Big Telecom Eyes More Broadband Usage Caps (And A Tax On Big Tech) As Revenues Sag

Things aren’t too exciting if you’re a telecom executive right now.

All the hype in tech is singularly fixated on the more headline catching, stock fluffing, and usually very broken aspects of “AI.” 5G, hyped as a transformative world changing tech by overly eager telecom marketing departments, wound up being a consumer dud that users don’t want to pay extra for. And subscriber growth is slowing to a trickle outside of new home builds.

So what is a poor telecom monopoly to do? If you’re AT&T CTO Jeremy Legg attending a global telecom grievance session held at a recent industry event, the answer is to start charging consumers more money for the same product in the form of usage caps and overage fees:

“One thing I would say is the telco industry historically has had these all-you-can-eat business models and I think the world is moving more toward consumption-based business models versus all-you-can-eat business models and so we’re going to have to adapt to that reality.”

By “we,” of course, Legg means you, the bandwidth-purchasing consumer.

We’ve noted for decades that there’s absolutely no technical justification to have usage caps and overage fees on fixed broadband lines. It’s simply the act of price-gouging an uncompetitive market where consumers usually can’t switch to an alternative provider. AT&T has been at the forefront of this movement for decades, so it’s not surprising to see this as their very first answer to sagging revenues.

Of course it’s not all bad news for telecom. The last five year fixation on the obvious problems with “big tech” has allowed telecom to largely skirt under the internet policy radar. You don’t hear much about efforts to rein in telecom monopoly power anymore; outside of some freshly restored net neutrality rules that probably will never be enforced and may not survive the next presidential election.

International telecom executives know they need something to goose stock valuations and spike sagging revenues:

“The reality is that our return on investment, our growth, is not good enough, and we can’t be happy with where we are as an industry at the moment,” said Kim Andersen, the chief technology officer of Australia’s Telstra, in a DTW call to arms. “We need to reinvent this industry and save this industry.”

In telecom, of course, that won’t actually involve being innovative or developing new exciting products people actually like. Because what most people want is a simple, dumb, inexpensive pipe to the internet. And it most certainly won’t involve trying to compete harder for subscriber affections, because that again would involve lowering prices, expanding access, or improving low-quality customer service, all stuff that harms short-term quarterly returns.

Enter the other big looming telecom gambit: the effort to force tech companies to pay them billions of dollars for no reason. Pitched to regulators in the EU and U.S. as a way to shore up broadband to areas telecoms historically couldn’t care less about, the idea effectively involves pretending that tech companies get a “free ride” on the internet, then imposing extra, duplicative telecom surcharges simply for existing.

I’d recommend this Internet Society piece on these so-called “sender pays” initiatives and how they ultimately just break the internet while driving up costs for everybody.

Of course consumers and enterprise broadband customers alike pay an arm and a leg already for broadband access thanks to widespread telecom monopolization. And despite a steady stream of billions in subsidies, those monopolies’ fiber expansions are mysteriously always left somehow half-complete. And now they’re proposing forcing tech giants (read: you) to pay for more fiber you may never see.

Despite this being a ham-fisted cash grab by an industry long known for ham-fisted cash grabs, these efforts are gaining more traction than you might think. The model has seen some success in South Korea, driving companies like Twitch out of the country and driving up costs for consumers. In the EU, telecoms are pushing for a tax for any tech company that accounts for over 5% of a telco’s average peak traffic.

The telecom industry effort has so far seen little meaningful traction under the Biden administration. But if Trump wins the next election, I 100% guarantee that one of FCC Boss Brendan Carr’s (R, AT&T) top priorities will be pushing big tech companies to pay telecoms billions of dollars in new, senseless telecom taxes in exchange for a bunch of layoffs and fiber networks you’re unlikely to ever actually see.