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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."

20 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

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    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.

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    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 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.

    7. 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.

  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.

  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.

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    1. 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.

  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. :-)

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  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?

  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. 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.

  9. 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 ;)

  10. 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.

  11. 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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