Wednesday, December 3, 2014

Common Carrier Regulation of Fixed High Speed Access Would Raise Taxes $90 a Year

Title II common carrier regulation of consumer Internet access--whatever else happens to pricing and investment in next generation networks--also will raise taxes for U.S. consumers.

The Progressive Policy Institute calculated that the average annual increase in state and local fees levied on U.S. fixed network users will be $67 each year, while mobile broadband taxes would grow $72 per line, per year.

The annual increase in federal fees per household will be roughly $17. That implies a potential higher cost of about $84 to $89 a year.

“When you add it all up, reclassification could add a whopping $15 billion in new user fees on top of the planned $1.5 billion extra to fund the E-Rate program,” the Progressive Policy Institute notes.

The higher fees would come on top of the adverse impact on consumers of less investment and slower innovation that would result from reclassification.

Those charges would occur because once Internet service providers are labeled “telecommunications providers” under Title II, their services become subject to both federal and state fees that apply to those services. The two main federal charges are an excise tax and a fee for “universal service.”

The bottom line is that annual residential fixed network high speed access costs would likely go up by $8 in Delaware to almost $148 in certain parts of Alaska, on an annual basis.  

The average fee for fixed network high speed access users would range from $51 to $83 per year.

Mobile phone bills would likely increase by at least that amount, as well.

The additional spending per household for fixed high speed access alone, attributable to the federal universal service program would amount to $2.014 billion (equal to $1.38 per month increase x 12 months x 121.7 million households).

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