Update: After recently speaking with Blair Levin, he believes his comments about the taxation of Google or Netflix at the February 23rd meeting of the Congressional Internet Caucus have been taken out of context. He has described to me that he simply feels that the discussions should take place, but that he has disagreed with the approach of taxing content in order to support the Universal Service Fund in the past.
The Net Neutrality debate appears to have gone full circle based on recent comments by Mark Cooper of Consumer’s Federation and Blair Levin who was the executive director of the U.S. National Broadband Plan. Cooper recently suggested that Netflix should contribute to the Universal Service Fund (USF) and Levin believes that the solution is to “tax Google”.
The USF is an $8 billion fund established by the FCC in order to extend telephone service and emergency services access to underserved and unserved communities. It has been suggested that the USF should be revitalized in order to fund the expansion of broadband Internet services to similar communities, and currently is considered by many to be a mismanagement of funds. Scott Wallsten of Technology Policy Institute recently noted that for every dollar sent to the USF, 59 cents is used toward administrative costs and overhead.
There are those that do not consider this an option. According to Marc Oestreich, Legislative Specialist in Telecommunications at The Heartland Institute, “Subsidizing the historically failed universal service fund with taxes on content providers like Google and Netflix flies in the face of both the ideas of Net Neutrality and responsible governance.”
An ongoing concern with proponents of Net Neutrality regulation is that Internet Services Providers like AT&T and Comcast may create pay walls for content creators. These are sometimes referred to as “fast lanes” or “toll booths”. Proponents have argued that regulation preventing the creation of these fees would address concerns of startup companies who would then theoretically be able to enter the marketplace on a level playing field. Additionally it has been argued that this would allow new entrants to the market the same access as companies already established or entrenched on the Internet.
However, taxing Google, Netflix, or any other content creator is seen as contradictory to the original goals of Net Neutrality proponents. “Net neutrality wrongly asserts that allowing ISPs to charge content providers for their use of the network is unfair and unjust. To hear the same groups that rail against net diversity defending the practice when it’s administered by the federal government is laughable,” Oestrech noted.
Were the Federal Communications Commission to pursue the taxation of content creators, the result of last December’s Open Internet regulation would appear to have limited effect. The message could be seen as the government simply deciding who can charge fees on the Internet, rather than protecting certain market segments from taxation. If this were to occur, the system could evolve into a much more European oriented model of Internet regulatory regime that has moved into the taxation of content creators in addition to service providers.