On June 15, 2021, The Federalist Society's Telecommunications & Electronic Media Practice Group sponsored a teleforum to discuss "Closing the Digital Divide: The Future of Broadband Access."
The COVID-19 pandemic has brought a renewed attention to closing the country’s digital divide. In response, Congress and the White House have made broadband infrastructure a top priority, with several different infrastructure proposals on the table. This massive investment to connect all Americans will require significant funding. This event, featuring FCC Commissioner Brendan Carr, will explore the different options available, potential roadblocks, and the continued importance of unleashing private sector investment in today’s broadband networks.
- Hon. Brendan Carr, Commissioner, Federal Communications Commission
- Moderator: Randolph J. May, President, Free State Foundation
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As always, the Federalist Society takes no position on particular legal or public policy issues; all expressions of opinion are those of the speaker.
Dean Reuter: Welcome to Teleforum, a podcast of The Federalist Society's practice groups. I’m Dean Reuter, Vice President, General Counsel, and Director of Practice Groups at The Federalist Society. For exclusive access to live recordings of practice group Teleforum calls, become a Federalist Society member today at fedsoc.org.
Nick Marr: Well, welcome, everyone to this Federalist Society virtual event as this afternoon, June 15, 2021, we're discussing "Closing the Digital Divide: The Future of Broadband Access." I'm Nick Marr, Assistant Director of Practice Groups here at The Federalist Society. As always, please note that expressions of opinion on our call today are those of our experts.
We're very glad to be joined this afternoon by two experts. We've got a moderator to lead the discussion and our future discussion. I'll leave the introducing to our moderator and just introduce him. We're very pleased to be joined this afternoon by Mr. Randolph May. He's the President of the Free State Foundation and a longstanding member of our Telecommunications and Electronic Media Practice Group, the sponsor of today's event.
And before I give Randy the floor, just a quick note for our audience, we will be looking to you for questions throughout the call and, especially, towards the end. So please submit those via chat or the Q and A chat, so Randy can filter those through and pick them out as he sees fit. So, with that, Randy thanks very much for being with us. I'll give the floor over to you.
Randolph J. May: Well, thank you, Nick. And thanks to The Federalist Society for hosting this event and, of course, thanks to Commissioner Carr for being the featured speaker today. As Nick said, the title of this program is "Closing the Digital Divide: The Future of Broadband Access." And to set up the discussion, I'm just going to read from the brief program description.
"The COVID 19 Pandemic has brought a renewed attention to the closing of the digital divide. In response, Congress and the White House have made broadband infrastructure a top priority with several different infrastructure proposals on the table. This massive investment to connect all Americans will require significant funding. This event will explore the different options available, potential roadblocks, and the continued importance of unleashing private sector investment in today's broadband networks."
In just a moment, I'm going to give Commissioner Carr a formal, or at least a semi-formal, introduction. But in case you somehow missed it, the keywords to have in mind today are "broadband," "infrastructure," and "digital divide." Obviously, all very topical now. And while the contours of what falls within the meaning of the term "infrastructure" has become to dispute, everyone seems to agree that broadband facilities are real, honest-to-God infrastructure.
Now, to introduce Commissioner Carr, I'm going to give you the short version of his bio. You can find the complete version, of course, on the FCC's website. Brendan Carr is the senior Republican on the FCC, and he previously served as the Agency's General Counsel. A lot of you may not know this, but as an old-timer, I'll just note several persons who have served as both General Counsel and Commissioner have subsequently been appointed Chairman of the Agency. That's something to look out for in the future, perhaps.
Now, Commissioner Carr brings over a dozen years of private and public sector experience in communications and tech policy to his position. Before joining the Agency as a staffer, back in 2012, he worked as an attorney at Wiley Rein in the forums of appellate, litigation, and telecom practices. After attending Georgetown University, Commissioner Carr earned his J.D. magna cum laude from the Catholic University of America's Columbus School of Law where he served as an editor of the Catholic University Law School.
So relevant to today's program, Axios justifiably in my view, has described Commissioner Carr as "The FCC's 5G crusader." He's been a leader of the FCC's work to modernize its infrastructure rules and accelerate the build-out past the broadband networks. He likes to climb very tall cell phone towers around the country, and shout "infrastructure" from the top of the tower. He has photos from his Twitter feed of him doing exactly this, so he rightly can be called the FCC's infrastructure Commissioner. That's not an official position, but that's my view really.
So, with that, I'm just going to remind you to put questions in the chat, and we'll get to some of those later. But now, again, I want to welcome and thank Commissioner Carr for joining us. And the floor is all yours, Commissioner.
Hon. Brendan Carr: Well, thank you so much, Randy, for that really kind introduction. And thank you for all the work that you do in the telecom space. You know, it's a complicated area. We need big thinkers like yourself to really dig in and help policymakers figure out the right path forward. So thanks for your contributions. And thanks as well, obviously, to The Federalist Society for hosting this forum. To Nick, and Dean, and the whole crew. I really appreciate the chance to get to speak with you all. And, as Randy and Nick said, hopefully, we make this interactive and I'm happy to take some questions.
But, you know, Randy, I think you really started this off the right way which is talking about what's happened over the past year or so. Obviously, with COVID-19 as it hit this country, as stay-at-home recommendations spread throughout our communities, Americans virtually overnight turned to the Internet to recreate their daily routines. Whether it's educating kids, working remotely, accessing telehealth, or just plain getting some distraction or entertainment by streaming content.
From an Internet traffic perspective, the past year was really a black swan event. We saw an average something like 20 to 30 percent increase in Internet traffic, again, virtually overnight. And that may not sound like a lot in the abstract but if you think about it from a network perspective when you're planning for, maybe, a 5 percent increase in traffic, a 10 percent increase in traffic per year, you know, a 20 to 30 percent increase overnight that's like taking 2 to 3 years' worth of expected traffic growth and loading it onto the network overnight.
And America's infrastructure withstood that surge in demand. And that wasn't a universal principle across the globe. Our counterparts in much of Europe, in China, they saw significant Internet slowdowns. There were real risks that their networks would collapse. They had regulators taking action to decrease Internet usage particularly among big streaming services offered by big tech. But our networks performed.
And part of the reason why they performed is over the last three to four years, we had an unprecedented growth in Internet infrastructure builds. On the wireless side alone, we had in 2016 something like 708 new cell sites go up in this country. In 2019, after the FCC updated our rules, that number jumped to over 46,000 new cell sites. And we saw the same on the wireline side. You had unprecedented levels of new fiber go in. In 2019, it was something like a 70 percent increase over 2016 levels.
And all of this really sharpened the focus for policymakers in Washington. And, I think it's fair to say, there's never been as much interest and drive and determination in fully getting the job done. Truly and completely bridging the digital divide. One of the things that policymakers have seized on, Republicans and Democrats alike, is a significant additional influx of funding to get the job done. And the numbers range from $50 to $60 billion that some have floated. $100 billion was the White House's original proposal. So we're very much talking about real dollars.
So one of the questions this comes down to is: How do we pay for this influx in new spending that is going to be needed to get the job done. And it's not just an infrastructure build. That's a big piece of it. But, also, making sure that low-income Americans can get online we've launched some new programs designed to help support their purchase of services. So we need to do both of those aspects.
And, if you look at the funding mechanisms, up to now there's been two leading proposals. The first approach is the way that we've been doing federally supported Internet builds at the FCC for the last few decades. It's this program called "The Universal Service Fund." Most people may not know about "The Universal Service Fund," but almost all consumers pay into
"The Universal Service Fund." There is a fee that you can refer to as a tax that is placed on the monthly bill whether it's wireless or wireline, and it's a tax that applies to your traditional phone service. And that tax has been increasing steadily over the years. And the last couple of years, it has been spiraling in what some have referred to as a death spiral. It's about 30 percent right now.
So there's a 30 percent tax that is added on top of a portion of your traditional telephone bill. And we at the FCC collect that money—that's called "The Universal Service Fund"—and we use that pot of money to support Internet builds in rural areas into subsidized -- the purchase of [inaudible:10:31] low-income Americans.
But, again, this is not sustainable. Both because that tax has been increasing. Again, it's over 30 percent for the first time. And the reason for that is we are taxing the services delivered, essentially, over the traditional telephone network to pay for the build-up of a separate -- largely separate network: the Internet. And this doesn't make sense. This is effectively like taxing horseshoes to pay for highways.
The other approach -- and, frankly, if we were to try to support the additional $60 or $100 billion in broadband spending that Congress are actually looking at through this current mechanism, it would push that system well past collapse. So we need something new.
Another leading idea -- a second leading idea that someone put out there is direct appropriation from Congress. And I think that has some advantages over the status quo mechanism. But it also has its own downside. There's an unpredictability that comes with Congressional funding efforts. There is a growing concern right now about National debt. Ultimately, putting on the government's credit card, you know, that money doesn't come out of thin air. It ultimately will get passed through to Americans in one form or another. We're going to be on the hook for that.
So what I've thrown out there is a third idea which is we should look to the revenues that big tech, broadly defined, generates from delivering their services over the network and they should start paying a fair share for this universal service effort. Or towards these broader initiatives that Congress is looking at, these 6 year, $100 billion new spending. They should be paying a fair share of that, as well.
Today, that current system—that 30 percent tax—is borne basically 100 percent by end-user consumers. And this is a marked departure from, sort of, the historic network compact that we lived under -- under which the communications networks in this country have traditionally been built. You know, back in the day, the business that benefitted the most from the traditional telephone network were enterprise businesses. And they paid a disproportionate, or the lion's share, of the cost through 1-800 services, through long-distance charges. And the end-user consumer bore relatively less of the expense of maintaining that, then, traditional telephone network.
Well, flash forward to today, and the businesses that are benefitting from these networks are Microsoft, Google, Amazon – it's big tech. And, yet, they are paying essentially zero into "The Universal Service Fund." So there's been a slow but steady departure from the traditional norm that the business that benefit pay. And there's been an increasing burden -- an unsustainable burden placed on the end-user consumer.
And, so, I have put forward an idea that would say, "Let's replace that 30 percent tax that goes right on your monthly bill, and look to the revenues of big tech." And there are certain revenue streams that you could look at that would not involve a direct pass-through back to the consumer. So, for instance, Facebook and Google ad revenue. That is something that I think we should look at for taxing that would not be a direct pass-through.
And this is a fair approach because we look at the amount of traffic consumed by big tech -- something like 75 percent of all downstream traffic on rural networks is consumed just by the big streamers alone. So you're looking there at Netflix, YouTube, Amazon Prime, Disney Plus, Microsoft companies like that. That's 75 percent of the traffic is just from those five entities.
But something like 94 percent of the costs of maintaining the network, of supporting that 75 percent of the traffic is attributable to those big streamers. So I think asking big tech to pay a fair and equitable share so that we can have these networks that work so we can make sure we can bridge the digital divide from an affordability perspective makes sense.
And you go back to where I started from, you know, the black swan event. Regulators in Europe during COVID-19 asked Netflix and other streaming services to degrade the quality of their service to take up less bandwidth because they were afraid that the Commons Networks would break. We didn't have to do that in the U.S. because we have this massive level of investment in our infrastructure. So, again, I think it's fair from that perspective, as well, to look at big tech to pay a fair share for these networks that are performing and allowing them to realize trillions of dollars' worth of benefits.
So maybe I'll stop there to start. But that was sort of the idea. And I've been really pleased with the broad based support that has been articulated already for this idea. You've got groups traditionally on the left side of the telecom policy spectrum to entities on the right that have voiced support. To be sure, big tech has not given a big bear hug to this idea, but that's to be expected. They've been working for decades since they were just tech companies, not big tech, to make sure that they don't have to pay an equitable share for these networks that they benefit from.
And some of us have suggested, well, isn't this just taxing the Internet which you said we shouldn't do? And I would say, "No, there's people who very much want to tax the Internet." Which is to say when you get your monthly bill, whether it's wireless or wire line, there's traditionally two components. There's the voice service component. Which may comprise, depending on the person, 15 to 30 percent of your bill. And, then, there's the data component which may be, again, up to 70 percent or whatever of your bill.
My rule's not that we should shift the tax from the voice portion, the 15 or 30 percent portion of your bill to the 70 percent of your bill. My proposal should get that tax off of your bill entirely and move it towards big tech's revenues. So, again, you can do the current model which is tax telephone service to pay for the Internet which is not sustainable. You can go to appropriation which I've articulated is better but has some downsides. You can tax the Internet which I haven't proposed because it would operative in a regressive way that would just make service unaffordable at a time when we're trying to get more people, including low-income people, online. Or you could look to big tech revenues, this third or fourth idea depending on how you rank it.
And, again, the current operation is regressive because it hits actually older Americans disproportionately so compared to others.
Randolph J. May: Brendan, maybe I'll jump in here. And, again, I'll invite any attendees to put questions in the chat if they have them. But maybe I can offer a couple of reactions and ask a question or two.
And my first reaction is that if nothing else, and I think there is something else, but I commend you for putting the idea out front and having a discussion about it. And I think even, hopefully, forcing a discussion about it because the reality is that this tax -- and it is a tax. Of course, the FCC doesn't call it a tax --
Hon. Brendan Carr: Yeah. Legally, they don't call it a tax.
Randolph J. May: Legally, they don't call it a tax but --
Hon. Brendan Carr: I use the word colloquially. Yeah.
Randolph J. May: For sure, it is a tax as the economist would look at it. But I've got in my drawer a sheet of paper, Brendan, that tracks the -- this tax. This contribution, for those that don't know, changes each quarter. And I've got a chart, Brendan, that goes back to 2000 that shows the increase. And in 2000, it was something like, I think, five or six percent at that time. I don't have it right in front of me.
But, as you say, now it's -- I think the most recently it was up to 33 percent and it's always been surprising to me that more consumers really haven't been up-in-arms about it. But it is, sort of, buried as we said in your telephone bill. But it does -- it's a regressive type of tax, and it does have an effect.
You know, one thing I will say -- and maybe this is not original with you, but I haven't heard it said before or heard you say it when you compared the tax to taxing horseshoes to pay for highways. I thought that was a great line. And you should patent it if it's not already patented. It's good.
But let me ask you this: I think I may know the answer, but I want to clarify it. In order to implement this idea that you're talking about of requiring big tech to pay, this would require a congressional action, right? You're looking for -- are you looking for Congress to take some action? Or is this something that you're suggesting that the FCC could do itself?
Hon. Brendan Carr: Well, yes and no to that question. And I'll give a longer answer. You know, you mentioned how this contribution factor, the percent taxes increased. Ironically, the very first day that I worked as a lawyer at a law firm back in 2005, the very first project that I was given was to track the changes in the U.S.F. contribution factor because they'd been going from five or six percent to seven percent. And there was concern about that jump from five to seven percent being unsustainable. And flash forward to today, as you know, we've hit 33 percent recently.
You also heard about I think there's a growing consensus that the status quo is broken, but there's been very few ideas articulated for paths forward because no matter which way you go there's going to be interest groups of stakeholders that aren't happy with the idea that you put forward. So I try to tackle this in a way that puts what I view as a common-sense answer out there for people to chew on.
In terms of authority, there's really two pieces of this. There's a portion of my idea that could be implemented immediately by the FCC without the need for additional congressional authority. [inaudible:21:40] to include revenues in the contribution base as we talk about it. It's not limited. For instance, we've had VOIP and other services pay in --
Randolph J. May: Brendan, excuse me, you broke up at least for me and froze for a minute
-- a few seconds. Maybe just go back two or three sentences and see if you can re-state that so if others missed what you were saying they can catch it.
Hon. Brendan Carr: Okay. Yeah. My name is Brendan Carr. I'm one of the Commissioners -- No. I won't start that far back.
Randolph J. May: No.
Hon. Brendan Carr: So in terms of the legal authority, there's two pieces of this. We do not need to re-classify or classify any service as a Title II service in order to go down this path. So, for instance, we have long assessed VOIP which we have not classified as a Title II service in going after VOIP revenues to contribute to Universal Service. So this has nothing to do with a Title I or Title II classification per sé. 0
The second piece of it is there are portions of the revenues that I'm talking about that I think today, under the FCC statute, we could include as revenues that would contribute in. So for instance, there's transport-like cloud services. Maybe the voice component, for instance, of Microsoft's X-Box service. So I think there are things that big tech does today that we could assess under the current definitions that we have in the statute in 254.
But to fully implement the idea that I'm talking about, I would agree with you that we would need additional authority from Congress. And there's several specific concrete steps they could do -- they could take to do that. So it's a yes and no. There are some of the additional steps we can take right now. But, yes, in the main to get at all the revenues I think we should, that would take some reform from Congress.
Randolph J. May: Well, I notice that acting Chairwoman Rosenworcel -- I believe I saw that she said something that, at least, was not dismissive of your [inaudible 23:57] and maybe it was even in the direction of saying it's worth thinking about it; is that right? Have you gotten any reaction from the other Commissioners to your proposal?
Hon. Brendan Carr: Yeah. I think she's given a couple of interviews where she says it's an intriguing idea. And I'll take it. I think this is something that is worthy of discussion. If there are other ideas out there, let's get them on the table, but I think now is the point in which we need to start getting pretty concrete, pretty specific with the ideas.
I've seen some of the trade groups representing big tech. That they've put out some statements saying that we shouldn't punish innovative companies and that they would hope the FCC would go forward with a common-sense solution. I guess I would say this is a common-sense solution, and two, I don't think this is punishing innovation to ask big tech to meet the same obligations that everyday consumers meet.
So I would hope that we're getting some support. Like I said earlier, there's been a pretty broad coalition from the left to the right that is expressed either interest in this particular idea or, at least, interest in exploring the idea.
Randolph J. May: Well, again, I think it's commendable that you put it on the table. You know, I guess, as a footnote, we probably could say that when it comes to big tech on various issues
—not only this one but some of the other ones that we talk about sometimes—there are coalitions on the right and left that seem to come together.
Well, if there are no other questions on this proposal, Commissioner Carr's proposal, right now, I think there's a question in the chat that actually would be a segue, I think, talking about some of the other issues and items before the FCC, whether it's Spectrum or removing other barriers to infrastructure that are relevant to this whole discussion of closing the digital divide and that we could talk about.
But I do -- I never like to ignore a question if we can. So, Commissioner Carr, if you can -- there's -- I don't know if you can see that, but I think without getting the gist of the whole thing, I'll just read the last part of it because the questioner -- she refers to it as longwinded. But I wouldn't say that. I think all questions are good. But the bottom line is she's asking if Eastport, up in Maine, is on the FCC's radar for improving broadband access. And Eastport, as we all know, is an incredible place. Any chance the FCC is working on broadband issues and down the east of Maine? Also, the fact that Eastport is so close to Canada -- is the fact that Eastport is so close to Canada a roadblock for expanding broadband access?
So maybe there's a way you -- I know that comes with one particular community in one place, but maybe you can take that and use that as a segue about a broader discussion about what the FCC is doing on infrastructure and expanding access.
Hon. Brendan Carr: Yeah. We made a lot of progress over the past three or four years in bridging the digital divide. But the reality is, if your particular community is one community away from one that's gotten new high-speed service, all of the data about the progress we're making nationally is basically meaningless to you. And, so, nobody is flying the mission accomplished flag at this point. We've still got the work cut out there.
Depending on the definitions you use, millions of Americans that still don't have an adequate high-speed connection. One of the very fundamental things we have to do at this point to target this funding in the right place is to complete our broadband mapping process. We started this during the last administration but had a problem in the lack of funding to complete those maps. So thankfully Congress solved that problem earlier in the year, and now it's on us to move with dispatch.
And these maps will tell us in a much more granular and specific way where there's service and where there's not. And as we engage in these additional funding efforts, we can then target it to the truly unserved areas because I think the last thing we need at this point is spending scarce federal dollars over-building communities that already have high-speed service or, effectively gold-plating communities that have high-speed service but want even faster future proof service. I think our priority has to be communities that have zero megabytes per second. Not the ones that have 50 or 80 megabytes per second.
So there's work ahead for us to do. We've got a number of Spectrum options that we need to get going on including this year. I've laid out some very specific ideas for Spectrum we need to get moving on this year or next year and after that. And then infrastructure ideas, as well. I mean, there's a lot of interest in Congress in spending money, but unless we reform our permitting part of infrastructure, which we did a lot of at the FCC the last couple of years, you know, pouring more money is just like jumping on the gas and the brakes at the same time. So you've got to pair more funding with hard getting-it-to-areas based on maps with making sure those funds actually go into the ground connecting communities, not just into red tape or the coffers of local governments.
Randolph J. May: What's the status, Commissioner Carr, of the litigation -- I know you were a leader in the FCC's proceedings having to do with removing the barriers having to do with permitting processes and excessities at the local level. And that was a long-running proceeding that you took the lead on. I think that it's still being challenged. I know there was a court victory at least on one of the proceedings in the appeals court. But just bring us up to date on your understanding of where all that stands in terms of being settled or not.
Hon. Brendan Carr: Yeah. We issued four, five, or six, depending how you slice it, different decisions that modernize our infrastructure rules. We looked at environmental, historic preservation rules that were just outdated particularly when it comes to the build-out of small cells. We looked at some of the outlier fees that state and local governments were imposing including some unreasonable delays on approval requests. We looked at expediting the swapping out of utility poles, adding new equipment through, what we call, The Section 6409 process.
And some of those are working their way through the appellate process right now. For instance, the decision we did on state and local fees was affirmed by the Ninth Circuit. And some of the big cities that have been charging exorbitant monopoly rents to approve this infrastructure appealed that to the Supreme Court. The FCC and DOJ recently opposed that cert request arguing that the Ninth Circuit got it right.
Some of the other decisions that we issued are in various states of appeals in the court of appeals. This is typical. I've been doing this for a long time. The Republican and Democrat administrations alike, anytime you issue a decision that's going to expedite infrastructure builds, odds are you're going to catch an appeal somewhere. So, hopefully, those appeals will continue to play out. In the main, those tend to be decided in the FCC's favor both because of the record we've established and the way that these reviews from the courts of appeal operate.
So hopefully there won't be any backsliding on that. Again, the focus is on 5G. The focus is on connecting the unconnected. The focus with COVID-19 is how do we further narrow and close that digital divide. You know, you can't do that by bringing back red tape and slowing down Internet bills.
Randolph J. May: I want to ask you about an aspect of President Biden's infrastructure plan that has received a lot of attention. I mean, there are several aspects that have been subject to critique and discussion. But let's start with this one: There seems to be a definite tilt in his proposal towards favoring municipal broadband sys-networks and co-ops and not-for-profit-type of entities in terms of the funding that would be directed towards them and maybe other ways, as well. I know that's something I have a concern about and have expressed some views, but what's your reactions to that part of the Biden plan to build out infrastructure. And when is it appropriate? Just give us your reaction to that part of his proposal.
Hon. Brendan Carr: Well, you know, there's a lot, obviously, that the state and local governments can do to help accelerate to build out an Internet infrastructure. In terms of them participating in what I would call a passive infrastructure sense which means laying conduit that the Internet providers can use, steps like that, I think that could go a long way.
The Biden plan leans very, very heavily on municipal broadband as a solution for bridging the digital divide. And the reality is the history of municipal broadband efforts is I think, if you're being fair, it's a mixed story at best. And there's studies that show that there aren't any economies of scale that come from a municipality doing it versus private sector. There are concerns about the performance of those networks.
You know, I was down in North Carolina in a small town that built their own municipal network. And I was talking to the city officials and they said, "Look. We're not in the business of selling a competitive commercial product. We don't do that very well. And once we built this network, we really didn't know what to do with it, how to use it, how to market it, how to get people online. It's a different thing than running a sewer system or a traditional utility. And, so, I think there's been a lot of cases like that where it hasn't panned out as successfully as the backers wanted. So I think that's one aspect of the Biden plan that is not a great feature.
The other portion that I talked about is what appears to be a preference for a single technology which is fiber. Fiber is and should continue to be the lion's share in terms of the technology that we use for building America's Internet infrastructure. But it shouldn't be the exclusive technology. There are places where it makes a lot more sense to do fixed wireless or other types of technology because it's not purely a question of can you get fiber today versus can you get fixed wireless today and purely a question of cost because there is a cost [inaudible:35:40] there. It's also a question of time, as well.
You can get a fixed wireless network built to your house in days versus it taking potentially years to get built out of fiber. So, yeah, we need to have a thumb on the scale for fiber as a general matter. That's what we do at our auctions, but it shouldn’t be a one-technology solution.
Randolph J. May: Commissioner Carr, when we introduced the program today and talked about the digital divide, we referred to the part of it that has to do with deployment and trying to build out networks ubiquitously. But we also referred to the fact that adoptionist is part of the equation and, obviously, I know that's part of what you were talking about earlier there. But it is such an important part of this whole thing. I mean, just to put a point to that because I don't want our audience to think it's all deployment and adoption's not important.
Are there other things that you didn't say that relate to adoption at all that are relevant? You know, if you just want to add anything there?
Hon. Brendan Carr: Yeah. I think, obviously, these are two components of the digital divide which is access and affordability. And we are tackling both components of that head-on. You know, we have stood up at the FCC a 3.2 billion emergency broadband benefit program. We have stood up a $7 billion program to get students connected. And so we are now launching and engaging in unprecedented efforts, not just what we've done in the last couple of years on infrastructure builds and on affordability, but we've now got this new traunch of funding from Congress that we're getting out there so we need to continue down both tracks.
Randolph J. May: All right. Okay. I did get a question posed to me going back to the original discussion about the contributions from big tech in order to broaden the base there. And, honestly, I'm not sure at this point the extent to which you've done further fleshing out of your proposal or not, but let me ask you the question here:
When you talk about big tech and requiring them to pay their fair share, have you discussed how you define those that would be included in your proposal?
I know, for example, when Senator Wicker just put out a bill for another purpose and he talked about large platforms and small platforms and had a measure for doing that based on revenue and another wrinkle. But the question is: Do you have anything further at this point to say or --
Hon. Brendan Carr: Yeah.
Randolph J. May: -- or are you planning to do that?
Hon. Brendan Carr: Yeah. There's several specific ways you could implement this idea. In broad brush strokes, the cut I would make would be at -- well, two or three levels. One is: I think, if the entity is benefiting in terms of the revenue streams sufficiently, based on sufficient nexus, to America's high-speed networks. And two is: If they're above a certain threshold of size.
So is sufficient nexus to the high-speed networks benefiting their business case and above a certain size? Those are two cuts I would make. In the op-ed, I laid out different ways that you could do this. You know, for instance, one component could be looking at the big streamers. So YouTube, Netflix, Amazon Prime -- a portion of those revenues. I think it's very clear that that would pass my test in terms of benefiting sufficiently from the network and being above a certain size.
I've also tossed out the idea that perhaps could be the Apple App Store. It could be the iPhone. You know, if you look at why does this thing have value? Why are they generating billions upon trillions of dollars in revenue? It's because it rides on this network and it wouldn't have the same value without that. So I think that could be fair game for people to look at.
So you could zero in on any one of these types or categories of revenue streams. Or you could construct a build that includes in an equitable way at least a portion -- attribute to least a portion of the cost -- whatever we decide that cost is in terms of 60 billion or a 100 billion -- and apportion it among different revenue streams that meet that high-level test.
Randolph J. May: You know, Brendan, in the old days the Commission used to issue a lot more notice of inquiries -- what we called, "Notice of Inquiries," at the time. You don't see those too much anymore. As we've been talking about that, I was thinking it seems to me that your idea would be perfect for a notice of inquiry and just gather information.
Hon. Brendan Carr: Yeah. That could make a lot of sense. Obviously, I would support an NOI seeking comment on the idea that I've been talking about. But I think that is something that we could flush out in an NOI. And then, obviously, I think there's additional authority that will be needed at least to catch everything. And so the NOI can help inform those efforts to the extent that those in Congress have interest, which is a point above my paygrade to be sure.
But, yeah, I'm open to asking these questions and taking a look at it.
Randolph J. May: Well, maybe Chairman Rosenworcel would be receptive to that. Going back even further in history, way back. You know, Commissioner Cuellar who served as Acting Chairman as well years ago, a lot of times when difficult issues would come before the Commission and they would decide to just initially do an NOI, he would often bode for it by saying, "Well, it's just a -- it's only an NOI." Anyway, so, maybe that would be something to get this started.
Okay. I'm going to read this question from my colleague at the Free State Foundation, Seth Cooper. How could I not do that?
Hon. Brendan Carr: Yeah. Exactly.
Randolph J. May: Seth asked, "On June 11th, the U.S. District Court for the Eastern District of New York, granted an injunction barring the New York Attorney General from enforcing the state's new law requiring broadband high speeds to offer Internet access services for $15 and $20 per month. What are your views on the court's decision and its reasoning?
Hon. Brendan Carr: Well, I haven't read the actual court's decision, so it's hard for me to opine on the exact reason there. But this comports with my view of how this case should have been decided, which is I think federal law is fairly clear whether you look at different components of it. Price regulation of this sort by the states is not compatible with the federal regime we have in place. I can't speak to the exact reasoning of the court. I'm not sure which version of that argument they ended up going with, but this is the outcome that I would have expected that a court would have reached.
Randolph J. May: Yeah. It was just a decision, the preliminary injunction with the usual caveats. But I think in terms of the merits of the preemption issues that were raised, at least from the FCC's point of view and the broadband providers that intervened, it's promising really and certainly bears watching going forward.
Hon. Brendan Carr: Well, yeah. I mean, it's funny when I have been talking about these issues. And talking about the increasing desire by some to bring back so-called neutrality regulation for ISPs I said, "You can't really divorce those calls from calls for rate regulation." At the end of the day, all of these issues flow back to rate regulations. When I started making those arguments, people would say, "Well, no. There's no real desire to rate regulation." It's like, well, we very specifically have this New York law now that is about rate regulation or price controls. And if you look at the Biden White House proposals on broadband, at a minimum, they're playing footsie with rate regulation. At a maximum, they are studying in working on a way to very specifically rate regulate.
There's going to be some hurdles there even at the federal level to doing that, but I do think the writing is on the wall if there's a desire to do it. Whether they get across the finish line politically or legally is TBD.
Randolph J. May: Yeah. I think when you write on the wall, "Rates are too high" which I think is a direct quote from the White House proposal then that's a pretty good indication that you're talking about rate regulation. And I'd just add whenever you suggest -- when someone does suggest that there ought to be an examination of data caps to see whether they're justified or not, the allocations of use that necessarily involves, really, rate regulation because you're essentially saying you're going to look at the cost involved in the network and in the usage and so forth. And the traditional types of factors that you look at when you decide whether some particular aspect of a service that relates to rates is "reasonable' or not. That's another part of it.
Okay. Well, in the time that's remaining, I think we've covered a lot of the infrastructure and your own proposal. I'm just going to ask you this -- if your staff gets mad at me then you can blame it on me. But you have been also pretty vocal about expressing concerns with, let's just call it, the suppression of certain speech by the big tech companies. The censorship and, obviously, I understand. I'm sure you do that one person's view of a particular speech or whatever is another person's -- they have a different view of it. And we all have different views on that
But I think you share some of the concerns that I've expressed about whether there is too much censorship that's not necessary or reasonable by the big tech companies. And there's so much of that in the news these days and there's so many proposals kicking around. And so many potential ways to address it. What are your thoughts at this point, right now?
Hon. Brendan Carr: That's a good question. I'm reminded if you think back and people, Randy, like you and me can think back to the early 1970s. The New York Times, the editors of The New York Times were the ones that launched the modern-day op-ed in the pages of The New York Times. They did so -- I believe it was John Oakes at the time was one of 0the editors of The New York Times. And he said diversity of opinion is the lifeblood of democracy.
And, so, they specifically launched the op-ed page because they wanted a diversity of views. Views different than the staff reporters and the editors at The New York Times to be presented in the pages of that paper. And I think we have seen a sharp departure in this country as a cultural matter form that embrace of that diversity of views. I think we're the poorer for it.
Even if you look at some of the Supreme Court's First Amendment cases from Turner all the way down, they talk about there being a governing interest of the highest order in a diversity of viewpoints. And I think we're better for it as a country. You know, when we shut down even the discussion of potential origins of the Coronavirus, I don't think it's a good thing for the country. When we shut down even the discussion of a story about the Hunter Biden laptop. You can't even talk about it.
Whether you agree or disagree with the story, that doesn't mean we can't talk about that at least on these websites. When you see Microsoft censoring searches for the Tiananmen Square tankman on the anniversary of the Tiananmen Square massacre, I think it is a departure from that idea that our democracy depends on diversity of views. So I think for conservatives to sit back and do nothing in the face of this very liberal trend toward censorship is not a good thing.
And you need to do this out of a desire to defend conservative speech. I think you could do it out of a desire to defend diversity of opinions, even ones you disagree with. So I think that Section 230 would [inaudible 50:16] make a lot of progress on these issues. But I also think that Section 230 is not sufficient. And you saw this on the Senate Commerce Committee which I think is a very -- sorry, I lost my connection there again.
Senator Wicker put forward what I thought is a very thoughtful way of approaching some of these big tech censorship issues. And at its core, I think there's three or four-piece parts that we need to do to address this liberal trend towards censorship. One is transparency. Whether it's federal or state law, I think we should step up and require a lot more transparency. The idea that a social media site can say, "We reserve the right to do anything for any reason," is basically walking yourselves out of terms of service entirely. So I think we can require a lot more transparency and then hold these websites accountable to those public statements.
Step two, I think, is some basic what I would call non-discrimination. So you shouldn't treat the same type of speech from Democrats and Republicans differently. So if you have a term of service against violent rhetoric, you shouldn't be enforcing it against one political party versus another. I think that's a component of it. And I think you can look at what Senator Wicker is doing. What I would say is a, sort of, anti-discrimination which is looking at some of these core civil rights, public accommodation concepts—race, gender, political affiliation—and looking at ways to put guard rails in place so we don't see discrimination across those bases.
Now, you've got to deal obviously with the case law that's out there, whether it's Turner, whether it's PruneYard on the one hand. Whether it's, you know, Miami Herald v. Tornillo or PG&E on the other hand and work your way through those cases. But I think when you look at the unique features of these social media sites, I think there's a strong case to be made for going down this path.
And, I think, a lot of people have reflexively looked to common carriage or public accommodation law. In some ways, that's right. I know Justice Thomas has pointed those out. But I would view those more as labels. Those are, sort of, examples of cases where we have imposed forms of anti-discrimination on those entities.
So I don't think you need to take social media sites or the square peg of a social media site and necessarily or per sé squeeze it into the -- I can't remember which shape hole I was using -- a square or round hole of common carriage public accommodation. But I do think our approach, here, should be informed. I -- you know -- the cases that are relevant to those types of entities and to the anti-discrimination requirements that apply in those contexts.
Randolph J. May: You know, Commissioner, in addition to the examples you gave it seems to me whether you're Republican, Democrat, liberal, donservative or whatever, one of the deplatform -- deplatformng or suppressions that I think bothers me and ought to be a good example of things going too far as the origin of the COVID-19 story where I think there was enough doubt and enough debate in the scientific community and enough disagreement that it's a little difficult to see why that discussion couldn't have continued without being banned or flagged from the social media sites.
You mentioned the Hunter Biden story, but I know after the election when Jack Dorsey testified in March, I think it was, along with the other executives -- of course the election had long been over but he did say Twitter had made a -- that was just a big mistake on Twitter's part at that point.
Well, look, we're almost out of time and I want to do this because there's one more question, and I want to ask it. I'm not -- you'll be more of an expert than I am in terms of whether you can answer this. This is from Brad Glass, but it goes back to the discussion about the USF. And Mr. Glass says, "Can the ISPs to whom big tech connects possibly collect a fee similar to USF and then pass some of it on to the last small ISPs in a manner similar to inner carrier compensation."
Hon. Brendan Carr: Well, you know, something I knew that I've put out there, I think some sort of explicit mechanism similar to USF is probably the right way to do it. You know, there's lots of different way that you could do this, presumably. But I think the best way to do this is -- even if you're looking at a new injection of new spending, you know, the $60 to $100 billion, I think you could include a mechanism in there to get it paid for out of the big tech revenues or benefit from that spending.
Randolph J. May: Right.
Hon. Brendan Carr: Or if you're looking at the, sort of, ongoing $9 billion that the FCC spends, I think we can get some additional authority to basically require a contribution into USF because, again, the collection of these funds is not purely or solely about compensation for a network usage. But it also goes to these broader efforts to close the digital divide including some of these affordability programs. I think getting it into USF or getting Congress to use it through an offset for this $60 to $100 billion spending is the best way to do it.
Randolph J. May: Terrific. Well, look, we have covered an awful lot of ground in one hour. More than I even anticipated at the beginning, so I want to thank you of course, first of all, for doing this. And also, Commissioner Carr, thank you for your leadership on these issues. Some relate to things you've done and others you're just helping us think about and it's all important. So thank you for that. And I'll say thanks to The Federalist Society and Nick Marr for hosting this. I'm going to turn it back over to Nick at this point.
Nick Marr: Thanks very much, Randy. And on behalf of The Federalist Society, I want to thank you, Randy, for your time. And Commission Carr for your time and the benefit of your valuable expertise this afternoon.
Also, to our audience for calling in, for your great questions, great engagement. If we had any we didn't get to, we're sorry. We had really good questions. Call into future events. Of course, be checking your email and our website for announcements about upcoming Zoom events like this one. Or you can register, tune in, and send in your questions there.
But until next time, until our next event, thank you all for joining us today. We are adjourned.
Dean Reuter: Thank you for listening to this episode of Teleforum, a podcast of The Federalist Society’s practice groups. For more information about The Federalist Society, the practice groups, and to become a Federalist Society member, please visit our website at fedsoc.org.