Should content providers chip in for broadband networks?

GNC reports on a report from Roslyn Layton on getting content providers to help chip in for broadband networks…

Roslyn Layton, a vice president at Strand Consult, researched four rural broadband providers and found that 75% of downstream network traffic comes from five companies: Amazon Prime, Disney+/Hulu, Microsoft Xbox, Netflix and YouTube, according to her report, “Middle Mile Economics: How streaming video entertainment undermines the business model for broadband.” The traffic from those companies drives about 90% of the net new network costs for the four rural providers.

The remaining 25% of traffic is what she terms “socially valuable” because it comes from sources such as government entities, public safety, education, health care and news sources. They account for about 10% of the network costs.

The author offers some options…

In the paper Layton presents several policy solutions. “The easiest things to do would be for the streamers to recognize that they have to contribute,” Layton said. Fees would be based on agreed thresholds and could reflect periods of peak usage — a tactic she likened to the postage Netflix used to pay to the U.S. Postal Service for mailing DVDs.

Another way to go about this is to incorporate the streaming companies into FCC’s Universal Service Fund by levying a tax on them. Created by the Communications Act of 1934 and expanded by the Telecommunications Act of 1996 to include the internet, the fund seeks to ensure that everyone has access to communications, which is paid for by contributions from telecommunications providers – a percentage of their end-user revenues. Or, Layton said, FCC could calculate an amount that internet companies must pay per terabyte of data they send into the middle mile.

Another solution is to charge end users. The problem with that, she said, is that two-third of Americans who subscribe to the internet are watching movies, but one-third isn’t, so those who aren’t streaming entertainment end up paying more for services than they should. “It’s a little bit unfair,” Layton said.

A final option is taxes. The report cites a December 2020 proposal from the Benton Institute for Broadband and Society that suggests using federal and state funding to build government-owned networks that are leased to private providers under the term “Open Access Middle Mile.”

This entry was posted in Rural, Vendors by Ann Treacy. Bookmark the permalink.

About Ann Treacy

Librarian who follows rural broadband in MN and good uses of new technology (blandinonbroadband.org), hosts a radio show on MN music (mostlyminnesota.com), supports people experiencing homelessness in Minnesota (elimstrongtowershelters.org) and helps with social justice issues through Women’s March MN.

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