for special interest lobbying that could easily derail the goal of pushing broadband out to where carriers refuse to take it. We hope the FCC stays clear of this option. Assessing fees on existing consumer and business broadband bills, however, is a direct means to a concomitant end. As broadband consumers are already well acquainted with USF fees, there won’t be a need for much education as to the process. The question is whether regulators will actually be able to resist temptation and formally cancel USF fees on phone accounts.  Similarly, experience leads us to half expect that phone carriers would continue to collect the USF fee long after being told to stop. Even if those worries do not come to pass, how well the public swallows a new broadband fee depends mightily on what percentage is finally assessed per broadband account, and the FCC isn’t saying yet.  Stay tuned.

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