July 1, 2005 12:55 PM PDT

New tax for broadband customers?

Many broadband customers will pay new universal service taxes akin to those on their telephone bills if Congress bows to suggestions from rural legislators.

The suggestions came as lawmakers started debating changes to the Telecommunications Act of 1996, which created the framework for the Universal Service Fund, overseen by the Federal Communications Commission.

The USF currently collects a fixed percentage of revenues from long-distance, wireless, pay phone and telephone companies so that it can pass on subsidies to low-income customers, high-cost areas, and rural health care providers, schools and libraries. Most companies come up with their share, set for this quarter at 10.2 percent, by charging their customers a fee.

The USF should continue to be "industry funded," but the base of contributors should be expanded to "all providers of two-way communications, regardless of technology used, to ensure competitive neutrality," a bipartisan coalition of rural legislators said in a June 28 letter to the U.S. House of Representatives Energy and Commerce Committee, which will be drafting the rewrites. That means companies providing broadband services such as VoIP over telephone wires would also have to pay into the fund.

"We need to ensure government policies protect the infrastructure that makes advanced services, including broadband, possible and available to everyone in the United States," said the letter, signed by 62 House members.

"If our residents are to be competitive in today's fast-paced, technology-driven global marketplace, our communities will require affordable high-speed, high-capacity access to data and information over the Internet," Rep. John Peterson, R-Penn., co-chairman of the Congressional Rural Caucus, said at a press conference held the day the letter was released. "If the private sector is either unwilling or unable to provide that service at an affordable price, we'll find a way to provide it for ourselves."

The wireless industry applauded the proposed change "since wireless consumers are significant and disproportionate payers into the universal service and intercarrier compensation systems," Steve Largent, CEO of CTIA - The Wireless Association, said in a statement.

But Randolph May, a senior fellow at the Progress and Freedom Foundation, a market-oriented think tank, said policy-makers should be cautious before making any changes. Broadband access, he said, is getting cheaper and more widely available.

"It's not clear that any subsidies are needed," May said. "But if policy-makers want to provide some subsidies, they should be, in my view, carefully targeted to low-income people that really need them."

The Universal Service Fund in recent years has faced allegations of waste, fraud and abuse. The FCC announced in June a formal inquiry into its management.

20 comments

Join the conversation!
Add your comment
Last thing we need is more taxes
I take it from the stories headline and article is that this is being proposed for voip services, god knows if my DSL bill goes up because of some new tax being added (its not like the Telephone Service isnt overly taxed as is) im disconnecting it, Besides the internet is becoming over regulated and not as open and fun or free as it used to be.
Posted by (71 comments )
Reply Link Flag
New Tax for Broadband
I am a little disgusted that now the Universal Service fee will be taxed on to Broadband/DSL service. Isn't the consumer paying enough to the phone companies for this fund. If lawmakers are suggesting that this fee be added and the telecommunication companies are passing it on to the consumer then we should be able to use these fees as a tax writeoff since it is going to "low-income customers, high-cost areas, and rural health care providers, schools and libraries".
Posted by (1 comment )
Reply Link Flag
Taxing the hell of things isn't how you make them
affordable...at least not to the average consumer.
As for low income families, there are more important things than broadband and VOIP. Why not worry about something important like health care?
Posted by unknown unknown (1951 comments )
Reply Link Flag
New tax for broadband customers?
If someone in a rural area wants broadband service "now", it is available from satellite without waiting for a line. The only reason I can afford broadband now is that VoIP combined with my cable modem is about the same cost as I was paying for my phone line alone (including taxes). If they add on more taxes the only people who will be able to afford broadband will be those with high incomes and the low-income families that get the subsidies. I also do not understand why we are paying a fee to the providers so that they can expand, get more customers, and make more profit. Are there still parts of the US where people do not have phone lines, shouldn't part of the cost of business for the providers be to keep their lines and equipment up to date (I bet they even deduct these costs from their taxes)? I do believe that schools and libraries should have broadband access so that students can use the Internet as an information source, but I do not know if I like the idea of subsidizing someone at home who is using it for entertainment purposes.
Posted by youngga2 (1 comment )
Reply Link Flag
Hypocrisy and double-talk/taxing...
>> ...The USF should continue to be "industry funded," but the base of contributors should be expanded to "all providers of two-way communications, regardless of technology used, to ensure competitive neutrality,"

But, ...the Supreme Court, at the urgings of the FCC, just declared that "Cable Broadband providers" are NOT "common-carriers" (they are "information Service Providers", whatever that NEWLY-INVENTED pseudo-term means), and CABLE-COs are, therefore, NOT obliged to provide "equal access" to allow any competition. So, how can they be required to extract a "communications tax" from consumers..?

Likewise, if you are already paying such access-fees to a "telephone company" for "DSL", then a new "tax" would mean that some Americans are being DOUBLE-TAXED for Internet-access.

Either way, businesses will charge more, the government will make more TAX-money, and you and I will pay for it. Then, we will be told how lucky we are, for being given the "...privilege" of being "American-consumers".

E-GAD...
Posted by Raife (63 comments )
Reply Link Flag
Broadband is not a necessity
This is absurd. I already think that it is silly to subsidize low-income telephone service. Now they want me to subsidize low-income broadband internet access? Are our congresscritters on dope?

Broadband internet access is a luxury for home users. Not a necessity. You will not die from lack of broadband internet access.

As far as subsidizing broadband access to rural areas, I think this is crazy. If these people want access, let them pay for it. There are certain trade-offs for living in a rural area as opposed to an urban one. Inexpensive internet access is one of those trade-offs. This is the U.S.A, not China, and people are free to live where they want. If you want inexpensive broadband access, move to the city. If you want bucolic scenery, live in the country.
Posted by aabcdefghij987654321 (1721 comments )
Reply Link Flag
I disagree...
There are more poor people in this country then there are rich and middle class combined. With most high paying jobs being moved over seas and people having to work for much less money, no benefits, expensive housing and everything else that is manditory (like car insurance, etc.) people can not be expected to be able to pay full price for phone service. Having a phone available incase of an emergency is a must. As for broadband, it too has become a requirement in order to be able to participate with the rest of the world as well as hopefully to get knowlege that may help them get better jobs and make more money.

Now if we were talking about discount cell phones for the poor I would say screw that. Cell phones are not a requirement. A wired phone and internet access is, unless of course the world is going to stop doing everything online and with computers.

Robert
Posted by (336 comments )
Link Flag
Broadband not a necessity??????
How many childern will have an equal opportunity in education without broadband in today's society?

We are already forcing a higher percentage of rural and low income young adults into military service in order to get an equal shot at an education.

It is true you will not die from a lack of broadband internet access but you will be disadvantaged.

You must be a "compasionate conservative" Republican, since you don't even use your name in your response.

I am an Independent and capable of thinking for myself. I believe we need to level the playing field for young Americans. I might add that some of the best come from the rural areas.

Ed Shaffer
Dallas, TX
Posted by EdShaffer (19 comments )
Link Flag
I have no problem with a new tax...
If it was to actually be used to get broadband in to rural areas. But, what will happen is the government, states and broadband companies will take and waste the money instead of using it for what it was meant for.

I also think that before they start expecting us to pay more in to a fund like this that they make damn sure it isn't guilty of the aligations brought against it. Only when it has a clean bill of health and free from corruption and waste should new taxes be added.

Robert
Posted by (336 comments )
Reply Link Flag
69 Years Later We Still Have The Rural Electrification Program
It has been 69 years since the Rural Electrification Program was created. God knows how many bureacrats this agency employs and what the annual budget is. By now the entire habitable rural countryside should have been electrified. The same thing will happen if this new tax is passed. Rural America will NEVER be broadbanded sufficiently to repeal the tax. The tax is guaranteed to increase year after year, and any attempts to cut funding will be labeled as discrimination against the poor.

<a class="jive-link-external" href="http://www.usda.gov/rus/electric/" target="_newWindow">http://www.usda.gov/rus/electric/</a>
"Providing reliable, affordable electricity is essential to the economic well-being and quality of life for all of the nation's rural residents. The Electric Program of USDA's Rural Utilities Service (RUS) provides leadership and capital to upgrade, expand, maintain, and replace America's vast rural electric infrastructure. Under the authority of the Rural Electrification Act of 1936, RUS makes direct loans and loan guarantees to electric utilities to serve customers in rural areas. Through RUS, the federal government is the majority noteholder for more than 700 electric systems."
Posted by Stating (869 comments )
Reply Link Flag
We need a level playing field.
How many childern will have an equal opportunity in education without broadband in today's society?

We are already forcing a higher percentage of rural and low income young adults into military service in order to get an equal shot at an education.

It is true you will not die from a lack of broadband internet access but you will be disadvantaged.I believe we need to level the playing field for all young Americans. I might add that some of the best come from the rural areas.

Ed Shaffer
Dallas, TX
Posted by EdShaffer (19 comments )
Reply Link Flag
We Already Paid For It
Several years ago yet another phone tax was levied to fund Internet access in public schools. And a lot of libraries offer free Internet access, including WiFi. There is Public Television, also funded by taxpayer money, that provides many hours of free children's programming to the poor. At some point you have to say enough is enough. NO MORE TAXES. Use what you have more efficiently. When is the last time you saw ANY report on the Federal Government that focused on productivity and efficiency?

It's very easy to trot out the "It's for the poor. It's for the children." slogans. What it really is for is the bureacrats and corporate fat cats who get lucrative contracts in exchange for campaign contributions.
Posted by Stating (869 comments )
Link Flag
Socialism
People have tried to level the playing field. It lead to the development of Socialism and Communism.
Posted by unknown unknown (1951 comments )
Link Flag
Speak out! Write to your representatives
24% of my cell phone bill goes to various taxes and fees. My landline telephone bill has its own long list of taxes and fees. Now they want to do the same thing with broadband. When will it end?

If enough of us speak out by writing or calling our representatives in the House and Senate, then we can stop this overtaxation. If we remain silent then we have only ourselves to blame for letting them increase our taxes once again.

Keep in mind that it is in the nature of their position to look for more services to provide their constituents. We would probably do the same in their shoes. But it's up to us to keep them in check and make sure that they don't overdo it. Unchecked government only leads to overgoverning.

Use the following links for contacting your representatives:

<a class="jive-link-external" href="http://www.senate.gov/general/contact_information/senators_cfm.cfm" target="_newWindow">http://www.senate.gov/general/contact_information/senators_cfm.cfm</a>

<a class="jive-link-external" href="http://www.house.gov/writerep/" target="_newWindow">http://www.house.gov/writerep/</a>
Posted by Juster444 (33 comments )
Reply Link Flag
Consumers Will Cancel Basic Phone Service
It seems that local exchange carriers will have the most to lose if the tax goes into effect. They will see a further erosion of basic phone service revenue as customers cancel fixed wire service altogether to avoid double taxation.

Continuing to hike fees will only spur consumers to look for ways to cut their phone bills. If a braodband tax goes into effect, then the first thing I will do is cancel my basic phone service and get naked DSL. I can use my cell phone for calls, including 911. I can use Skype for long distance. I'm not going to pay the same tax three times (local, cell, broadband).
Posted by Stating (869 comments )
Reply Link Flag
The rural poor can't participate in piracy!
How fair is that? Obviously they need broadband so they can have the same access as the urbanites to such things as illegal downloads of recent movies and the latest in Top 40 mp3s. And Doom3! And XBox Live! And they've got to be involved in all the same online gambling and video dating as those blessed with broadband.

Last I checked the web and email still worked on dialup. And also, most public libraries in the US do have broadband.
Posted by DaClyde (96 comments )
Reply Link Flag
 

Join the conversation

Add your comment

The posting of advertisements, profanity, or personal attacks is prohibited. Click here to review our Terms of Use.

What's Hot

Discussions

Shared

RSS Feeds

Add headlines from CNET News to your homepage or feedreader.