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Potential Phase 4 COVID-19 Bill Must Not Turn Broadband Charity into a Tax

As the COVID-19 crisis ransacks more and more sectors of our economy, the old adage “If it ain’t broke, don’t fix it” carries increasingly important wisdom. By any objective account, the American Internet and the companies that power it are performing nothing short of heroically during this crisis. As Congress considers a reported “Phase 4” bill in response to this unprecedented crisis, lawmakers must avoid messing with success.

Unsurprisingly, Internet traffic has surged with tens of millions of Americans switching to remote work, schooling, and entertainment. What has caught many by surprise is the resiliency of U.S. networks following the sudden surge in bandwidth-intensive activities such as video conferences and binge-watching Netflix’s “Tiger King” (side note: Wow, just … wow).

FCC Commissioner Brendan Carr has detailed some of the stunning statistics in a post on Medium. Overall, depending on network and geographic variables, Internet traffic is up anywhere between 17 to 37 percent over the baseline and undoubtedly growing. Despite this surge, Carr notes:

So far, our networks are delivering under this new pressure. BroadbandNow compared the average download speeds of the 200 largest metro areas to the speeds those areas had experienced pre-pandemic. Three-quarters of the metro areas experienced no significant slowdown in available speeds (defined as speeds within 10 percent of the normal range). [Emphasis added]  

In addition to strong overall network performance, companies themselves are going above and beyond to keep Americans online through strong consumer protections and assistance. Over 500 Internet service providers (ISPs) across the country have signed onto a voluntary pledge organized by FCC Chairman Ajit Pai. The Keep Americans Connected Pledge states:

Given the coronavirus pandemic and its impact on American society, [[Company Name]] pledges for the next 60 days to:1. not terminate service to any residential or small business customers because of their inability to pay their bills due to the disruptions caused by the coronavirus pandemic;2. waive any late fees that any residential or small business customers incur because of their economic circumstances related to the coronavirus pandemic;3. and open its Wi-Fi hotspots to any American who needs them.

Yet, as companies were lining up to sign the above pledge last week, House Speaker Nancy Pelosi and her Democratic colleagues unveiled a COVID-19 stimulus proposal that contained a section regarding “Continued Connectivity” (see Division U, Title IV on page 1250). This section largely copied the provisions of the voluntary pledge organized by FCC with a few key differences.

First, failing to provide the kind of consumer assistance that companies have thus far voluntarily offered would be a violation of federal law.

Second, and most problematic, is that the bill would leave such measures in place for an indefinite period of time, exposing companies to untold costs.

While Speaker Pelosi’s proposed legislation during the Phase 3 negotiations remains just that, it sends a worrying signal of what could be contained in a Phase 4 bill. Simply put, there is no need to impose legal restrictions on hundreds of broadband companies across the country that mirror their voluntary and charitable efforts. Imposing such a requirement is not only a waste of time, it sets a bad precedent going forward.

At the outset of the crisis, and even preceding the coordinated Keep Americans Connected Pledge, companies raced to demonstrate what measures they would take to help Americans through the crisis. Turning such efforts into rigid legal standards risks blunting the competitive incentive for companies to pursue such charitable efforts in the future.

In addition, it could make companies hesitant to begin offering assistance without a direct government order. A company that begins dedicating resources to relief efforts that do not satisfy some later legal requirement could very well be left in a precarious position.

The language in Pelosi’s bill would also force companies to provide the requisite assistance measures for an indefinite period of time versus the 60-day voluntary pledge. Such a requirement is unsustainable for firms. To quote another old adage, “Time is money.”

Suspending late fees, offering free service, and increasing capacity for a specific period of time allows companies to generally estimate the costs they will incur. Essentially, through these various measures, companies are saying that they are willing to provide assistance worth a big check for some amount of dollars. The structure of the proposed legislation turns this into a blank check that many companies may not be able to honor.

ISPs have stepped up to the plate in a big way during the COVID-19 crisis. Their preparedness and subsequent efforts should be commended. Turning their temporary charitable efforts into an indefinite tax is the opposite of the reward they deserve.