Understanding Project 2025’s implications for the telecommunications and technology industry

Brendan Carr, the author of Project 2025’s Federal Communication Commission chapter, has been nominated to become the chairman of the FCC—and he has not minced words. He intends to “dismantle the censorship cartel and restore free speech rights.” As an existing commission member, Carr understands the FCC and related regulations and is likely to make sweeping changes that will have a major impact on the telecommunications and technology industry.

Reinterpreting Section 230 creates a free-for-all content cage match

The most significant proposed change will be reinterpreting Section 230, which currently limits immunity for content moderation decisions made by online content hosts, such as Facebook, Google, Yahoo, and other social media platforms. In 2022, big tech spent nearly $70 million lobbying in the US and 113M Euros lobbing EU bodies to protect this regulation. The fundamental argument here is the ownership of content versus the platform. Changing 230 could directly impact what people or companies publish online and for which they can or can’t be held accountable.

Carr intends to limit the immunity currently provided under this regulation. Further, Carr intends to force platforms to disclose algorithms and moderation policies. While much of Project 2025 focuses on deregulation, these additional regulations will create new operating challenges:

• Legal expenses are expected to rise with the limitation of liability, which will cause moderation policies to become laxer and communication to be more diverse. While this strengthens free speech rights, in theory, the ability to restrict hate speech and factually incorrect speech will significantly change user experiences on these platforms. DEI-related policies are likely to be cast aside based on their limited defensibility, as seen in the Supreme Court’s 2023 ruling in Students for Fair Admissions v. President and Fellows of Harvard College, which quashed affirmative action and sent chills through companies’ DEI programs. It may be that technology firms reduce content moderation efforts, which could have a significant impact on services provided by many business process firms.
• Publishing algorithms will have significant cost implications for the platforms, which probably do not have an “easy to share” format for these algorithms. They will also create public transparency in major technology companies’ embedded commercial strategies. Maybe we will also finally learn if the Amazon app or Google Nest devices listen to conversations and drive specific promotions to people in the room.
• Trust and safety will change. Once immunity is removed, technology companies are likely to reduce moderation activity. Where moderation has allegedly suppressed right and left-wing content, limited the spread of what was deemed factually inaccurate information, and attempted to moderate disinformation campaigns by foreign adversaries, this information will be completely unmoderated in the future. Feeds and search results on Google, Facebook, Instagram, and comment sections on news sites will be flooded with content, making such feeds so rife with misinformation, unsubstantiated rumors, and so-called “expert” opinions that HFS believes there will have a significant impact on general public wellness and anxiety.
• Content rights, as referred to in Section 230 of the US Telecommunications Act of 1996, set statutes of limitations for the liability of ‘platforms’ and the user content that is created, hosted, and shared on these platforms. Furthermore, Section 230 effectively indemnifies the platform from any legal or financial obligation to ensure that content is moderated, fact-checked, and edited appropriately. This will change how social networks and media (internet and traditional) are positioned as platforms and content arbitrators rather than just landing spots for user-generated content.

What we are sure of is that the algorithms created by software firms providing services or platforms (e.g., social media or e-commerce) will likely be required to be disclosed, which could increase development and compliance costs to meet transparency standards. This would also expose proprietary systems potentially undermining competitive advantages and intellectual property protections, allow competitors or malicious actors to exploit publicly available systems, and create operational slowdowns due to new documentation and oversight requirements.

While these costs will be intended to improve the quality of content, many platforms may find themselves under attack due to perceived bias in the content they create, host, and/or disseminate. This blade cuts both ways, as the intersubjective views of one group about another group’s platform and content can strangle factual information and increase, not decrease bias.

In the long term, repealing or shutting down Section 230 could end up doing the opposite of its intentions by indirectly limiting free speech. With the threat of liability over users’ speech, smaller platforms without deep pockets to defend their actions could stop hosting user-generated content altogether. More robust platforms could double-down on pre-screening content at the expense of more niche online communities, as the Electronic Frontier Foundation warned (regarding Zuckerberg’s Section 230 amendment preferences): “[T]he vast majority of online services that host user-generated content do not have the technical, legal, or human resources to create systems that could identify and remove unlawful content.” Overall, this could lead to a small number of large, powerful platforms that restrict content to limit legal risk, thus suppressing free speech.

Goodbye TikTok and welcome low-earth orbit satellite infrastructure

Project 2025 is clear: TikTok represents a national security risk and will be blocked more broadly in the US. Note: TikTok (known as “Douyin” in China) is already heavily regulated there, where its owner, ByteDance, is located, and many countries have already instituted levels of TikTok bans. There will likely be significant public debate as millions of influencers lose their small-business income.

Project 2025 also promotes using Elon Musk’s Starlink and Jeff Bezos’ Kuiper communications satellites to reach underserved communities and provide high-speed internet and phone service. The shift to low-earth orbit telecommunications networks will create substantial new competition for cellular phone and cable network companies. Companies such as Verizon, AT&T, and T-Mobile, which have been eking out 2-3% annual growth, could be further relegated to obscurity in the media, B2B, and even consumer wireless markets.

Part of the drain on existing networks’ bottom lines will result from the enhanced security concerns Project 2025 communicates. It advocates for expanding the FCC “Covered List” (companies whose technologies cannot be installed in the telecommunications network), which will drive significant network investment as equipment is subject to a mandated “rip-and-replace program” throughout the United States. This is an expensive endeavor, and Project 2025 would require technology companies to fund the Universal Service Fund, which subsidizes equipment replacement.

There may be further implications for IoT investments to allow devices, such as cars, planes, industrial vehicles, and sensors, to communicate via satellite. By adding satellite connectivity, private network solutions can provide new capabilities for those industries without the legacy costs of a traditional carrier. This may lead to a significant reduction in technology investment by communications carriers and widespread layoffs. The knock-on effect will be the monopolization of communications by a semi-regulated private industry rather than an industry tasked with a universal obligation to provide service to all American residents and businesses.

Project 2025 also accelerates the release of bandwidth spectrum for use in 5G and 6G, accelerating the availability of high-bandwidth networks capable of supporting vastly more network devices. Expect audits and reallocating expenses related to “broadband waste” and improved oversight of federal programs for underserved communities. It can be argued that more broadband, however it is provided, offers consumers and businesses more options and stimulates competition and innovation. But again, in the US, Citizens Broadband Radio Service (CBRS) is available for Microsoft, AWS, and Google to deliver wireless 5G-like capabilities, further squeezing traditional telcos. In effect, low-Earth orbit (LEO) satellites and the release of 5G for private networking will come at the expense of telecommunications companies. This will only have a short-lived cost benefit for end consumers as the monopolistic efforts of a few firms will quickly move to own all the spectrum, access, and nodes needed for delivery.

IT services providers will see income opportunities early but at the cost of other revenue streams

From an IT services and digital engineering perspective, firms involved in network management, cloud computing, and infrastructure services could see new business opportunities stemming from the need to replace telecommunications equipment affected by the FCC Covered List. IT service providers may need to ensure compliance with heightened national security standards when supporting telecommunications providers or clients using federal funds. Expansion of LEO satellites will require IT services to integrate terrestrial systems with satellite communications networks. Other new opportunities will arise to develop systems compatible with satellite-based IoT, enabling advanced applications for industries such as transportation and logistics. Expanded FCC security measures will drive demand for managed IT security services.

Be wary that this gift horse has teeth. Neither Starlink nor Kuiper are heavy consumers of IT services. Instead, they are just as likely to lean on their technology capabilities to do much of the infrastructure investment and management themselves. That said, IT services companies should start developing strategies to support the pressures their current telecoms customers need from them, expecting declining spending over a 5-year period. And a second scenario where they create similar services for big tech companies (which, interestingly enough, will likely be dealing with the shifts from the prior section of this paper).

Deregulation and competition

Creating the perception of competition will be the name of the game for the new FCC and Project 2025. Media and ownership rules will likely be highly deregulated, allowing big companies to take advantage of their size while creating an environment of small-company innovation. Big tech may see a move to strip out its platform businesses to create legal and financial Chinese walls.

The impact of these new policies on the telecommunications industry will likely be substantial merger and acquisition activity not seen since the 1991 Telecommunications Act. Behind every merger is a significant amount of consulting services and technology expenses as companies standardize processes and systems. The dominos of change will dictate that IT services and advisory firms substantially change how they operate.

The Bottom Line: If the FCC decides to amend (or completely remove Section 230) or significantly move the posts on how internet and traditional communications are regulated, we will see seismic shifts in the TMT industry.

HFS recommends that leaders in telecom, high-tech, and IT services begin their scenario planning immediately to map out an accelerated divestiture of assets that will either expose them to new financial duress or limit their growth in a market that the new administration seeks to radically reinvent.