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Cable Modem Tax Proposed by FCC
TheSync writes "News.Com has an article by Declan McCullagh that says the FCC is considering a new tax of up to 9.1% on the revenue of cable modem providers. This is an expansion of the existing universal service fund, which currently does not apply to cable services. The USF could even be expanded to wireless IP and VOIP providers as well, expanding the fund to over $13 billion."
Well, I can't really say that this surprises me and as much as it may suck that my cable bill would go up, at least the money is going to some somewhat good causes:
About 85 percent of the fund's revenues are split between two causes: the "e-rate" program (40 percent), which subsidizes school and library Internet connections, and rural telephone companies (45 percent), which might otherwise end up paying more for telephone service than city dwellers. The remaining 15 percent goes toward discounts to low-income subscribers and funds rural health care.
I have often regretted my speech, never my silence.
-Xenocrates
deserve's got nothing to do with it...
These assholes already have forced my DSL provider to bill me for this, never mind that there's no phone service going over my data line (right now). To force this for cable as well is insane.
7 November 2006: The day Americans realized corruption and incompetence weren't addressing 11 September 2001
Who's with me? I can see the pile in the middle of bay now =)
Stranded.org
They take X dollars earmarked by this Fee/Tax and apply it to Y, while giving the X dollars which used to fund the program back to the general fund to spend elsewhere. It's a bait and switch that leaves the "needy program" funded at the same or marginally higher levels than before the Fee/Tax.
For a great example of this, look at how the states "fund" education from their lotteries. It's a scam.
the idea behind the universal service fee was originally to provide basic telephone service
Cable modem doesn't fall unnder my definition of "basic telephone service". No way do I buy that internet access is the same sort of necessity. Got your leg caught in a thresher? My first reaction would be to pick up a phone, not a cable modem. It's just not a necessity. So much so that I'll gladly drop it if this tax materializes.
That would imply that schools need Internet access more than additional teachers. NOT!
So basically I'll have to pay a higher bill and children instead of getting a better education and learning the fundamentals will get a computer thrown in their face.
Sorry but kids don't need computers as much as they need traditional education.
If you wanna get rich, you know that payback is a bitch
When I signed up for AT&T broadband, the pricing was $34.95 for service, $10.00 for modem rental. I bought a modem, so my monthly bill was $34.95. After 6 months or so, ATTBI decided to restructure their pricing to $42.95 for service, $3 for rental. In essence, they were extorting an extra $7 per month from their most loyal customers (the ones who made the investment in hardware) while not affecting the renters who had no financial investment and could leave at any time.
Then along came the Comcast buyout of ATTBI. The very same week, I got a letter from Comcast alerting me that they had noticed that I was a cable internet customer, but not a cable television or long distance customer. As such, my broadband internet price would jump from $42.95 to $57.95. That is, of course, unless I opted to sign up for their cable television service, in which case I could keep the "bargain" price of $42.95. I don't want Cable TV (hell, I know I already get it due to the way the technology works).
So my cable bill has made two jumps since January, from $34.95 to $42.95 to $57.95. That's a total increase 65.8% since then! 66%! Why did my bill gone up 66% over four months? Did the cost of providing me that service really go up that much?
Add 9.1% to $57.95, and we're up to $63.22 - that's an 80.90% increase in the cost of my service since last December!
Imagine if the cost of everything else went up 81%. That $20,000 car would be $36,200. A gallon of milk would jump from $1.50 to $2.72. Gasoline would jump from $1.60 per gallon to $2.9 per gallon. And my sallary would increase by roughly 2%. Now, I'm not an accountant, but I think I can see that if my salary increased by 2% and the cost of living increased by 81%, I wouldn't be doing too well.
How are you going to keep them down on the farm once they've seen Karl Hungus?
The people who need the money the most are the people who are unemployed. When you are unemployed you have no income, and hence pay no taxes. The only way to help those people with a tax cut is to cut taxes of people who will either:
If you're one of the 8% or so of people out there in the US with no job, that's the only kind of federal tax cut you should be looking for, because it's the only kind that's likely to have any chance of helping you.
Cutting taxes for people with low income won't help the unemployed people because the money will be spent on retail items that will probably come from China given our current trade deficit, so while such a tax cut might help those low income people, it won't help the economy or the unemployed.
All that said, I think this most recent tax cut is stupid. It's not the tax cut Bush asked for, and because it was renegotiated to go more to the lower end of the income scale it's essentially $350 million flushed down the giant hole that is our trade deficit.
Have to go devil's advocate here for a sec...
"55% of this tax will go to school internet connections, library internet access, and low-income subscribers and health care. 45% goes to the somewhat less worthy but still valid rural subscribers to keep costs equitable."
School internet connections? Schools in this city first need a) usable hardware, b)knowledgable, decently paid teachers and IT staff, and c) an actual use for the internet in their curriculum.
Library internet access? So we've settled all those issues about recordkeeping, privacy, restricted content and so on? Good to hear.
Low income subscribers? Low income _cable_ subcribers? So cable tv/modem service is a right now?
Health care? That's just a weird place to fund health care from. They use up all my cigerette taxes that fast eh?
Rural access is less worthy? And why is it that much more expensive anyway?
Just what the weak economy needs, more taxes.
"Yes, that's right. 55% of this tax will go to school internet connections, library internet access, and low-income subscribers and health care. 45% goes to the somewhat less worthy but still valid rural subscribers to keep costs equitable. Now, what was that you were about to say?" ...and 100% will go right back into the pockets of the big monopolies. Whom do you think is going to get these taxes? Sure they will go toward providing "services" at a "fair" price for the poor little children. But surely the companies will be given a market rate for their services which are being mandated, one for which they will profit.
This is just another case of power hungry beaurocrats and money hungry monopolists feeding eachother. Yet another government subsidy of big business.
Please nobody forget that taxes are when people are forced to pay for something they wouldn't voluntarily pay for... if someone came to your house and took your money without your consent, then I think even the most maleable among us would be offended. Why is this money grab any different? You say because we elected them... that we collectively have chosen this?
No. Democracy thrice removed is not democracy. These people are thieves pure and simple. They do not represent me, any more than they represent you. They take our money by force and hide behind promises of job creation and benefit to children and the poor, but no good can come from a thieves gold.
Sure we have a choice to pay for these services or not... to participate in society or to not. To pay taxes or to not, but what choice is that really? Not a free one.
In my area free school access is just part of the price cable modem providers pay for cable's right of way. School access doesn't really cost much of anything for the providers beyond the istallation, so why not just mandate it from the monopolies? By my accounting it would take just a couple hundred subscribers in a community to easily defray even the commercial cost of educational access, let alone the real cost. Education access in exchange for right of way is a fair bargain, an exchange of value, not a theft like these proposed taxes and many others
Eventually this corruption will stop, either we will put a stop to it or it will stop us, but it will stop.
Or, like you said, are only "incumbent" telcos allowed to sit at the trough?
:-) aww... restating revenues is something everyone does!), the problem is that this avoids reality. In the upper midwest, we've had incumbants actually threatened with license recovation because they refused to deliver a single T1 to a commercial entity in an underserved/ignored market. In Qwest's defense, they have so many major fires, that a little town of 2,000 people is something it just something it doesn't have time to worry about. "Ignore them and they'll go away" is the new operating statement.
It's sort of a public relations vs. reality issue. The fuzzy program materials sound great. In fact, programs such as the farm bill and RUS grant/low-interest loan provisions have gotten so many folks excited about easy money that I've had 3-4 calls a week from startups, angels, small communities, etc. that want me as a partner to obtain some of this money for their project. (One two weeks ago had already started hiring technicians to get going, you know - step 1. fill out RUS low-interest loan app, step 2. ???, step 3. make billions!).
The reality is much different and clearly benefits the incumbants. RUS, for instance, specifies capital reserves and other operational details that are structured towards a certain kind of operator (hint: incumbant).
We monitored the farm bill/broadband process very closely. Without giving my location away, I'll say that several board members have good contact with a key driver of the farm bill. Always, the devil's in the details and when the rules were finally published, the details were written to benefit incumbants. (Not that I would defend this particular Senator, but he didn't write the rules that gave away the store to the incumbants).
While I can understand the argument that "incumbant = low risk" and better track record for integrity (like Qwest?
The smaller incumbants have another equally troubling issue. While they're more engaged with their community and usually do care about the local people, they're terribly incompetent. They have an aging engineering staff that's eyeing retirement, have avoided infrastructure reinvestment for 20+ years, and quite simply do not understand wide area carrier networks. To them, a AT&T Internet T1 + DSLM = broadband for thousands. In their defense, a one to a dozen market incumbant is a post-regulatory oddity that survived in spite of evolution. You can't expect to be competitive on this tiny scale. A Cisco CCIE should be handling a region as large as a state (and needs the portion of revenues from that area to be cost-effective). So they don't have CCIEs. They've got guys who used to repair tractors working as router "experts." Seriously... one competitor's top engineer also maintains the fleet vehicles and is the groundskeeper as well. Need I say "DHCP enabled on a wireless AP serving a community on an omni antenna"? Ugh!
Please understand I'm not whining about the Federal loans/grants - I don't take any of it because I know better than to ask for it. It's not intended for me, as I don't pay an attorney in DC thru the various ILEC/RBOC lobbying firms. I don't aspire to receive this money either, as the price I have to pay for it (regulation, political donations) is not acceptable.
But to tax my small town customers and punish my business under the guise of "helping incumbants find a way to provide broadband to small towns" is criminal and is a very good way to turn red fly-over country blue (god forbid). If they really wanted to figure it out, they'd sell the house in Vail, drop the country club membership for upper management, and tell the five engineers that serve one small town that they need to produce or get the boot.
And the FCC had better remember that right now is a really bad time to put a tax on these small town folk. They don't have the dollars to give, and you can expect I'll let them know who added the tax.
*scoove*
SVM, ERGO MONSTRO