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FCC Panel Wants To Tax Internet-Using Businesses, Give the Money To ISPs (arstechnica.com)

The FCC's Broadband Deployment Advisory Committee (BDAC), which includes members like AT&T, Comcast, Google Fiber, Sprint, and other ISPs and industry representatives, is proposing a tax on websites to pay for rural broadband. Ars Technica reports: If adopted by states, the recommended tax would apply to subscription-based retail services that require Internet access, such as Netflix, and to advertising-supported services that use the Internet, such as Google and Facebook. The tax would also apply to any small- or medium-sized business that charges subscription fees for online services or uses online advertising. The tax would also apply to any provider of broadband access, such as cable or wireless operators. The collected money would go into state rural broadband deployment funds that would help bring faster Internet access to sparsely populated areas. Similar universal service fees are already assessed on landline phone service and mobile phone service nationwide. Those phone fees contribute to federal programs such as the FCC's Connect America Fund, which pays AT&T and other carriers to deploy broadband in rural areas.

The BDAC tax proposal is part of a "State Model Code for Accelerating Broadband Infrastructure Deployment and Investment." Once finalized by the BDAC, each state would have the option of adopting the code. An AT&T executive who is on the FCC advisory committee argued that the recommended tax should apply even more broadly, to any business that benefits financially from broadband access in any way. The committee ultimately adopted a slightly more narrow recommendation that would apply the tax to subscription services and advertising-supported services only.
The BDAC model code doesn't need approval from FCC commissioners -- "it is adopted by the BDAC as a model code for the states to use, at their discretion," Ajit Pai's spokesperson told Ars. As for how big the proposed taxes would be, the model code says that states "shall determine the appropriate State Universal Service assessment methodology and rate consistent with federal law and FCC policy."

39 of 243 comments (clear)

  1. Gotta love it! by fustakrakich · · Score: 5, Insightful

    We're letting *AT&T, Comcast, Google Fiber, Sprint, and other ISPs and industry representatives* write our tax code. I guess it's better than letting Enron, Exxon, and DuPont write them... Oh wait, they probably do

    --
    “He’s not deformed, he’s just drunk!”
    1. Re:Gotta love it! by randomErr · · Score: 4, Informative

      And Facebook and Twitter is pushing to have phone taxed so that people will use their messaging and VOIP services.

      --
      You say things that offend me and I can deal with it. Can you?
    2. Re:Gotta love it! by ShanghaiBill · · Score: 4, Informative

      It has to be at the state level. A federal tax would violate the tax and spending Uniformity Clause of the United States Constitution.

      This is, of course, assuming anyone still cares what the Constitution says.

    3. Re:Gotta love it! by WaffleMonster · · Score: 5, Insightful

      False. Right there in the write-up, don't even need to RTFA (emphasis mine):

      USF is a shining example of how not to implement a tax.

      1. Regressive taxation of a (once) essential service. About as ridiculous as taxing food to subsidize food for the poor.

      2. Tax rate is ambiguous and incalculable subject to unnecessary amounts of complexity where larger providers have inherent advantage to leverage their ability to do the necessary paperwork to pay a lower rate. Only the interstate component of telephone service is taxable so providers either have to use default "safe harbor" rate or conduct a "study" using a methodology the FCC has to sign off on to determine the effective tax rate given portion of service that is interstate.

      To pour salt on the wound safe harbor rate for certain categories of telephone service is astronomical. Wireless safe harbor for example is half that of Internet OTT voice service for no reason other to fuck over small providers because they can.

      the model code says that states "shall determine the appropriate State Universal Service assessment methodology and rate consistent with federal law and FCC policy."

      Calculation methodology is irrelevant... AT&T and crew still controls who gets the money (themselves) and what rate will be subject to factors and criteria's set by states.

    4. Re: Gotta love it! by fortfive · · Score: 5, Insightful

      Also, don't internet business already, actually pay for connectivity? Like, million dollar contracts to backbone isps, which would include att and verizon? And don't subscribers pay?

      How do they get away with this idiocy?

      Nevermind the subsidies already mentioned.

      I have no sympathy for google or even Netflix, but I do have sympathy for myself, because it is me that will be paying that tax.

    5. Re:Gotta love it! by Jane+Q.+Public · · Score: 4, Informative

      This Pai jerk needs to go. Very soon.

      You know what FCC just did? They just declared SMS to be an "information service" like internet, as opposed to communication.

      That means now carriers can now choose to slow down, time-delay, or even block SMS any time they want.

    6. Re:Gotta love it! by Aighearach · · Score: 2

      That's not what that means. That means that if it is done at the Federal level, the tax rate has to be same everywhere.

      This is at the State level, because the FCC isn't Congress and can't pass a tax. And Congress would never do it, they have to stand for election.

      You don't even say anything about what you think wouldn't be uniform.

    7. Re: Gotta love it! by LostMyBeaver · · Score: 4, Interesting

      I wouldn't worry about that just yet.

      I'm pretty sure that companies will instead just get smart. For example, there's absolutely no reason NetFlix has to be a tax paying U.S. company at all. They can pretty much just pack up and move to Canada or Europe. We have room for them.

      Then there's Amazon which would be more difficult to sort out, but if you simply move the corporation to Canada or Europe and then push orders to U.S. warehouses via leased lines or dark fibre, there shouldn't be any problems. Then Amazon could probably avoid paying 50% of what little taxes they already pay.

      Google could probably save billions by leaving the U.S.

      Microsoft wouldn't have to move very far at all to save a bunch of money.

      I'm almost entirely sure that there's no real problems associated with this. And if I were a shareholder of any significance, I would consider suing any company which insisted in staying in the U.S. if something like this get passed.

      I work for a telecom provider almost as big as AT&T. We have a presence in over 100 countries and we make money off of real estate. In some cases, this is literal in the sense that we rent offices and land that we own. In other cases, we rent and sell fiber as if it were real estate. The worst thing that could happen to us is if the content providers decided to pack up and move away from our networks into places where we would have to carry the data instead of providing it locally.

      If we were a company like AT&T and were servicing the U.S. and then had to consider the risk of Netflix moving to Canada and moving all their proxies to Canada... or worse Europe, the cost of this to us would be so high we probably would collapse.

      Consider that a website like Pornhub published on their technical blog live statistics a few years back of how much content they were delivering. It was approximately 300Tb/sec 24/7 worldwide. That means that there are just a massive number of one handed web surfers at every moment of every day sucking up bandwidth. If Pornhub were to consider moving their CDN outside of the U.S. and incorporating in the Cayman's for example, I would assume that service providers would have to increase capacity by at least 40Tb/sec to compensate for this.

      Now consider that XVideos is supposedly bigger than PornHub (in this case it's not just the size, but the size surely matters) but they don't publish statistics like PornHub does. Now consider that YouTube and Netflix are A LOT bigger than either of those two sites.

      The cost of just these 4 websites relocating to outside of U.S. borders would place at least 500Tb/sec additional burden on American service providers. Now, to anyone living in a first world country that has visited the U.S. (technically a first world country but second world in most categories other than money) they have horrible Internet access even when paying insane prices and they have miserable mobile/LTE coverage. I drove more or less the entire east coast on business and visiting friends and family last year and even Malta and Gozo were technically more advanced than America.... and those ARE shitholes.

      Consider that while the FCC recently had a debate that suggested lowering the definition of broadband to 10/1 connectivity but due to lashback decided that 25/3 is what broadband is... across the first world, we can't even order anything that slow on our mobile phones anymore. How about in the Baltics where at least Lithuania and Latvia has 100Mb/sec fiber for like $15 a month in every house.

      No... don't worry... you won't have to worry about footing the bill for this. In fact, we're more than ready to welcome Facebook, Microsoft, Amazon, etc... when they decide to just pack up and take their money and jobs with them.

    8. Re: Gotta love it! by Duhavid · · Score: 2

      "And they're gigantic beneficiaries from the broadband ecosystem."

      The ISPs only exist because there are companies like Google, Facebook, Amazon, etc that make having an internet connection desirable.
      Without them, there is no reason to pay an ISP. Who, really, is the "gigantic beneficiary" here?

      If roads where private, would they tax stores? ( apparently, the answer is yes ).

      It is a strangulation relation. It is extortion, not free trade.

      --
      emt 377 emt 4
    9. Re: Gotta love it! by Dixie_Flatline · · Score: 4, Informative

      Isn't pornhub mainly located in Canada? Montreal, specifically. But in any case, that also goes to show that moving out of the USA would probably be a trivial matter.

    10. Re:Gotta love it! by mi · · Score: 2

      Ok, so they're writing state law...

      Except, they are not — the very write-up directly contradicts your statement.

      Is there a difference?

      About as much as between "yes" and "no".

      --
      In Soviet Washington the swamp drains you.
  2. Another money funnel to corporations? by kimgkimg · · Score: 4, Insightful

    Because you haven't given ISPs enough ways to screw the consumer and make money already? Unbelievable.

    1. Re:Another money funnel to corporations? by Anonymous Coward · · Score: 5, Insightful

      I thought that the reason we got rid of net-neutrality is because of our faith in the free market.

      So why don't we just let the free market bring faster Internet to places that need it? Why do we need *both* an unregulated ISP market *and* tax-funded support for that market?

      Of course I am being rhetorical. They want *all* of our money, every penny, and they will abuse every bit of power they have to get it.

    2. Re:Another money funnel to corporations? by Narcocide · · Score: 2

      +1 underrated

    3. Re:Another money funnel to corporations? by Anonymous Coward · · Score: 2, Insightful

      The ISPs listed also want to be content providers.

      So all businesses that are solely content providers are competitors.

      So they want to tax their competitors, and have that tax money delivered directly to them.

      Of course their competitors will just pass the tax along to the consumers, which is fine by the ISPs because the higher costs will drive more consumers to go for the cheaper content provided by the ISPs.

      You remarked that this is "unbelievable." I disagree. This behavior is completely consistent with the incentives that the ISPs have, and the position they are in. The only people who are surprised by this are people who naively believe that the wealthy potentates at the top of these hierarchies got there by practicing generosity, goodwill towards others, and fair dealing.
       

  3. GOP give away to rural communities by rsilvergun · · Score: 5, Insightful

    who tend to vote for them. Not that I mind rural communities getting the Internet, but not like this. Make it municipal broad bank. A country just did it for about $5 bucks a month. Verizon got billions of my money to build out rural fiber, kept the money and never did the work.

    No more. Fund municipal broadband out of the General fund or tell the fuckers to fuck off. All this does is charge me $5 bucks a month (I pay for business class at home) for free money in AT&Ts hands.

    Once again, we've got an election in 2 years. Show up at your primary and vote the fuckers out. Then show up at the general and put some real pro-consumer folks in. We had plenty of them in the primary in 2018 but so few showed up for the primary that most of these yahoo incumbents survived. Again, no more. Primary them and then vote in pro-worker and pro-consumer reps who refuse corporate PAC money.

    --
    Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
    1. Re:GOP give away to rural communities by mishehu · · Score: 3, Insightful

      The funny thing is that you think that the rural voters are going to get anything out of this proposal. They won't. Hell, the FCC doesn't even really know how many households out there can and cannot get broadband services...

    2. Re:GOP give away to rural communities by Stormy+Dragon · · Score: 5, Insightful

      It's not even a giveaway to rural communities, it's a give away to big telecom companies. There's already existing fees to pay for rural broadband. The telecom companies just take the grants and never end up building the stuff they promise and the government never calls them on it or forces them to return the funding.

    3. Re: GOP give away to rural communities by _Sharp'r_ · · Score: 2

      The BDAC is an industry committee, it's not the FCC. It's organized by the FCC so the industry can make suggestions. It doesn't matter who is on the FCC, or even if this committee exists, the industry is going to suggest you tax other people to give them money, just like just about every other industry. Next someone will exclaim surprise that Tesla thinks we should increase the gas tax in order to subsidize EVs.

      Where the rubber meets the road is if anyone actually goes along with their new tax proposal or not. Fortunately, the FCC doesn't have the authority to do so and hopefully most States (which is the target of the proposal) aren't stupid enough to create a new obscure tax to collect.

      --
      The party of stupid and the party of evil get together and do something both stupid and evil, then call it bipartisan.
  4. On the other hand ... by fahrbot-bot · · Score: 5, Insightful

    Since "Internet-using" companies already pay their ISPs for access and bandwidth, like everyone else does, perhaps the ISPs could take some their -- what do you call them, ah, yes -- enormous profits and use them to build rural infrastructure all on their own. Sure, perhaps the ROI / profits from that won't be enough to list under the "Rape and Pillage" section of the quarterly reports, but maybe people will hate ISPs a little less -- except, obviously, for Comcast. :-)

    --
    It must have been something you assimilated. . . .
  5. How About... by Stormy+Dragon · · Score: 5, Interesting

    ...we sue AT&T, Comcast, and Verizon for the $400 billion of public funding they already received for rural broadband and just pocketed and we can use that to provide rural broadband?

    1. Re:How About... by SlaveToTheGrind · · Score: 2

      we sue AT&T, Comcast, and Verizon for the $400 billion of public funding they already received for rural broadband and just pocketed

      If the amount of money were even close to that level and the case for liability even close to that clear, any number of creative and enterprising class action lawyers would have swarmed over this a long time ago.

  6. it's like giving the gas tax to private toll roads by Joe_Dragon · · Score: 4, Insightful

    it's like giving the gas tax to private toll roads and no they will not be made into free roads.

  7. You're already paying the fuckers! by nctritech · · Score: 5, Insightful

    You're already paying the fuckers! CenturyLink is being paid $500 MILLION in tax money yearly for rural broadband expansion and they're only using it to cover areas that someone else covers already so they can stifle competition, completely ignoring unserved areas. The rationale behind municipal broadband bans is that it's unfair to compete with the government because they have tax authority, yet they gladly take tax money and use it to be anti-competitive. NO MORE TAX MONEY TO BIG ISPs!

  8. ITFA motherfuckers by WaffleMonster · · Score: 3, Insightful

    They can't tax Internet use. It's literally against the law.

    But don't let that stand in the way of FCC announcing to the country how totally, utterly and completely corrupt they are.

  9. Re:Plus another tax and bureaucracy by Harlequin80 · · Score: 2

    Not in the US, but guessing this is a similar tax setup.

    But as an employer I absolutely hate hate hate hate Payroll tax. It's technically not that much, and pales into insignificance compared to others. But I find something truly obnoxious about paying a tax to employ someone.

  10. But net neutrality stopped you from investing.. by bjdevil66 · · Score: 3, Informative

    ...in infrastructure projects like this one, right?

    Well, you got net neutrality overturned. So go invest in that infrastructure now... Oh wait, you don't want to pay for it now. What's your lame-ass excuse now?

    You lying, greedy, ******* bastards.

  11. Re:Plus another tax and bureaucracy by currently_awake · · Score: 4, Insightful

    Europe has universal healthcare, national daycare, welfare etc. Capitalism and Socialism are like fire: A little bit keeps you warm, a lot kills you.

  12. I don't, read my post, not just the subject by rsilvergun · · Score: 3, Insightful

    They're not going to get squat, but the GOP will get a photo op where they tell them they're gonna get Internet and the propaganda news outlets they watch will trumpet that. Then when the Internet never materializes they'll blame it on tax and spend liberals' job killing regulations.

    Keep in mind I'm not necessarily blaming the Rural folks for falling for this crap. The big reason I want them to have internet is so they can stop watching cable and over air TV and get out of the propaganda bubble their in. I think it would be great for the country as a whole. Those communities have massive hospital shortages and problems with clean drinking water. The American left (think the Bernie wing of the Democratic party) wants to solve those problems, but they keep losing elections to rural voters (who, thanks to the Senate, Electoral college and gerrymandering have about 40x the voting power of a city voter) keep shooting down attempts to help them.

    If we could somehow get the message to them about how much the GOP is screwing them over we could fix just about everything.

    --
    Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
    1. Re:I don't, read my post, not just the subject by _Sharp'r_ · · Score: 2

      Right, it's the local left-wing Democratic Party politicians who are the champions of putting politics and special deals for their buddies aside and just working on solving problems for people.

      Never mind what they actually do, as evident in all the long time Democratic political strongholds like Detroit, Chicago, Baltimore, etc.

      But hey, don't believe your lying eyes, we really just need to put them in charge of more communities and this time it'll be different, right?

      --
      The party of stupid and the party of evil get together and do something both stupid and evil, then call it bipartisan.
    2. Re:I don't, read my post, not just the subject by mishehu · · Score: 2

      Oh I'm with you man, as I live just beyond the boundaries of the suburb-exurb in my area, and I'm about 1 mile from the nearest fiber pull, but they won't pull it up or even tell me how many households need to sign up in between my house and the fiber for them to pull it. In fact, they (Ma Bell) can't even figure who in their organization would know that answer. I am of the opinion that if we don't get this whole country connected with a decent minimum baseline standard (25 mbps would be a start) then those parts that don't have connectivity will ultimately end up regressing into a modern day dark ages. My lovely state even has a law on the books prohibiting muni fiber solutions (again, thanks Ma Bell), and I don't have enough capital to start a co-op.

  13. Re:Universal Service by nctritech · · Score: 2

    There is also nothing at all that guarantees they'll actually DO the build-out, much less do it in rural areas that are unserved. Major carriers get literal billions from the government solely to build out service in unserved areas and they don't do it. Rather, they don't serve an area, a small competitor ISP starts dropping fiber in the ground in that area, and LIKE MAGIC, the big ISP that gets billions in tax dollars to build out to unserved areas has the funds and desire to build out to that area that's about to be served by the small competitor. But the ten houses two miles down the road and 2000 feet down a gravel driveway? Fuck 'em, the hillbillies, they don't get our tax-funded build-out that the government intended to be for them! These rural build-out agreements with telecoms clearly hold no teeth. The government is literally paying tax money to huge companies to keep small companies from competing with them.

  14. Fuck Ajit Pai... by TiberiusKirk · · Score: 2

    ...and the donkey he rode in on! Hopefully he'll be an add-on to the Trump impeachment proceedings.

  15. Re:I hate filling out forms to pay $2.12 tax by oldgraybeard · · Score: 4, Interesting

    I still run a small(tiny me) business 30+ years. I did outside contractor work for 3M corp for over a decade. And I was required to pay for a Workers Comp. Ins. Policy the whole time. Because the state of MN required 3M to furnish the Workers Comp. policy number to them for all their vendors. Every year the state of MN would contact me and ask why I have a workers comp policy but all my reports have 0 payroll. And I explain and they would go huh, interesting.
    Everything government does has a cost and no one in government has a clue about the real world.

    Just my 2 cents ;)

  16. Re:I hate filling out forms to pay $2.12 tax by oldgraybeard · · Score: 4, Informative

    For those who do not know, the owner of a business can not make a claim on the business workers comp policy. i was required by the government(over sight and regulations) to buy Insurance I could never make a claim on.

  17. Re:Plus another tax and bureaucracy by sarren1901 · · Score: 2

    More like a punish the poor and middle class tax really. Fuel taxes hurt the poorest of us the most. Had he only passed a tax that went after people making over 100k Euros and I'm sure you would hear almost nothing about it. Certainly not rioting.

  18. Re:Plus another tax and bureaucracy by Bert64 · · Score: 4, Insightful

    The rich people will just find ways to avoid paying the tax, or move elsewhere.
    Taxes mostly hurt and poor and middle classes.

    --
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  19. 3M didn't want to pay for your insurance by SethJohnson · · Score: 2

    Because the state of MN required 3M to furnish the Workers Comp. policy number to them for all their vendors.

    Actually, if you didn't have your own Worker's Comp policy as a subcontractor for 3M, then the insurance company covering 3M for Worker's Comp would have billed 3M for your coverage. Worker's Comp premiums are based off of payroll and it's an accounting exercise to correlate payments to subcontractors with their WC policy numbers to then deduct those amounts from their own payroll totals that are used to calculate the WC premiums for 3M. This was not the state of MN demanding 3M furnish all their subcontractors' WC policy numbers. This was 3M leveraging the subcontractor relationship to reduce their operating expenses as much as possible.

    1. Re:3M didn't want to pay for your insurance by oldgraybeard · · Score: 2

      i agree 3M was covering their ass. But you are missing the point. 3M is covering their ass for workers comp ins.regulations made by state government. And which the Insurance companies and 3M were following.
      Anyway I paid for insurance I could never make a clam on due to again government rules. i owned the business so i could never make a claim! on a product i was required by the government to buy so something of no value.
      just because the insurance companies and 3M were the enforcers it still all goes back to the government.

      \ just my 2 cents ;)