I guess the proposal to tax Internet advertising platforms for the
Universal Service Fund uses the same reasoning Willie Sutton used to
justify robbing banks: That's where the money is ( https://www.fbi.gov/history/famous-cases/willie-sutton ). However, that is probably not where the traffic is (Netflix provided 12.9% of American downstream traffic in the first six months of 2019 but hosted no
advertising).

However, I think we should recognize that Internet transport IS
communications. It should be regulated in the same manner as other telecommunications services.

Quoting from my comments in the Net Neutrality proceeding ( https://ecfsapi.fcc.gov/file/1071735191329/FCC%2017-108%20Comments%20by%20Harold%20Hallikainen_170716.pdf
):

10. NPRM:9. The NPRM cites letters from Congress at https://ecfsapi.fcc.gov/file/2038710001.pdf as in indication that Congress
did not intend for ISPs to be regulated as telephone companies. The first
of the cited letters (from John D. Rockefeller IV) concerns ISP
contributions to the Universal Service Fund. His letter says “We believe
it is also imperative that the Commission revisit its decision regarding
the exemption of Internet service providers from universal service contributions and access charges. New reports of offerings of voice to
voice telephony and fax services over the Internet -- the providers of
which do not pay either either access charges or universal service contributions -- indicate that these providers are are indeed now offering telecommunications services, and that they should incur universal service obligations. Like long distance carriers, these providers rely on the
local phone network to receive and deliver their services. They should not
be allowed to continue to burden
without paying their fair share for its upkeep.” If anything, this letter recognizes that Internet service providers are telecommunications carriers
and should be regulated as such.

11. NPRM:9. A second letter (the “Five Senators Letter”) takes the
opposite stance (that quoted in the NPRM) that ISPs should not be
considered telecommunications carriers and be subject to universal service
contributions. While discouraging considering regulation of ISPs as telecommunications carriers, the letter continues “In arguing for the
extension of direct universal service obligations to ISPs, the development
of “Internet telephony” services is cited as the primary reason why ISPs
should contribute directly to universal service. While various types of Internet telephony now are being tested, such services currently are not
good substitutes for traditional telephone service. Nevertheless, because
the advent of Internet telephony does raise some important policy issues
we urge the FCC to carefully monitor developments in this area. In short,
while we believe that it would be appropriate for the FCC to initiate an inquiry to better understand the the emerging Internet telephony
marketplace and its potential impact on the public switched network, given
its early stage of development, such services should not become an excuse
for regulating information service providers.” Thus, nearly 20 years ago, Internet
telephony was not sufficiently developed to consider regulation of ISPs in
the same manner as telephone companies. In the intervening 20 years,
Internet telephony as well as video conference, and various other communications techniques are well established and ready for regulation in
a manner similar to POTS.

12. NPRM:9. In the third and final letter, Senator John McCain makes a
strong argument that Internet access is an information service. However,
in this 1998 letter, he states “Recent public announcements about the
advent of commercially available “Internet telephony” services suggest a possible partial convergence between information services and telecommunications.
It would be grossly premature, however, to attempt to address these
services today, given their early stage of development.” Now that these services have matured, it is indeed time to address these services with a
fresh look.


Harold

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On 9/21/2021 5:01 PM, Harold Hallikainen wrote:

I guess the proposal to tax Internet advertising platforms for the
Universal Service Fund uses the same reasoning Willie Sutton used to
justify robbing banks: That's where the money is ( https://www.fbi.gov/history/famous-cases/willie-sutton ). However, that is probably not where the traffic is (Netflix provided 12.9% of American downstream traffic in the first six months of 2019 but hosted no advertising).

However, I think we should recognize that Internet transport IS communications. It should be regulated in the same manner as other telecommunications services.

Quoting from my comments in the Net Neutrality proceeding ( https://ecfsapi.fcc.gov/file/1071735191329/FCC%2017-108%20Comments%20by%20Harold%20Hallikainen_170716.pdf
):

[Moderator snip]

Harold

Harold, you make some good points, but it may help to understand how we
got into this mess.

In the Telecom Act and in the Computer II rules that it sort of tried to enshrine into law (unsuccessfully), the understanding at the time of its passage was that there were two distinct layers. The "basic service"/"telecommunications" layer passes raw audio or bits, often via
a monopoly carrier. The "enhanced service"/"information service" layer
is provided by computers that are attached to the telecommunications
facility. The whole point of the Computer Inquiries (1966-1987 or so)
was to ensure that the FCC regulated telecommunications without becoming
the Federal Computer Commission.

Set aside for the moment that both "net neutrality" and "overturn
Section 230 and regulate social media" are activities almost purely in
the computing realm.

The problem is that ISPs today are treated as vertically-integrated
players, wherein the telecommunications facililties are regulated as information services even though they really aren't. This was affirmed
in the case of cable in the Brand X case, inasmuch as cable (ca. 2001)
was never a monopoly common carrier and had not offered
telecommunications services per se, and thus cable modems were just a "self-provisioned ISP". There was no Computer II violation because they
weren't common carriers. But that gave the ILECs a sad so they got the
FCC to overturn Computer II in 2005 and vertically-integrate their
networks. Thus DSL and FTTH were removed from the USF contribution base.

You also have wireless ISPs who do not and generally cannot offer
raw-bit telecommunications services over purpose-built networks.

But if incumbent providers and holders of exclusive spectrum licenses
were required to pay USF contributions on the (properly identified, not
that trivial) share of their revenues that actually went for telecommunications, vs. the part spent on computing, ISP customer
service ("how can I set up my email?"), etc., then the contribution base
would be expanded dramatically, while the pure computing function of
"pure" (not carrier) ISPs would still be outside of the contribution
base. This is what was expected when TA96 (which created USF) was
passed; it is just so far from current practice that it seems radical.

Fred

--
(Remove QRM from my email address to write to me directly)

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