In comments submitted to the Federal Communications Commission (FCC), opinion pieces and recent tweets, Big Tech companies and the so-called “public interest” front groups they fund have engaged in a disingenuous campaign regarding NAB’s request for a regulatory fee structure that would make the companies that benefit from the FCC’s actions actually paytheir fair share for the Commission’s services. They assert that broadcasters are asking the FCC to impose a tax on Wi-Fi usage.
This claim is not only plainly false, it’s also intellectually dishonest. A quick look at the facts makes clear that NAB is seeking reasonable and necessary changes to ensure the FCC follows the law and acts in the public interest.
Each year, Congress requires the FCC to collect regulatory fees to fund its rulemaking and other operations from the beneficiaries of its activities. The concept is that those who “benefit” from Commission activities should cover the government’s costs in providing those benefits. To that end, America’s radio and television broadcasters pay the U.S. Treasury nearly $60 million each year for the privilege of being regulated by the FCC.
Apart from the very large annual price tag itself, there is a glaring problem with the Commission’s annual bill to broadcasters. Due to the FCC’s broken methodology for assessing fees, a healthy chunk of the $60 million bill to broadcasters also covers costs for the Commission to regulate industries unrelated to radio or television broadcasting. For example, broadcasters pay approximately $3 million-plus annually to support the work of the Universal Service Fund, which according to the FCC is designed for “affordable, nationwide telephone service.”
This approach is sloppy at best – there is no reason broadcasters should pay for something like USF administration. Broadcasters’ contributions to the work done on behalf of other industries is largely the result of the Commission’s throw-up-its-hands approach that requires industry segments already under the FCC’s regulatory thumb to proportionally split most of the FCC’s tab, a portion of which is attributable to resources devoted to Big Tech’s interests. NAB’s simple ask is that the FCC update its cost assessments to more accurately reflect the beneficiaries of its work in compliance with the law. It is no answer to argue that it’s just too hard to get it right.
Unsurprisingly, after NAB surfaced the issue and noted a few areas where the Commission needs to adjust its methodology, some of the country’s largest technology companies marshalled their forces to beg the FCC to look the other way when it comes to assessing them fees. It’s clear the Facebooks of the world like business plans that rely not only on free, unregulated spectrum, but also Commission resources subsidized from regulatory fees that they are not obligated to pay. Maybe there’s a reason Facebook is nearly a trillion-dollar company.
One of my personal favorite lines of attack from the Big Tech industry is that NAB’s proposal that Big Tech (and others) pay its fair share constitutes a “Wi-Fi tax.” But anyone who reads the record will see that not only does NAB not discuss Wi-Fi, but NAB’s argument goes far beyond unlicensed spectrum.
At the outset, when it comes to unlicensed spectrum, NAB simply highlighted that, since many technology companies routinely push the FCC to adopt favorable rules for unlicensed spectrum that will clearly benefit them, those companies should pay their fair share like everyone else. Congress did not create an unlicensed spectrum exemption from regulatory fees.
Moreover, any suggestion that broadcasters are seeking to no longer pay regulatory fees is plainly false. Broadcasters simply don’t want to be forced to subsidize Big Tech or any other industry. Under any scenario we will pay millions of dollars; we just want to make sure we are paying for the services from which we actually benefit, as required by law.
NAB has also made clear that unlicensed spectrum is just one piece of the regulatory fee problem at the FCC. For example, why do broadcasters fund nearly 20% of the Consumer and Governmental Affairs Bureau (CGB), which appears to spend nearly all of its time on calling related issues, such as robocalls, that are obviously annoying but not directly related to broadcasting? Indeed, approximately 90% of the complaints received by CGB this year have been related to telephone and internet issues. A cursory look at the bureau’s headlines in 2021 indicates an overwhelming emphasis on broadband, robocalling and robotexting issues. The same analysis should be conducted with respect to other bureaus and offices at the Commission, including the Enforcement Bureau, the Office of Economics and Analysis and the Office of the General Counsel.
Another amusing notion advanced by Big Tech surrogates is that broadcasters should pay their current regulatory fees because they received their spectrum “for free.” First, this point is a non-sequitur. How broadcasters acquired their licenses has exactly zero to do with Congress’ regulatory fee directives. Even if it was somehow relevant, it would logically require the FCC to reassess fees for wireless and satellite carriers as their initial allocations were made without bidding as well. And let’s face it, when companies like Microsoft sit out the 600 MHz auction after claiming how badly they would like to help rural America improve rural broadband, the effect is that the spectrum they use is “free” as well.
The “free spectrum” argument is misguided for many other reasons, but perhaps chief among them is that broadcasters already pay handsomely for their spectrum by being the only service required by law to provide a free product to the public. Moreover, broadcasters have many public interest obligations that no Big Tech company would go anywhere near. Would the Wi-Fi crowd accept that they can use spectrum so long as nothing transmitted over Wi-Fi is indecent, let alone pornographic? I think we all know the answer.
This entire conversation started by Big Tech itself is misleading. Broadcasters are not seeking to escape paying regulatory fees. It should not be controversial for broadcasters to cry foul when being forced to subsidize enormous companies like Microsoft, which generates revenue beyond the GDP of most countries (even after paying groups like Public Knowledge). Frankly, NAB itself does not care who pays – it is the FCC’s job to figure that out. We just don’t want to subsidize the richest companies in the world. It’s a reasonable and fair ask that happens to comport with Congress’ instructions.
If public interest groups truly supported what’s best for the public, they wouldn’t simply kick and scream because Facebook, Google, and Microsoft may have to pay their fair share for the benefits they receive from the FCC. Those groups should be equally, if not more, concerned that local broadcasters have to subsidize massive technology companies, all while having government-mandated public interest requirements including a requirement to provide a signal to the public for free. Unfair and unrelated costs to broadcasters hurt our ability to provide valuable free services to the public.
The FCC’s task here is to follow through on its responsibility to account for the time it spends on the needs of different industries. That includes a deep dive on bureaus and offices beyond the four it calculates today. If we were talking about Commission offices and bureaus having to spend their own budgets, I bet the FCC would do much better than its current practice of accounting for only 25% of direct costs and then just spreading the rest among those already paying in an indiscriminate fashion. The current approach is inaccurate, unlawful and unjust. The only advantage of Big Tech’s bleating overpaying its fair share is that it puts the FCC on notice that it is finally on the right track.
