from the good-decisions,-bad-intentions dept
In a day full of terrible Supreme Court rulings there was one bit of good news: in their FCC v. Consumers’ Research ruling, the court rejected a bid by radical right wing Republicans to destroy a popular $8 billion FCC program that connects poor and rural schools and communities to the internet.
The plaintiff in this case, Consumers’ Research, isn’t really a consumers’ group. It’s a right wing political project designed to put a veneer of pleb-friendly populism on efforts to destroy corporate oversight. The organization (which maintains a part of their website tasked with tut-scolding “woke” companies) sued the FCC claiming that the Universal Service Fund (USF) was unconstitutional.
The USF applies a small surcharge on traditional phone lines to fund broadband expansion to rural unserved locations (of which the U.S. has a lot thanks to rampant telecom monopolization and the corruption that coddles it). The program has had some problems with subsidy fraud in decades’ past, but more recently it’s been cleaned up and proven hugely beneficial for rural communities.
Consumers’ Research claimed the FCC was illegally overstepping its authority by levying the fee. The Trump-stocked Fifth Circuit, pretty radically, agreed with them last summer.
The Supreme Court ruled 6-3 (with Thomas, Alito, and Gorsuch dissenting) in favor of the FCC. It’s a curious reversal of a broader (and very successful so far) Republican court trend attempting to destroy all remaining government oversight of corporate power and dismantle whatever’s left of regulatory independence. You know, for rural small town populism or whatever.
A Good Ruling, Driven By Less Ethical Motivations
Why did the right-wing Supreme Court buck its broader trend of boxing in regulatory autonomy? Largely because of the influence of telecom giants like AT&T. While the USF does genuinely fund a lot of useful broadband expansion, it also throws billions of dollars into the laps of telecom giants like AT&T, Verizon, Charter, T-Mobile, and Comcast.
These telecoms were opposed to destroying the USF for what should be obvious reasons. And there had been hints for several months that they had managed to convince several Supremes that the USF should be maintained. Though it speaks volumes that Thomas, Alito, and Gorsuch thought nothing of destroying a hugely-popular program built over decades with broad bipartisan support.
But the remaining Republican majority rejected Consumers’ Research because the telecom industry has a plan underway to get much more taxpayer money in the next few years.
With traditional phone lines dying, the USF program risks running out of money. So there’s been a long-standing conversation about how to expand the contribution base so you can keep funding the program and keep connecting rural schools, libraries, and communities to the internet. This conversation, as is usually the case in the U.S. telecom policy, is being dominated by self-serving giants like AT&T.
AT&T and their friends have a proposal they’ve been planning for years: they want to have the FCC apply a new tax on streaming video services like Netflix to theoretically help fund broadband expansion.
On the surface, having tech companies help fund broadband expansion isn’t a terrible idea. The problem is that companies like AT&T have an extremely long history ripping off subsidy programs, overbilling schools, and pocketing money that was earmarked for rural communities. And Republicans have an even longer history of badly mismanaging subsidy programs and ignoring corporate subsidy fraud.
So what’s far more likely to happen is the USF gets dramatically expanded once the FCC has a working voting Republican majority, and steadily becomes a much larger and much worse-managed slush fund that dumps billions in additional money in telecom monopolies’ laps in exchange for fiber networks that are mysteriously somehow never fully deployed.
There’s an obvious a tension here between right wing and Libertarian zealots who want to destroy all federal governance, and right wing grifters who want to steal taxpayer money in new and creative ways. There’s also tension within telecom monopolies’ like AT&T’s interest to destroy all remaining FCC oversight, yet keep the FCC just functional enough to keep slathering it with billions in taxpayer dollars.
There are good faith people (including consumer groups) who support some sort of streaming tax expansion just to keep the USF alive. But in a government where the expansion will be literally written by AT&T lawyers and overseen by weird lackeys like Trump FCC boss Brendan Carr, I think assuming this will be done and enforced competently and ethically is delusional wishcasting.
Such a Netflix tax would generate untold billions in additional subsidies for telecoms, at the cost of much higher streaming prices for consumers. Which should help you understand why some members of the Republican Supreme Court suddenly and mysteriously grew an uncharacteristic conscience. Kill the USF, and you kill the opportunity to make telecom monopolies significantly wealthier in the years to come.
Filed Under: big tech tax, brendan carr, broadband, consumers’ research, fcc, fiber, netflix tax, rural, slush fund, subsidy, supreme court, taxpayers, telecom, usf
