Digitally invisible, p.27
Digitally Invisible, page 27
Therefore, a candid conversation on universal service is timely and needed in the United States. Without it, we are essentially throwing up the same wish list that we had decades ago, in hopes that we can finally do something different—or, as President Biden declared, that we can, finally, finish the job. Such a conversation is also pertinent as spaces maintain certain racialized and/or vulnerable postures, where commitments can help to alter the trajectory for proposed digital access by making it more available.
It Is Time to Modernize the Universal Service Program in the United States
Throughout the book, I have offered some insights into what should constitute universal service in the United States, but it is probably worth a deeper dive into how we codified it decades ago. It began in 1913, with the “Kingsbury Commitment,” which was a deal between the former AT&T (before it was reconstituted) and the U.S. Department of Justice after an investigation into the company’s market power over telephone service, especially long distance.8 That would be around the same time that the CEO, Theodore Vail, started talking about universal service after the settlement opened up AT&T’s long distance network for independent telephone companies, set up the company’s divestiture of the money exchange service Western Union, and stopped the company’s ability to purchase other companies if there were objections from the Interstate Commerce Commission, which was the telephony regulator at the time.9 In many respects, the deal between AT&T and the Justice Department set the stage for the original provision of universal telephone services for all Americans, which was included as a statute in the Communications Act of 1934, after creating the Federal Communications Commission (FCC) as the known regulator over these services. In addition to the language that I previously shared from the statute, it was also the intent that universal service be made “available . . . to all the people of the United States . . . to a rapid, efficient, Nation-wide, and world-wide wire and radio communication service with adequate facilities at reasonable charges.”10 In the 1970s, AT&T was accused of becoming a legal monopoly, and with antitrust complaints from the U.S. Justice Department under the Sherman Antitrust Act, the company ultimately spun off portions of the business in 1984, making way for seven “Regional Bell Operating Companies” to provide consumers with lower rates, more choices of telephone service, and less reliance on AT&T’s control over hardware, whereby it had formerly forced consumers to rent phones rather than purchase them.
In 1985, the Lifeline program, with which you are now extensively familiar based on the number of times I have spoken about it, emerged and offered discounted local phone service to low-income consumers. When the communications act was later amended in 1996, the language on universal service was also changed to enable the FCC to “make available, so far as possible, to all people in the United States, without discrimination on the basis of race, color, religion, national origin, or sex, a rapid, efficient, Nation-wide, and world-wide wire and radio community service.”11 The FCC also convened a joint Federal and State Board to ensure compliance with these program caveats that are outlined in the 1996 legislation:
—Quality service at rates that are just, reasonable, and affordable should be available.
—All regions of the Nation should have access to advanced services available in telecommunications and information.
—Telecommunications and information services should be accessible by consumers (including low-income) in all regions of the Nation, including rural, insular, and high-cost areas at rates reasonably comparable to those in urban areas.
—All providers of telecommunications services should make an equitable and nondiscriminatory contribution to preserve and advance universal service.
—Specific, predictable, and sufficient support mechanisms at the Federal and State levels are necessary to preserve and advance universal service.
—Access to advanced telecommunications services for elementary and secondary schools, health care providers, and libraries should be available.12
As noted in earlier chapters, the flexibility of the statute allowed for changes to the program, which happened in 2005 under President George W. Bush, to include wireless carriers as “eligible telecommunications carriers” (known as ETCs) to pay into and offer discounted mobile services to low-income consumers—to say it the third time as a charm, this is the reason why the program should not be called the “Obamaphone.” Further, the FCC lifted the facilities requirement, which were a requirement for wireless carriers to be eligible that led to more competition from companies like Tracfone, one of the nation’s largest Lifeline service providers for wireless, which brokered deals with Sprint and other major incumbents. In the 1990s, Northwest Tower residents were beneficiaries of universal service, but they also were subjected to the “telecommunications tax” that providers passed onto them as part of their legal obligation to this compulsory universal service tax.
One other change worth noting in the telecommunications sector was its expanded inclusion of companies handling interconnections, which facilitated the use of different networks for domestic and international calls. The process also expanded the ecosystem of telecommunications and led to increased contributions to the Universal Service Fund (USF). Some refer to this proportionate distribution and increasing value of telecommunications as “Metcalfe’s law,” which was attributed to Robert Metcalfe, who also founded the Ethernet, in 1980. As more devices entered the network—including telephones, fax machines, computers, and later the internet—more value was accrued in their networking; that is, two fax machines communicating with one another to send and receive documents contributed more dynamism to telecommunications.13 The Ethernet, or the combination of wired networking technologies to facilitate local to wide-area networks, helped to facilitate these types of connections, and was later commercially standardized in 1983 as IEEE 802.3.
After Reagan put in place universal service and entrusted the FCC with its oversight and expansion, President George H. W. Bush opted for light-touch regulation as communications transitioned from analog to more mobile, digital services and devices. He was also the first to introduce email into the White House in 1992, as he dealt with a variety of notable domestic and global events—including bailing out big banks, the Exxon Valdez oil spill, the massacre in China’s Tiananmen Square, and the fall of the Berlin Wall—none of which were posted and shared online, since the internet was not fully commercialized. In 1994, President Clinton published the White House’s first website, and he was also the first to introduce the concept of the digital divide to the American public. In the background were large tech companies, like IBM and Microsoft, which were dominant players, setting the stage for companies like Apple, whose early Macintosh products brought competition to Microsoft’s personal computers and whose later innovations within advanced communications outpaced Motorola’s inaugural set of mobile phones.
The early 2000s made way for tech start-ups, like Google and Mozilla, to leverage emerging internet-enabled platforms to engineer more products and services that revolutionized online search. Simultaneously, companies like Cisco, which was focused more on sensors and devices powering internet networks, like routers, activated the broad ecology of the internet of things with new capacities that can found installed within consumer appliances and even automobiles. To keep up with this growth, voluntarily, some internet service providers (ISPs) provided broadband speeds upward of 124 Megabytes per second (Mbps), which has made technologies like digital subscriber lines, at 35 Mbps, dinosaurs during a time when copper telephone lines are near full retirement, and fiber-optics the fastest broadband conduit, at 1,000 Mbps, or gigabit speeds in many places across the United States.
In April 2021, I testified before the U.S. House of Representatives’ Committee on Ways and Means’ Subcommittee on Trade about inclusive technological growth. In my written remarks and oral presentation, one of my recommendations to the members was the need to modernize and reform the universal service program—something that I said as early as 2013 in a publication with my former colleague at the Multicultural Media, Telecom, and Internet Council, David Honig, called “Refocusing Broadband Policy: The New Opportunity Agenda for People of Color.”14 We argued in that white paper that the initial enactment of the U.S. Communications Act of 1934 implored Congress to maintain equity and parity in available technologies, and despite not projecting the capacities of broadband, it has managed not to do this well.
The $8 billion USF is still highly dependent on a compulsory “telecommunications tax” from declining numbers of incumbent telephone and interconnection companies. I briefly mentioned this above: that the fees collected manage, fund, and deploy the four programs that are obligatory to the statute: (1) the Connect America Fund (formally known as the High-Cost Program) to support qualifying telephone companies for broadband deployments in rural areas; (2) Lifeline for eligible, low-income consumers to offset the cost of phone service, including for those on Tribal lands; (3) E-Rate for the deployment of the internet and related resources to schools and libraries; and (4) rural health care, particularly the investments in modern-day telehealth to ensure remote and real-time access to good-quality care in rural areas.
But much has happened in the telecommunications and technology marketplaces to affect the usefulness of universal service. The innovation sector, consisting of high-tech companies, has grown exponentially, and there have been growing monopolies among companies that have been obligatory USF contributors, including the range of wireline and wireless telecommunications carriers, and interconnected Voice over Internet Protocol (VoIP) providers like cable companies that provide voice service. Wireline services have also dwindled alongside the elimination of legacy analog services.
Given such shifts, the universal service program as we know it today is dying, much like the death of analog services and systems with rapid digitization, and consequently support to close the digital divide occurs on the edges of the existing program without any major reform. Further, universal service is not solely based on what and how much you give people, but rather it should be focused on how you treat them. In Garrett County, for example, people were elated to be connected to the internet via the alternative technology of TV white spaces because of how Barry helped them to understand their needs and worked with them individually to solve their connectivity challenges.
This Is Not Your Grandma’s USF
For decades, policymakers have perceived universal service as a “one-size, four priorities” program, and they have presented it as a wholesale solution to myriad unique community challenges. Because it was and still is rooted in traditional telephony, universal service has pretty much favored rural areas, with large amounts of monies allocated to them via the Connect America Fund and rural health care programs. Rural areas have also gotten a boost from the complementary resources of the U.S. Department of Agriculture, while urban areas are more situated to benefit from the E-Rate expansion and Lifeline programs.
In the summer of 2023, President Biden crafted a new term, “Bidenomics,” which argues that investments in the working and middle classes of America will eventually make it to the masses of less fortunate populations. Not surprisingly, this concept is being applied to the trillions of dollars being allocated to high-speed broadband. During his June 26 press event at the White House, he shared stories of rural, working-, and middle-class residents who wanted to pay less for higher-quality broadband service, and immediately after the formal event, it was announced that about two-thirds of the Broadband Equity, Access, and Deployment (BEAD) monies went to majority-Republican states and households.15 Senator Tommy Tuberville (R-AL) tweeted his excitement about his state of Alabama being in the top five of BEAD funding recipients, despite voting against the Infrastructure Investment and Jobs Act on the congressional floor in 2021.
While this could very well be an indication of the necessary bipartisan support that Biden needs for reelection in the 2024 presidential election, the short-term gains for the Republicans may do very little to impress social and economic changes for individuals in Perry County, the most impoverished part of Representative Tuberville’s state, and the program may be diverted and potentially eliminated if a Republican president takes office after the next presidential election in November 2024. With the current state of political affairs, time will tell.
When I think about the elderly woman in the small Chinese market, it was pretty obvious what China had done to ensure her status as a first-class digital resident, which enabled her to be an entrepreneur. Mind you, countries like China have very little competition when it comes to mobile carriers. China Mobile, the largest operator in the country, has 950 million mobile subscribers and 172 million wireless broadband connection customers.16 Compare this with the consumer base of the three largest U.S. mobile operators in 2022: AT&T is the largest, with 217.3 million wireless subscribers; while Verizon is at 143.3 million and T-Mobile is at 110.2 million wireless subscribers.17 All three also pay into the USF, somewhat begrudgingly.
USF Contribution Reform
In 2012, when Obama was in office, his first FCC chairman, Julius Genachowski, opened a Notice of Proposed Rulemaking to address existing USF contribution reform. He pointed to the growing availability of wireless and the variation of voice, data, and video services available over internet protocol–based services, which was the preface to broadband and its streaming capabilities. Genachowki saw the shrinking contributions to the USF and heard from providers about the extraordinary burdens placed on the remaining companies that were obliged to satiate the fund.
While no actions were taken after the comments in the Notice of Proposed Rulemaking, the efforts to modernize the USF’s contribution levels over a decade ago were significant. But the conversation that is more pertinent today involves both physical infrastructures and the applications and services that are tethered to the networks, and whether there is enough spectrum to support the increasing consumer, enterprise, and government demands. A comparison of the effects of technology on the U.S. Postal Service is worthy of comparison.
U.S. post offices have survived from both the delivery of letters and packages, but more important from the purchase of stamps and other services, including money orders and express delivery. Then came email and accelerated package delivery for a higher price. When you think about it, first, companies like United Parcel Service and Federal Express upended the Postal Service’s existing business models on modes of delivery; and soon after these companies were affected by Amazon, which raised the bar through the two-day delivery schedule as part of its Prime service. At the very least, this is what is currently happening to USF.
Reforming the methodology for contributions into the USF entails a much longer conversation, one that should be of interest to Congress, as more broadband assets are deployed using federal dollars. And getting people access to more reliable broadband and internet-enabled devices may be more urgent than originally realized more than six presidential administrations ago. You are a dinosaur, and a very thirsty one, without being part of robust, online eco systems that further one’s quality of life. Given the state of the marketplace and the shrinking capacities of the few companies still contributing to USF, the United States is at an impasse—whether we like it or not—and for this reason, I offer three recommendations to grow and effectively sustain universal access.
It Is Time for Big Tech Companies to Open Their Wallets
First, it is time for Big Tech companies that amass tremendous profit from available and accessible broadband networks to provide their proportionate share of resources to universal service and/or the USF. Changing the current Communications Act to include every company that builds, supports, and benefits from online connectivity—including the Big Tech companies—could be game changing in the race to equitable online access.
In a 2022 an op-ed in the Hill, Matthew Weinberg, who is a partner at an early-stage venture capital firm and a former Obama appointee at the U.S. Small Business Administration, argued that revenue from existing carriers that pay into the USF have eroded from “a peak of $80 billion in the early 2000s to less than $30 billion in [2022].”18 Additionally, consumers also have increased their portion of what they carry on the tax from “11% in 2007 to 23% in [2022].”19 Brendan Carr, a Republican appointed an FCC commissioner, touted the suggestion that the regressive tax on the revenue of landline telephone customers be revisited—suggesting in a statement that the current contributions to USF are like “taxing horseshoes to pay for highways” because of the antiquated base.
Figure 8-1. Internet-Edge-Providers’ 2022 Advertising Revenues
(billion dollars)
a. Daniela Coppola, "Amazon: Statistics & Facts," Statista, June 28, 2023, https://www.statista.com/topics/846/amazon/#topicOverview.
b. Julia Faria, "Global Amazon Advertising Revenue 2019-2022," Statista, March 10, 2023, https://www.statista.com/statistics/259814/amazons-worldwide-advertising-revenue-development/.
c. Tiago Bianchi, "Google: Quarterly Revenue 2008-2023," Statista, May 10, 2023, https://www.statista.com/statistics/267606/quarterly-revenue-of-google/.
d. Tiago Bianchi, “Google: Annual Advertising Revenue 2001-
e. 2022.” Statista, February 24, 2023. https://www.statista.com/statistics/266249/advertising-revenue-of-google/.
f. S. Dixon, "Meta: Annual Revenue and Net Income 2007-2022," Statista, February 16, 2023, https://www.statista.com/statistics/277229/facebooks-annual-revenue-and-net-income/.
g. Dixon.
h. Mansoor Iqbal, 'Twitter Revenue and Usage Statistics (2023)," Business of Apps, May 2, 2023, https://www.businessofapps.com/data/twitter-statistics/.
i. "Twitter Ad Revenue (2021-2023)," Oberlo, https://www.oberlo.com/statistics/twitter-ad-revenue/.
