Is the FCC Considering a Broadband Tax?

by Jordan Richardson on August 28, 2012

According to reports, the Federal Communications Commission is considering a tax on broadband Internet services in the United States. The tax would send much-needed cash to the Connect America Fund, an agency-created subsidy that the FCC set up last year to increase access to the World Wide Web.

Thus far the issue has dropped out of public view, but some corporations and trade associations are chiming in after the FCC issued a request for comments when the proposal first landed in April.

So why is this coming up now? Because it could conceivably be an election issue and that could mean that the FCC has to put the brakes on it – for now.

Right now, the problem seems to be that Congress doesn’t even understand that the issue is in the works. “If members of Congress understood that the FCC is contemplating a broadband tax, they’d sit up and take notice,” said Derek Turner, research director for Free Press.

To support the FCC’s Universal Service Fund, consumers pay fees on landlines and cell phone bills. That fund ensured, at least theoretically, that every American had access to telephone services no matter where they lived.

At some point last year, the FCC “overhauled” a portion of the aforementioned Fund and turned it into the aforementioned Connect America Fund in hopes of supporting the construction of new broadband networks to get access to some 19 million Americans out of range of current services.

The FCC’s current mandate is, at least in part, to expand Internet services as much as possible. Chairman Julius Genachowski has argued that broadband access is essential in today’s economy, but generating adequate funds to ensure that services broaden is becoming a bit of a challenge.

As a result, the Commission had a few ideas for getting more contributions. A tax on text messages was suggested, as was a flat-rate levy on phone lines.

As of now, the FCC isn’t “going ahead” with any of the ideas to generate more money for the Fund. It is seeking input, though, and that’s where public response becomes critical – no matter what side of the fence consumers find themselves on.

AT&T, Sprint and Google are among the companies said to be in favour of the tax. This makes sense, as these companies stand to gain more revenue when more consumers are connected to broadband services.

Of course, at this point and time (and indeed at almost any point and time in recent American history), the idea of a new tax of any sort is an abomination that signals the death knell to political ambition. That’s why this issue will likely still fly below the radar, at least until the dust settles in November.

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