AT&T Promises Your Broadband Will Suck Less…But Only If It Gets Another Massive Tax Cut
from the Charlie-Brown-and-the-football dept
One of the reasons for the U.S.’ pricey and mediocre broadband is our historical habit of throwing oodles of tax breaks and subsidies for fiber optic networks at giant ISPs, then letting them tap dance over and around those obligations when it comes time to deliver. Verizon, for example, has gobbled up millions in subsidies and tax breaks from cities and states up and down the Eastern seaboard for fiber optic networks it fails to fully deploy. Given the stranglehold large ISPs have on federal and state regulators and lawmakers, efforts to hold these companies accountable for any of this have been decidedly mixed.
AT&T has similarly spent decades demanding all manner of regulatory concessions, tax breaks or subsidies in exchange for broadband upgrades that seem perpetually just around the next corner. Whether it’s gunning for tax cuts and subsidies, or looking for approval of its latest megamerger, AT&T’s an absolute master of the regulatory carrot and a stick game. Even if the carrot is entirely hallucinated, as we saw when AT&T threatened to curtail its already modest fiber optic deployment unless net neutrality was killed.
Ignoring the fact that AT&T has been making the same empty broadband deployment promises for the better part of the last decade, the company popped up this week to throw its support behind Trump’s latest attempt at “tax reform.” According to an AT&T statement, the company insisted that reducing the company’s tax burden will result in all manner of new broadband investment:
“By immediately lowering the corporate tax rate to 20%, this bill will stimulate investment, job creation and economic growth in the United States,? said Randall Stephenson, AT&T Chairman and CEO.
“With a rate of 20% combined with provisions for full expensing of capital expenditures for the next five years, we?re prepared to increase our investment in the United States. If the House bill is signed into law, we?d commit to increase our domestic investment by $1 billion in the first year in which the new rates are in place. And research tells us that every $1 billion in capital invested in telecom creates about 7,000 good jobs for the middle class.”
The problem, again, is that AT&T simply has no credibility when it comes to broadband deployment promises. The company has a long-standing history of promising greater broadband investment if it gets “X” (the death of net neutrality rules, the death of privacy rules, more subsidies), then either ignoring those promises outright, or fiddling with its deployment numbers to make it appear that it adhered to its own promises. Meanwhile, in the real world, AT&T remains under fire for failing to upgrade broadband in numerous urban areas that should have been upgraded to fiber decades ago.
AT&T has whined fairly incessantly about the U.S. tax rate being among the highest in the developed world. And while technically true, telecom providers in particular use all manner of loopholes to ensure they often pay a pittance in taxes. That includes using Reverse Morris Trusts to dodge all tax obligations as they sell off chunks of their networks they refuse to upgrade, efforts that have resulted in a few bankruptcies for smaller ISPs on the receiving end of this creative bookkeeping. The end result is often an effective tax rate of 0% for companies like Verizon.
History generally indicates that any additional tax cuts will be pocketed by telecom sector executives, not put back into the network. That’s because we’ve built a system where we not only refuse to do anything about a lack of competition in the broadband sector, but actively reward companies that falsely promise the broadband we truly want is just around the next corner, but only if we’re willing to give these companies everything under the sun.