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Let’s fund broadband expansion with a “contribution factor” from big tech

By Ken Glueck, Executive Vice President, Oracle —April 19, 2021

There is no debate that communication networks are vital parts of American society. And it is clear the broadband divide impacts lower income and rural Americans’ ability to participate meaningfully in commerce, health care, education, and many other basic aspects of our daily lives. This impact has been brought into sharp focus during COVID.

We are also not in new territory. Eighty-five years ago, connecting isolated and poor communities to the interstate telephone service was one of the central achievements of the New Deal. Connecting most Americans to the phone network made America more prosperous and more equitable and brought vital services to rural areas and to the chronically underserved.

Communication networks themselves have transformed; what used to carry a simple voice call now carries nearly all of the various pieces of data making up modern life. This data can be the important financial information that makes small business function; the medical imagery that can save a life; the curriculum that can bring educational content to remote learners; the video calls that have connected much of our social and work lives during the pandemic; and the streaming movies and shows that have kept us all sane.

Overlooked in all of this data transmission is the ubiquitous white noise of the internet—the millions of digital ads we are bombarded with each year. In fact, if someone were to create a pie chart of the largest users of American bandwidth, digital advertising would occupy a huge slice of the pie. In a study from five years ago, researchers at Simon Fraser University found that simply installing an ad blocker allowed consumers to save 40% of their data consumption. Sure, it is true that advertising funds many useful services on the internet, but it is the digital equivalent of pollution, nonetheless.

Just as the dirtiest, heaviest vehicles are the cause of significant air pollution, congestion, and maintenance on our physical highways, think of ads as the digital equivalents of the 50,000-pound smoke-spewing dump trucks of the roadways. Their slow loading causes bottlenecks; their massive size increases maintenance and capacity costs; and their pollution (loss of privacy, viral click-bait driven misinformation, rampant fraud, and the destruction of journalism and content businesses) drives massive negative externalities.

On the one hand, our networks are increasingly vital for everything from education and research to business operations and entertainment. On the other, our networks drive increasing threats—from a loss of privacy, to the monopoly dominance of some of the largest internet platforms, to the rise of disinformation and digital redlining. Not to mention the problem that tens of millions of Americans lack adequate access to these networks in the first place. In some communities, if internet access is even available, it is incredibly slow and incapable of delivering essential services many Americans take for granted. Forget about streaming Netflix, think about getting your children online for school during a pandemic with only a smartphone and an expensive, metered data plan.

President Biden is right to include universal broadband access in his infrastructure plan. Not only does the Administration’s plan call for ensuring more than 30 million Americans without access are connected, it goes further by recognizing that these networks need to be “future-proofed” so that they keep pace with advancing technology. Further, it sets up a goal of bringing down access costs for every American. Improving the reach and inclusivity of America’s broadband networks is an expensive, but achievable priority—all that remains is to change who pays for the build out of, and the traffic on, these networks.

Currently, building out the physical infrastructure that brings the internet into homes either through wires or wireless signals transmitted by communication towers, is largely paid for by internet service providers like AT&T, Verizon, and Comcast. These highly regulated businesses are classified as common carriers and are forbidden from favoring certain users over others, or from inspecting the types or content of data flowing over their cables and wires. They pay for providing and installing the infrastructure, either in their own right, or through agreements with local governments.

They also pay into something called the Universal Service Fund which helps bring these networks to hard-to-reach communities, though the fund is not nearly enough to build out what is needed. Programs like E-Rate are intended to provide telecommunication services to schools and libraries, but is likewise underfunded.


The “Core” and the “Edge” switch places

Back in 1996, which saw the last major update to our nation’s telecommunications laws, the “core” of the communications infrastructure in the United States was made up largely of behemoth telco and cable companies. The “edge”—Google, Facebook, Twitter, Instagram, Amazon – barely even existed, and the word “platform” had yet to enter our everyday lexicon.

Of course, everything is different now. The internet platforms overwhelmingly dominate the delivery of services (broadly defined) and the communications companies occupy a smaller and smaller part of the discussion. Could you have even imagined, back in 1996, AT&T or Comcast being worth 10 percent of a company like Google? Yet, the highly regulated common carriers bear the burden of building the roads and bridges of the internet, while the largely unregulated “platforms” enjoy a highly subsidized free ride.


It’s time for a Broadband Service Fund … the Paris Accords for the internet.

There is bipartisan agreement that bringing broadband to underserved communities and individuals at an affordable cost is necessary, whether it’s called “infrastructure” or not. What is less clear is how to pay for it.

One answer is to create a Broadband Service Fund paid for with a “contribution factor” assessed on the digital ads crowding our networks and paid by the big tech platforms that serve them. It is the best way to remedy a situation where consumers, phone companies, and cable companies have subsidized the growth of the online, privacy-stealing, advertising monopolists. It’s time to shift the burden from the old to the new, to pass the burden from Bell, Watson and Edison to Zuckerberg, Page, and Bezos. Broadband expansion doesn’t pay for itself.

A half-century ago, it made sense to fund our communication networks by asking the companies who profited from them to make the initial investment. And today? Literally. Everything. Has. Changed. Now the entities who profit the most from our networks are the digital advertising monopolists. If we are going to upgrade our networks, and bring millions more Americans onto them, there’s no reason the dominant platforms who will benefit the most shouldn’t foot the bill.