When it comes to the cost of broadband service, those who can afford it are often frustrated by the additional taxes and fees that accompany their monthly bills. Last fall, Congress took strides to reduce the amount of excess taxes that could be added to phone and internet bills through passage of the Permanent Internet Tax Freedom Act – a law that permanently bans state and local taxes on internet access. The bounds of that protection may be tested, however, based on a recent ruling by the Oregon Supreme Court. After several rounds of legal wrangling, the Court affirmed a lower court decision allowing the City of Eugene to levy a 7% license fee against broadband services provided by cable companies.
In response, eight national and regional civil rights, intergovernmental, professional, and community-based organizations representing tens of thousands of consumers wrote a letter to the Federal Communications Commission expressing their concern “about efforts to circumvent the Internet Tax Freedom Act (ITFA) – legislation passed by Congress in 1998, and made permanent in 2016.” The Broadband Access Supporters say this new broadband fee is going to be passed through to consumers, and is merely an internet access tax in disguise. Following the ruling, “several other municipalities in Oregon now view broadband fees as a way to raise revenues and have followed Eugene’s footsteps by imposing duplicative fees and taxes on broadband access. Other states and municipalities are sure to follow,” says the group.
This kind of hidden taxation is bad for consumers. According to the Broadband Access Supporters, “when the cost of broadband services increase, low-income individuals and families are the first to feel the financial burden. This in turn impacts adoption and the ability of families to participate in a digital economy. The Oregon law requires families to directly shoulder the cost of broadband.”
Stating their support for “policies like ITFA to help close the digital divide, improve quality of life, and create pathways to first-class digital citizenship for low-income, veteran, senior, multicultural, and disabled consumers,” the Broadband Access Supporters weighed in. “State and local efforts to circumvent ITFA are in direct opposition to Congressional intent to promote broadband adoption. These efforts disrupt progress toward increasing broadband access, infrastructure investment, and network deployment.”
As noted by Broadcasting & Cable, the Multicultural Media, Internet & Telecom Council, one of the Broadband Access Supporters, wants the FCC to intervene and preempt laws that effectively operate as a broadband tax on consumers.
“The Federal Communications Commission is wise to seek comment on fees that harm adoption and deployment of broadband [the FTC has launched a notice of inquiry into clearing away local and state impediments, including preemption], and we implore the Commission to ban fees like those imposed by Eugene,” they wrote the FCC. “ITFA was established to protect consumers from expensive broadband access fees or taxes. The FCC must use its platform to support ITFA policy, as it will result in a tremendous public interest benefit in ensuring that every American has affordable access to the digital economy.”