dslreports logo

story category
FCC Plays Dumb, Points Fingers Over Broadband Tax
FCC Disavows Idea as Press Notices New Levy
by Karl Bode 10:45AM Monday Sep 10 2012
As we noted back in March, our new national broadband plan involves reconfiguring the Universal Service Fund (USF) so that money paid into it is put toward broadband expansion (currently the funds only address school broadband and rural phone connectivity). It also involved increasing consumer broadband fees, estimated to be between $1 to $5 per broadband connection, in order to pay for it.

Though we've been discussing the idea since March, for whatever reason nobody apparently realized this tax even existed until this summer, when both progressive consumer groups and both parties alike began slamming the idea -- especially given the USF's long history of fraud and abuse.

With the tax suddenly making headlines, and it being election season, the folks at the FCC suddenly can't run away from the idea fast enough. The Hill has a really amusing story highlighting how despite the fact that Republicans and Democrats alike voted for the idea, they're now all denying they approved it and blaming its creation on the other party:
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.
Except that the additional levies on consumers have always been a part of the broadband plan (page 148, page 170) and it has been part of the FCC's ongoing "USF reform," which all commissioners ("who me?" McDowell included) voted for after much lobbying support from the likes of AT&T, Google and Sprint. Last month consumer group Free Press lambasted the tax and the expansion of USF funds without first reforming what has long essentially been an unaccountable slush fund for carriers big and small.

McDowell is of course first in line to head the FCC if there's a White House party shift, so it's especially beneficial for him to pretend he has no idea what anybody is talking about. It's particularly amusing because when this was called an "increase in the subscriber line charge" or "expanding the USF contributions base" nobody batted an eyelash. Call it a tax during an election season, and suddenly everybody at the FCC is ultra-concerned about the consumer's wallet.

topics flat nest 

Tavistock NJ

Problem is internet tax is additional tax & not replacement

This FCC backed USF tax on broadband was always pitched as a reconfiguration or replacement for POTS based USF fees. But no one actually believed that an internet tax would actually result in the elimination or reduction of the POTS USF fees. The government is not known for reducing or eliminating existing taxes. But they are well known for adding new ones. The MSM finally woke up to this recently and so the FCC taking the heat caused them to back off.

Reptiles Are Cuddly And Pretty
Mount Airy, MD

1 recommendation

Schools Red Herring

How many years have we been paying for connecting schools to broadband? Isn't this done yet? And why is it a federal problem? Why shouldn't state/local school taxes pay for this stuff since it is their problem?
Romney/Ryan 2012 - Put a couple of mature adults in charge.


Re: Schools Red Herring

The problem with the FCC, FDA etc is that the previous administration appointed their cronies to the key positions. These guys are out to make sure that the government and anything it does fails. No different to Alan Greenspan, who made decisions based on his no government or regulation Ayn Rand creed. The inevitable end result spoke for itself.

Cities and localities have no money. Remember, unlike the rest of the developed world, our tax model is centered around Personal Property and state income taxes and the archaic county based system. Put simply, a county or city is not able to realize economies of scale, as they are overseas, where everything is on a state level.

Why do you think our states are in the red? Teachers, Police, Fire? Dead Wrong. It's because the tax revenue from personal property taxes and state income taxes tanked the second the economy went into recession.

However, to this day, not one single Republican has accepted this fact. Instead, the continue to blame and scapegoat the aforementioned.

Austin, TX

Re: Schools Red Herring

said by Telco:

The problem with the FCC, FDA etc is that the previous administration appointed their cronies to the key positions.

/sarcasm on Of course this didn't happen with the current administration. /sarcasm off

Portage, IN
·T-Mobile US
This is the problem with partisans. We will never progress as a nation as long as everyone, rather than coming up with any real solutions, just continues to scapegoat the "other team" for doing exactly what "their team" is doing.

The previous administration appointed their "cronies" (industry insiders mostly) to key regulatory positions. Obama appointed his college buddy to run the FCC. Better or worse? But it's OK to be a parasite on the country, as long as the last guy did it too, right?

I am not beholden to any political party, and I have no problem with sound and reasonable regulations when imposed on industry to protect the citizens or consumers from monopolistic or dangerous behaviors and fraud. But when all the regulations seem to have done in the last few decades is protect the multinationals while turning the screws on the consumers and the little guy. In that case, I'm all for Ayn Rand.

Reptiles Are Cuddly And Pretty
Mount Airy, MD
said by Telco:

However, to this day, not one single Republican has accepted this fact. Instead, the continue to blame and scapegoat the aforementioned.

Blah blah blah.

Why didn't your man 0bama get this done from 2009 to 2011 then.
Romney/Ryan 2012 - Put a couple of mature adults in charge.

Lake Zurich, IL

Re: Schools Red Herring

Because your 'party' put up every roadblock they could think of to keep it from happening, rather than working for the good of the country.

said by pnh102:

Why didn't your man 0bama get this done from 2009 to 2011 then.

Of course "bla bla bla" as what else does your ilk have... It's always abstract scapegoats like the government or teachers that are apparently to blame for everything.

What he did was stop the depression we were heading into. Once again, you guys act as if you handed him the same economy Bush was handed from Clinton, like federal revenue exceeding expenses (aka a budget surplus).

Then you have the 275 filibusters by the Republicans and TEAnutters; the highest on record in our nation's history.

Exton, PA


I'm okay with that, didn't seem to be doing much good.


Glen Head, NY


I certainly agree with Free Press that the waste and fraud need to be removed from the system. The fact that AT&T and Verizon (and Google) are supporting this is even more reason to shoot it down. Anytime the big telco's support a change in the USF, you realize it is all about how much more money they can suck from the taxpayers and give nothing in return. Yet if you even broach the subject of municipal broadband, allowing the taxpayers to use their tax money to pay for their own service, the corporate titan's go ballistic. Yet take the same money from those taxpayers and funnel it to one of the telco's and they are happy as pigs in $#!t even though it is a worse deal for those very same taxpayers.
I support the right to keep and arm bears.

Complete Your Transaction


USF tax reincarnated

Unfortunately, the USF tax didn't die with the land line. It has morphed into the new broadband tax. It is disappointing that we couldn't use this opportunity to find a better way to support broadband deployment.



So stupid.

What did they think the FCC meant when they said they'd "broaden the base" of support?

Everyone on the 8th floor may be running away from this now, but wait until we aren't in an election year. They weren't planning on moving on this item this year anyway. Now, next year is another matter...

Little Rock, AR

when I had a land line was I paying for this

Hey give me a $15 a month phone service and then $18.70 a month in taxes and fees that no one can explain and get mad if you ask.

Hell they sound like they are training to be senators.
Lie,cheat,steal and bought off then say what,when,where...NOT ME

Richmond, VA

2 recommendations

Let the free market decide!

If Aunt Myrtle wants broadband in her farm house, she can pay for it just like the rest of us.

De gustibus non est disputandum
Phoenix, AZ

It's All Lies

Lies, they all lie and if they are elected they lie all the time and hire others to lie for them while they sleep.
My perception is REALITY