Matt Brunk
Matt Brunk has worked in past roles as director of IT for a multisite health care firm; president of Telecomworx,...
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Matt Brunk | July 20, 2011 |


Predatory Telecom Taxing

Predatory Telecom Taxing It's not that I think we shouldn't pay any taxes, it's that our telecom taxes and fees are misdirected and opportunities to build value into a better infrastructure are misguided and this will affect our competitiveness.

It's not that I think we shouldn't pay any taxes, it's that our telecom taxes and fees are misdirected and opportunities to build value into a better infrastructure are misguided and this will affect our competitiveness.

In past posts I've lamented about the government taxing of our industry. Carriers are paying excessively for rights-of-way fees to traverse public property that is owned by the public and in turn, the carriers' costs are reflected in charge backs to their customers. Everyone continues to pay for what they already own in trust. Never mind that the carriers also pay for development and maintenance of these rights-of-ways. But the federal government coffers never stay satisfied because you remember that for 108 years everyone was taxed on their phone bill to pay for the Spanish-American War. The lesson here is that inaction on behalf of government is what we can expect whenever someone attempts to stop using telecommunications as the sacred cash cow to raise tax revenues.

For those that don't recall the anti-competitive measures of State and local jurisdictions to further expand taxes on telecom, I'd invite you to read what I wrote previously in A la Carte Telecom Market Share: "Another hit to come will be the US government, followed by state and then local jurisdictions wanting to exercise their taxing authority to raise the revenues coming into the treasuries."

Last week, Josh Long (Channel Partners) wrote in Wireless Tax Moratorium Moves Forward that,

"Over the past few years, state or local governments in Arizona, California, Delaware, Georgia, Hawaii, Kentucky, Maryland, Maine, Nebraska, New York, Oregon and Wisconsin have imposed or attempted to impose new discriminatory taxes on wireless service," said Scott Mackey, a partner and economist at Montpelier, Vt.-based KSE Partners LLP, in written testimony in March on Capitol Hill. "And wireless users have every reason to be concerned about the possibility of new targeted taxes in other states and localities as well."

What I find particularly amusing is that the federal government is shaking the State and local taxing authority trees for bad behavior without examining their own excessive taxing policies on telecommunications. Then, I still think the FCC's policies are largely misdirected. Coupled with prior remarks from the Pentagon that, "a cyber attack from another country can be an act of war" and with the recent remarks about national security as it pertains to the Internet by outgoing DOD official William Lynn, we will likely see new and increased taxes. I've also stated in the past that, "Applying the use of the old model to the Internet today and the NGN is definitely bad karma." This is what the FCC I think is doing today and the FCC direction still comes from both Capital Hill and the White House.

In my travels and prior contacts with school administrators I've learned another pain point that they are experiencing. E-Rate, another tax that we all pay so schools and libraries can build networks with Internet access, was used to buy not the "best fitting solution for the organization’s application;" instead these purchases were "best in class" or Cisco. I don't fault Cisco for playing the E-Rate game, they are great at it and so was the former 3Com.


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