The big problem with this aging $8 billion fund

It’s welcome news that Big Tech is investing billions in AI infrastructure, but who’s really paying for the broadband networks that help make those AI investments profitable? That burden is increasingly falling on America’s aging Universal Service Fund, which since 1998 has supported broadband deployment in rural communities, low-income households, schools, libraries and hospitals. The fund is financed mostly by telephone subscriptions—many of them paid by seniors on fixed incomes. The more AI-generated traffic Big Tech sends down the pipe, the more costs are passed along to these landline users who don’t generate that traffic and don’t profit from it. There’s a structural mismatch here. The companies driving the majority of broadband traffic—eight platforms that account for about 65 percent of fiber and cable traffic and 68 percent of mobile network traffic—pay little to nothing to support the fund. The fund was created before the commercialization of the Internet. That world has changed, but the funding model hasn’t. Big Tech benefits every time someone connects to the internet; it’s time to update the rules so that those who benefit most from universal connectivity help sustain it.

[Roslyn Layton is an American broadband economist at Strand Consult.]