FCC Commissioners All Claim 'The Other Guy' Came Up With This Crazy Broadband Tax Idea

from the the-Man-inadvertently-sticks-it-to-himself-this-time dept

Most of the time, it seems our “representatives” in Washington simply don't care what their constituents want. The DC thought process is that constituents are not to be trusted, much less listened to. Of course, all bets are off during election cycles. Suddenly, everyone cares.

Karl Bode at DSLReports has been following the FCC's “National Broadband Plan” since the first draft was made public back in March. He noted then that an additional $1-5 was to be added to existing customers' monthly bills in order to help fund the USF (Universal Service Fund) and expand broadband coverage.

Now, after asking for public comment and realizing that election season is in full swing, the FCC, along with pretty much everyone in both parties is pointing fingers at each other for daring to hit the poor consumer with yet another tax, all while insisting that they weren’t the ones who proposed it. It seems this “proposal” magically appeared without anyone’s support, if you believe the sudden backtracking from, well, everyone.

Neil Grace, a spokesman for Chairman Julius Genachowski, said the commission only made the proposal “following the urging of Republican Commissioners and members of Congress.”

“The Chairman remains unconvinced that including broadband is the right approach,” he said. Robert McDowell, the only Republican on the commission when the proposal was floated earlier this year, flatly rejected that he ever supported the idea. “I have never suggested taxing broadband Internet access,” he told The Hill.

The Hill's Technology Blog has a few more details, including this bit of interesting bit of skepticism from McDowell, who is first in line to head the FCC if there's a party shift this November :

McDowell said he is skeptical that the FCC even has the legal authority to tax Internet service.

So, if I’m reading this right, no one on the FCC supports this proposal that the FCC put forth and is now considering, even though no one wants it. Got it.

Of course, this wasn't the only suggestion the FCC considered, but the others weren't much better.

In April, the FCC suggested a number of ideas for reforming the fund's contribution system, including adding a fee to broadband Internet service. The commission also sought comments on taxing text messages, as well as levying a flat fee on each phone line, instead of the current system, which is based on a portion of the revenue from interstate phone calls.

Between now and November, this plan will have no support from previously interested politicians. An FCC official has referred to the idea as “politically toxic.” Once the elections are over, though, it will probably be placed right back on the table.

The “internet tax” does have some support, though.

A number of companies, including AT&T, Sprint and Google, expressed support for a broadband tax in comments filed with the FCC.

Now, there's a good reason for these companies to support the funding of the UCF through these fees. For starters, this gets passed along to the customers so it's no money out of their pocket. (And it appears on the bill as a below-the-line charge, in order to allow both the government and the phone company to avoid calling it a “tax.”) Even better, the UCF has become a loosely-regulated “slush fund” which dumps collected “fees” directly back into the pockets of the same companies collecting it in the first place.

What started as a program with important goals (making sure rural farmers can make phone calls and ensuring the poorest among us can dial 911) turned into an unaccountable corporate slush fund. Today USF is an $8 billion annual program, nearly quadrupling in size since its inception, with the bulk of that increase going to landline and wireless phone companies.

Maybe this massive growth would be no concern if USF were a model program with a sterling reputation for efficiency. But it’s not. One recent study found that 59 cents of every USF dollar raised for rural networks was spent on administrative expenses and general overhead. A 2010 audit of the rural USF program found that one out of every four dollars sent to participating phone companies was an “overpayment,” with nearly a billion dollars unaccounted for.

The corporate supporters of this plan to “expand the USF contributions base” have no constituency to worry about and have boldly stated that they'd love to have additional fees levied, presumably for noble reasons, like providing 911 service for rural farmers or helping lower income individuals acquire broadband services.

AT&T says that “retail mass market broadband Internet access should be included” in the FCC’s tax, and Google “strongly supports expanding the USF contribution base to include broadband Internet access services,” even as it begs the FCC to exempt Google’s own voice telephony services from the USF tax.

Conveniently ignoring the fact that adding additional fees does nothing to encourage broadband adoption by the low income population, the companies who stand to benefit the most from having more money dumped into a big cash pool are also first in line to make generous offers with other peoples' cash. The government is always more than happy to “pick up the check” on grandiose gestures, but at least every two-to-four years they remember whose wallet they're actually using. But these companies, with a hand stuck in both your back pocket AND the till don't have a periodic attack of conscience. This “broadband tax” will return to the table again and again as long as lobbyists still roam D.C.

Filed Under: , , , ,

Rate this comment as insightful
Rate this comment as funny
You have rated this comment as insightful
You have rated this comment as funny
Flag this comment as abusive/trolling/spam
You have flagged this comment
The first word has already been claimed
The last word has already been claimed
Insightful Lightbulb icon Funny Laughing icon Abusive/trolling/spam Flag icon Insightful badge Lightbulb icon Funny badge Laughing icon Comments icon

Comments on “FCC Commissioners All Claim 'The Other Guy' Came Up With This Crazy Broadband Tax Idea”

Subscribe: RSS Leave a comment
Anonymous Coward says:

as long as there is a single item that can be taxed, that can add revenue to a company for what ever reason, under whatever circumstances, there will be someone that comes up with a ‘bright idea’. the minute it even looks as if it may cost anyone except the public any money, it will be dropped. when are people going to get it into their thick skulls that no one gives a flying fuck about them, what they want, what is best for them and/or everyone, as long as they are paying out?

Ninja (profile) says:

Politics. I believe it’s the only thing that’s universal. Universally corrupt and hypocritical. Actually it doesn’t really matter if there’s lobbying or not. Without it they’ll just order general polls to see what’s the hot topic among the voters and then hammer those ad nauseam. Then after they win they’ll just ignore those topics and revert to the standard politician working to benefit their own megalomaniac needs which includes their pockets.

MaJoR Rush (profile) says:

I kinda of disagree with the author on this one. As someone who has dialup, trust me, we have to goad the telecoms with something. There wouldn’t even be power and telephone lines here if it wasn’t for the encentives in the great depression. Something has to be done, because otherwise the telecoms will happily exclude millions of people because of their shortsightedness.

Here’s what I think. The companies are supportive of it, so use it as a chance to redo the whole system. Set up proper accounting and insure that every dollar is spent appropriately. Obviously there will be loopholes and problems, but if you start with a good foundation and fix things as they come up, you can make it work. THEN, after you have a good basis, you alter how money is collected. Obviously the interstate telephone tax is not sustainable, so something else will be done. I imagine, they could set it up so people pay the same amount give or take, but it’s for broadband and not telephone service. That way, as telephone service fades away, the USF will be sustained.

That Anonymous Coward (profile) says:


We’ve given then shitloads of money and your still on dialup, I think we can safely say the plan failed.

Before just throwing more money in the pool and praying it fixes the problem, it might be time to fix the whole system.

We’ve also provided tons of money for expansion and more coverage outside of this program, and we have jack shit to show for it.

The telcos are not interested in expanding their networks, because that would take money away from them, even though we are handing them 8 billion a year they can’t even keep with with the demand in a major city. Do we think handing them 16 billion would mean they might finally get everyone up to a basic level of service? Or would they find a new way to skim their cut off the top, while keeping us at the bare minimum service levels.

A much better solution would be to point out they are getting 8 billion a year, and the expectation is they will be providing x coverage expansion a year or the money gets paid back with interest. A company paying a CEO millions a year in bonuses really shouldn’t need cheap right of ways any longer.

Or maybe it is time to take a page from the WPA and put people to work running fiber across the country. The private sector won’t do it, so we should do it with the money rather than let them line their pockets with the cash. Other countries offer radically faster services for less to their citizens, if we plan to compete with the world we should be keeping up.

Add Your Comment

Your email address will not be published.

Have a Techdirt Account? Sign in now. Want one? Register here

Comment Options:

Make this the or (get credits or sign in to see balance) what's this?

What's this?

Techdirt community members with Techdirt Credits can spotlight a comment as either the "First Word" or "Last Word" on a particular comment thread. Credits can be purchased at the Techdirt Insider Shop »

Follow Techdirt

Techdirt Daily Newsletter

Techdirt Deals
Techdirt Insider Discord
The latest chatter on the Techdirt Insider Discord channel...