The FCC is considering a proposal that would levy a tax on broadband Internet service, which is gaining support in Congress. The intent of the proposal is to generate revenue for the Connect America Fund, which is a subsidy meant to finance the expansion of broadband Internet access to rural and underserved areas.
The Connect America Fund is currently being funded by additional fees on landline and cell phone bills nationwide. Other proposals being considered by the FCC include a tax on text messages, or adding a flat fee on each phone line instead of charging a percentage on interstate phone call fees. According to FCC Chair Julius Genachowski, the existing funding system is inefficient and behind the times: “Today we propose three goals for contribution reform—efficiency, fairness, and sustainability.”
However, the FCC may face strong legal obstacles in instituting a new tax. The Internet Tax Freedom Act, passed in 1998, prohibits the taxing of Internet access, which was intended to encourage more broadband subscriptions and hasten the nation’s transition into the wired era of instant communications. According to the FCC, the proposal is really a fee rather than a tax, though whether this euphemism is accepted by the courts remains to be seen.
The proposed “fee” will expand internet access rather than restricting it, according to its proponents. Genachowski added that “any reforms to the contribution system must safeguard core Commission objectives, including the promotion of broadband innovation, investment and adoption.”
Tech giant Google and telecom behemoths Sprint and AT&T have no objections to the tax proposal. However, Google did add that taxing certain services like email or Google Voice might not be very effective in generating the funds because it might discourage “innovative options for all communications consumers and cause immediate and lasting harm to the users, pioneers, and innovators of Internet-based services.”
As for me, I don’t like the sound of this proposal. Don’t get me wrong—I fully support the expansion of broadband into the rural and underserved parts of this country, and I agree that we should join the rest of the 1st world (like Singapore, France, Japan, Germany, etc.) when it comes to defining high speed broadband and making it available to all. I think it’s terrible that large parts of this country still have medieval internet networks, so I do think that modernization can’t come fast enough. However, I do question the wisdom of levying “fees” or “taxes” or whatever you want to call it on internet broadband subscribers. I’m not an anti-tax zealot, so I know we need taxes to fund important government initiatives. But we’ve paid enough taxes—why can’t they take the money from the banks, who have more than enough money to pay for this initiative, given how the public has bailed them out? I don’t get why the subscriber who’s already on a tight budget needs to pay any more—taxes, fees, or whatever. It’s hard earned money out of the pockets who can afford it least, no matter what you call it. Does the Connect America Fund deserve to exist? Of course. I just don’t think it’s fair for subscribers to pay the price when all that’s really necessary is a rearrangement of priorities. I’m not going to argue about the size of the military budget, or how we found 700 billion for the banks without having to levy additional “fees”. I believe there are better ways to get the funding, so here’s to hoping that the proposal withers on the vine.