New Law Would Add New Tax To Your Netflix Bill So AT&T And Comcast Execs Can Get Richer

Broadband

from the you-ain't-gonna-ride-my-pipes-for-free dept

Telecom lobbyists have been working overtime for decades in the US and EU, trying to get policymakers to support the idea of “Big Tech” paying “Big Telecom” billions of additional dollars for no coherent reason. It’s what started the net neutrality wars. More recently, it has evolved into claims that we need to tax streaming companies to help fund broadband deployment.

This taxation effort always involves some variant of the (false) claim that popular tech services are getting a “free ride” on the Internet. So it’s “only fair” that they help pay telecom giants for broadband expansion that is, quite mysteriously, perpetually only half finished despite billions in taxpayer subsidies already.

Such efforts popped up again last week with the introduction of the Lowering Broadband Costs for Consumers Act of 2025 (S. 1651), sponsored by Senators Markwayne Mullin, Mark Kelly, Mike Crapo, and Kevin Cramer.

The bill would update Section 254 of the Communications Act to make tech companies pay into the Universal Service Fund (USF), which helps bring broadband access to underserved neighborhoods, libraries, and schools. In reality, that means a new surcharge on all of your streaming video and online services, making those services (already consistently facing rate hikes) even more expensive.

It would, contrary to the bill’s name, do nothing to actually lower broadband costs for consumers. That would require actually standing up to powerful telecom monopolies. It would make streaming services more expensive. In exchange for fiber deployments that, if U.S. history is any guide, probably won’t materialize. Especially under our current corrupt authoritarian regime.

On its surface, requiring that tech companies contribute to the USF isn’t the dumbest idea in the world. If it was well managed and launched in good faith.

The USF is funded primarily by surcharges on dying copper voice lines. As those connections die off, the contribution base has shrunk. So foundationally, the idea that you’d shore up a low-income, rural broadband subsidy program with the help of tech companies isn’t the most insane concept ever. Again, if it was well managed and launched in good faith by competent people.

Here’s the problem: U.S. telecom subsidy programs have a long, long history of giants like AT&T and Verizon taking billions of dollars for networks they then fail to deploy. They’re routinely defrauding U.S. subsidy programs because we routinely fail to hold these companies accountable. We fail to hold them accountable because they’re politically powerful and tied to our domestic surveillance systems.

Enter Trumpism, which already has a long history of botching subsidy programs (like the FCC’s RDOF program) resulting in a ton of additional fraud and waste. At the same time, Trumpism’s assault on the regulatory state is making it almost impossible for regulators to hold companies accountable for any fraud, whether it’s ripping off government programs or harming consumers with price gouging.

So in essence you’d be throwing billions of additional dollars at large telecom companies with rich histories of fraud, overseen by corrupt incompetents with their own vast experience in defrauding taxpayers. People actively ending the government’s ability to do anything should AT&T, say, take billions in exchange for fiber networks it then fails completely to fully deploy. Or, say, rip off programs designed to help school kids.

There’s the added complication that an even more radical wing of Trumpism is currently trying to outlaw the USF entirely. The deeply unserious Fifth Circuit recently ruled the USF unconstitutional based entirely on the baseless claims of a fake, weird, right-wing “consumer group” simply upset at the idea government program might help people.

The Supreme Court is poised to make a ruling in that case any day now. I suspect they’ll keep the USF intact, which will (quite intentionally) create more pressure to “fix the USF” and implement something like this new tax on big tech. But contrary to the narratives being pushed by telecom industry backed think tankers or guys like Trump FCC boss Brendan Carr, this isn’t a good faith effort (though there are some smaller and more rural telecoms that support it because their survival depends on the USF).

The real goal is to create a largely unaccountable slush fund for companies like AT&T, Comcast, and Verizon with rich histories of abuse. Again, run by the worst sort of corrupt incompetents imaginable. The resulting funds are far more likely to go toward outsized executive compensation and stock buybacks than meaningful rural fiber deployment.

The press is, and will, flub this story badly, falsely framing it as a good faith effort to “bridge the digital divide” and lower consumer costs. In fact, that’s already happening:

Again, many of the groups and providers that depend on the USF to survive will support this because a corrupt hot mess of a reform is better for them than the USF dying. That doesn’t inherently make this particular reform “good” or well intentioned by its architects (which again, is the biggest telecoms).

As this story emerges in the weeks and months to come, one thing to look out for when trying to recognize bad actors is to try and spot the folks claiming that tech companies get any sort of a “free ride” on the internet. We’ve been debunking this flimsy claim for literally decades now.

Tech companies already pay billions of dollars annually for bandwidth, cloud, CDN, transit, undersea cable, and other infrastructure. Google technically is already a broadband provider when you factor in Google Fi (wireless) and Google Fiber. When it comes to U.S. telecom, nobody gets a free ride thanks to corruption, consolidated monopoly power, and market failure policymakers refuse to address.

Again, leveraging billions in tech company money to shore up broadband access isn’t the worst idea in the world. It’s just that this particular application isn’t being done in good faith, and it’s going to be implemented by one of the most corrupt federal governments the U.S. has ever seen. The outcome is obvious. I can see it coming before the news cycle even fully takes off.

The billions of dollars in new fees and misdirected consumer anger that will come as a result of this effort is probably something tech companies should have thought about before they tripped over their own asses to support Trumpism. It wasn’t hard to see coming. Trump earlobe-nibbler Brendan Carr has been telegraphing this whole plan for a while, including in his chapter in Project 2025.

Filed Under: broadband, fiber, fraud, free ride, low income, rdof, subsidy, telecom, usf
Companies: at&t, comcast, netflix