Two weeks ago the Supreme Court rejected an effort by a dodgy right wing activists to destroy an $8 billion FCC program that connects poor and rural communities to the internet. The plaintiff in the case, a fake right wing “consumer group,” had tried to argue that the bipartisan subsidy (the Universal Service Fund, or USF) was an “illegal tax” the FCC lacked the authority to charge. They lost the case.

But why did the Supreme Court majority, an agency that’s been on a tear destroying regulatory protection and corporate oversight, keep this particular program alive? It’s because Republicans and telecom monopolies want to repurpose the USF into a poorly managed slush fund paid for by U.S. tech giants (or more accurately you, their customers).

The long-bipartisan USF helps fund broadband connections to rural schools, libraries and communities. It is primarily funded by a monthly fee imposed on traditional phone lines. But given the death of the traditional landline, the contribution base for the program has shrunk. To keep the program alive, it genuinely does need new funding.

The most obvious way to do that would be to impose a small fee on broadband and wireless connections. That contribution base is so massive, the fee wouldn’t need to be onerous. To do this correctly, you’d need to ensure that government oversight of telecom subsidy collection and spending was competent, something that’s never been our strong suit.

Telecom giants like AT&T and Comcast obviously don’t want that. Instead, they’ve long been proposing a new tax on video streaming providers and tech companies. To sell this idea, telecom lobbyists have long (falsely) claimed that companies like Google and Netflix get a “free ride on the internet,” so it’s only right that they pay “their fair share” in funding broadband expansion.

The Supreme Court’s protection of the USF creates the perfect platform to relaunch this effort. In fact, I suspect the USF is only alive today because of AT&T’s ambitions to create a new slush fund paid into by streaming video customers already annoyed by soaring streaming video prices.

The problem(s)

It shouldn’t take a scientist to see why a major new subsidy proposal cooked up by the monopolists at AT&T and managed by the Trump administration might not be a success story.

AT&T has a long history of defrauding federal subsidy programs (including the USF), but routinely dodges accountability due to its favored role as a domestic surveillance ally. At the same time, the Trump administration has a long history of mismanaging federal subsidy programs and doing an exceptionally terrible job ensuring that telecoms follow up on subsidy deployment promises (see: the FCC’s RDOF).

Having tech companies pay into broadband deployment isn’t foundationally a bad idea. And there are some good faith consumer groups that support it as a way to keep the USF alive.

The problem is there’s genuinely no real indication that a new tax on streaming video would actually go toward broadband expansion under the guidance of unethical, corrupt government. It’s far more likely that money would be funneled from streaming video consumers into AT&T and Comcast’s back pocket, permanently.

At the same time, throwing more taxpayer subsidies at regional broadband monopolies doesn’t fix the real problem with U.S. broadband.

The reason U.S. broadband remains spotty, sluggish, and expensive in 2023 is concentrated monopoly power and the corrupt politicians who protect it from real oversight and competition. Yet somehow when it comes time for the FCC to shore up the USF and expand access to affordable broadband, cracking down on consolidated monopoly power never even enters the conversation.

Another reason U.S. broadband remains spotty is the federal government refuses to hold telecom giants accountable for taking billions in taxpayer dollars in exchange for fiber networks that are routinely only half deployed. A serious effort to shore up broadband expansion would need to involve further policing major provider subsidy fraud. We simply don’t do that here in the U.S.

Prepare For A Lot Of Bad Faith Lip Service About “Bridging The Digital Divide”

Ignoring all of this, the proposals to impose this new tax on Netflix and other streaming services will be portrayed as a good faith effort to “bridge the digital divide.” AT&T’s already got one such preferred law winding its way slowly through Congress.

The Lowering Broadband Costs for Consumers Act of 2025 (S. 1651), sponsored by Senators Markwayne Mullin, Mark Kelly, Mike Crapo, and Kevin Cramer, was introduced back in May. Contrary to the bill’s name it wouldn’t “lower broadband costs.” It would, however, impose a new tax on streaming video service customers that the Trump administration would then funnel to AT&T, Comcast, Verizon, and Charter.

Who gets this funding will be a point of contention. You can guarantee that under Republican leadership this expanded subsidy base won’t be going toward community-owned broadband networks, cooperatives, or city-owned utilities driving new competition to market. It will, primarily, be dumped in the laps of telecom monopolies with rich histories of subsidy fraud. And to Elon Musk.

With the Supreme Court case settled, prepare for a new push on this front this summer and fall. The tell-tale sales pitch will be replete with claims this new tax is necessary because “Big Tech” gets a “free ride” on the internet. FCC Trump boss Brendan Carr has been pushing for this for years (he wrote a Project 2025 chapter about it). From a 2021 Newsweek Op/Ed:

“Big Tech has been enjoying a free ride on our internet infrastructure while skipping out on the billions of dollars in costs needed to maintain and build that network. Ending this corporate welfare is more than fair.”

That’s of course never been true — companies like Netflix and Google invest billions in bandwidth, transit, cloud storage, undersea cables, and even last-mile broadband access. When it comes to a U.S. telecom industry dominated by politically powerful monopolies, nobody gets a free ride. And Carr has never cared about the “corporate welfare” involved in dumping billions in AT&T and Comcast’s lap.

Consumers are already getting fed up by the soaring prices and sagging quality being caused by mindless media and telecom consolidation, which will get dramatically worse under Trump. An additional tax on streaming likely results in even greater annoyance, and a greater shift of viewership back to free options like piracy, which the industry will blame on everything but themselves.

I’ve written extensively on why Carr and AT&T’s call for a “big tech telecom tax” isn’t serious adult policy, but I’m still not entirely sure that “big tech” execs fully understand the scope. In the EU, telecoms have pushed proposals that would charge any internet service that accounts for over 5 percent of a telco’s average peak traffic billions of dollars in additional extra-government surcharges “just because.”

One such proposal even removed government from the equation entirely, and simply demanded that big tech companies funnel billions of dollars to big telecom companies without oversight.

You’re going to see a major new push to revisit variations of this idea in the summer and fall, replete with oodles of bullshit and a lot of empty rhetoric about the “digital divide” from people who routinely demonstrate they don’t actually care about broadband consumers. It’s another story the easily exploitable tech press will fail to cover with any accuracy or nuance. Don’t say you weren’t warned.

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