10/21 FCC Comments for PISC Opposing Proposed ‘Wi-Fi Tax’

New America's Open Technology Institute co-wrote and filed comments on behalf of the Public Interest Spectrum Coalition ("PISC") with the Federal Communications Commission (Commission) strongly opposing a proposal to implement regulatory fees on unlicensed spectrum users that would amount to a "Wi-Fi tax." PISC signers included Public Knowledge, the Benton Institute for Broadband & Society, Access Humboldt, Center for Rural Strategies, Tribal Digital Village, the Institute for Local Self Reliance, and the Schools, Health, & Libraries Broadband ("SHLB") Coalition. The comments highlighted how the proposed fee would contradict the law surrounding the assessment of regulatory fees and undermine the nature of unlicensed spectrum as a public, nonexclusive good which has served as the foundation for innovation, economic growth, and societal well-being. An introduction and summary is available below:

Every industry trade association and lobbyist in Washington learns the late Senator Russell Long’s rhyme about tax policy: “Don’t tax you, don’t tax me, tax that fellow behind the tree.” Nobody likes paying regulatory fees. Since regulatory fees are a zero sum game, the only way to reduce regulatory fees assessed against one industry is to shift the fees to someone else.

The National Association of Broadcasters and State Broadcasters Associations have become wealthy and powerful by exploiting their exclusive access to scarce, licensed spectrum. They received their grants of free spectrum prior to auctions. And, understandably, they would also like to shift the burden of regulatory fees from themselves to others. The National Association of Broadcasters (NAB) and the State Broadcasters Association are merely trying to shift the burden of regulatory fees from themselves to others, as one might expect of any entity charged with fees. But the fact that this impulse is understandable does not make it permissible. Even if it were permissible as a matter of law to charge users of unlicensed spectrum regulatory fees, or to identify a class of “Big Tech” companies to charge, it would not relieve NAB or its members of regulatory fees. The broadcasters entirely ignore the reality that they themselves are among the largest beneficiaries of the value unleashed by use of unlicensed spectrum. Indeed, to the extent NAB has articulated a theory of “direct benefit” to unlicensed users, it would sweep in all NAB members, as well as manufacturers and retailers of television sets and equipment used by broadcasters.

Even if the proposed regulatory fee were permissible to impose, it would be impossible to administer. The broad number of users of “unlicensed spectrum” and the wide variety of use cases make it impossible to find an accurate and fair way to determine or distribute agency expenses assigned to unlicensed spectrum use. Most importantly, any attempt to do so would be extremely bad policy. Even if the transaction costs for users and the Commission—could be calculated, they would far exceed any benefit from such an effort.

Part II discusses the legal standard for assessing regulatory fees in light of both the statute and the non-delegation doctrine. Under existing law, unlicensed spectrum constitutes a “general benefit” for which the agency may not assess regulatory fees against a specific payor or class of payors. Nothing in the RAY BAUM’s Act changes this. Although Congress clarified that a specific payor that receives a clearly defined benefit can be assessed regulatory fees regardless of whether or not the payor has a license from the Commission, the Commission must still identify and distinguish a specific benefit different from the broad benefit received by the general public. To the extent broadcasters have identified benefits, the same benefits are enjoyed by numerous other industry sectors, including broadcasters themselves. Indeed, to the extent OET’s work to ensure that interference from devices is mitigated, it is exclusive licensees such as broadcasters that receive the clearest and most identifiable benefit.

Part III provides a more detailed explanation as to why unlicensed spectrum constitutes a general public benefit and why a fee would be contrary to the public interest. Use of unlicensed spectrum goes well beyond Wi-Fi, and well beyond “Big Tech.” This is possible because, unlike licenses for exclusive spectrum, use of unlicensed spectrum is both non-rivalrous and nonexcludable. That is to say, one user using unlicensed spectrum does not deprive the other users of use. Nor can a user exclude other members of the public from using unlicensed spectrum in the same geographic area—even if the user tries. As a result, unlicensed spectrum has been adopted broadly by the general public.

Part IV explains why, given this broad use of unlicensed spectrum access by virtually everyone, it is impossible to administer a regulatory fee for unlicensed use. Unlicensed devices are so ubiquitous and use cases so varied that the transaction cost of creating and administering a system of assessments that could survive judicial scrutiny as fair would cost more than it would collect.

Finally, as Part V notes, the questions asked as to whether some specific class of tech companies should pay to support universal broadband access properly belongs in a proceeding dedicated to Universal Service Fund contribution reform.