CCIA Warns Against Making Cloud Providers Pay Into USF
Making cloud services pay into the USF would increase the price of the services, drive down adoption and negatively affect the economy, according to a new study from the Computer & Communications Industry Association. The study was written by Raul Katz, director-business strategy research at the Columbia Institute for Tele-Information at Columbia Business School and funded by Amazon Web Services. Ruiz discussed the results Tuesday on a webcast with Trevor Wagener, CCIA's research center director and chief economist.
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FCC Chairman Brendan Carr has long expressed an interest in expanding who pays into the USF contribution base (see 2104130073).
A 1% increase in the price of cloud services would decrease cloud adoption by 0.5%-0.6%, the report projected. A 5% USF fee on cloud service revenues, passed through to customers, would cause a hit to the U.S. GDP of up to $148.18 billion. That could lead to a drop of more than $7 billion in capital investments by cloud service providers, the report said.
“This study demonstrates that imposing USF fees on cloud computing services will harm U.S. consumers and economic growth across national and state economies,” the study said. “Cloud services should remain exempt from USF contribution reform proposals to mitigate these potential negative impacts.”
The idea that increased prices for cloud services would decrease adoption is “perfectly consistent with standard economic expectations,” Wagener said. The “magnitude” of the effect that a 5% fee would have on GDP may surprise some observers, he said.
“It’s not how much companies are paying for the service; it’s how much companies receive in terms of benefits of buying the service,” Katz said. “That’s why the number is so big.”