Jonathan Spalter

Funding the Future of Universal Connectivity

Policymakers around the globe are discussing how best to keep broadband networks strong, resilient, and connecting as many people as possible for the long haul. This investment has long been the purview of broadband providers as well as government funding. But more than 30 years since the first honk and screech of commercial dial-up, there is a conspicuously empty seat at the collective table of global high-speed connectivity.

Today, six companies account for half of all internet traffic worldwide. These six companies have a combined market cap of $9 trillion. It’s a far cry from their garage start-up days, and without question, they are tremendous American success stories.

But three decades later, the question is being asked: Does it still make sense that the government and broadband providers alone fund this critical infrastructure? Is there no shared obligation from the primary financial beneficiaries of these networks – the world’s most powerful internet companies?

Right now, the EU has a consultation underway to consider “the potential need for all players benefitting from the digital transformation to fairly contribute to the required investments.” Specifically, the EU is evaluating a model proposed by European telecom operators that would require large traffic generators to pay network support contributions directly to broadband providers rather than to a government fund that supports national connectivity objectives.

As the U.S. government correctly notes in its recent comments on the consultation, the proposed model varies significantly from the approach taken in this country to advance universal, high-speed connectivity. In the U.S., broadband providers commit the lion’s share of infrastructure investment – roughly $102.4 billion annually – to fund network expansion, maintenance, and upgrades. And these primary investments are supplemented in high-cost areas by public Universal Service Fund (USF) resources as well as Congressional appropriations that reflect the broad national mandate to connect all Americans, including high-cost rural areas, low-income consumers, as well as schools and hospitals. We concur with the U.S. government’s position that rather than the payments to broadband providers proposed in the EU, such “publicly accountable funding mechanisms can better ensure that resources are devoted to key policy objectives, such as improving access and strengthening network security, while avoiding discriminatory measures that distort competition.”

In fact, bipartisan leaders on Capitol Hill are weighing just such an approach – examining whether large tech companies who undoubtedly benefit from America’s broadband infrastructure should join the shared obligation of ensuring a sustainable future for our nation’s commitment to universal service. Indeed, the Senate Committee on Commerce, Science and Transportation held a hearing and launched a working group just last month on this timely topic.

These leaders are right to infuse a sense of urgency into this work. When the USF was first created in the mid-1990s, Amazon was a mere bookstore and the meager 20 million Americans who were connected to the Internet spent just 30 minutes a month online. While the world has changed dramatically since then, the mechanism for USF contributions has remained trapped in amber, collecting assessments from a dwindling base of wireline telephone customers—many of whom are older Americans on a fixed income.

We need a modern reset that more equitably shares these financial obligations among those who benefit the most from these connections. In its response to the EU, the U.S. government highlighted the key role the USF plays in achieving and sustaining a truly connected nation. To secure its future, the time has come to fill that empty chair at the table.