Policy

Mass. Tax Battle Unites Enemies

3/15/2007 8:25 AM Eastern

The political season in Massachusetts is creating interesting dynamics between the telephone and cable industries, which will fight each other tooth and nail on a bill this season to reform cable franchising but link arms to mutually fight a plan by the governor to eliminate some decades-old personal-property-tax exemptions.

“In the morning we’re allies. In the afternoon we’re knocking each other’s blocks off,” joked Paul Cianelli, president of the New England Cable & Telecommunications Association.

Incumbent cable companies, RCN, Verizon Communications, wireless-service providers, chambers of commerce and high-tech industries formed a coalition to fight an initiative by Gov. Deval Patrick to close what he described in February as “tax loopholes” used by businesses in the commonwealth.

Patrick targeted a number of business tax breaks he wants to eliminate in order to resolve the commonwealth’s $13 billion budget shortfall.

Telecommunications companies now have an exemption from personal property tax on poles and wires that pass over the public rights-of-way. Cianelli said the exemption was instituted to promote the deployment of advanced services. “Our deployment is now second to none, and we don’t want to end up behind the curve” due to increased taxation, he added.

Eliminating the exemption could increase telecommunications taxes by $40 million in the commonwealth, providers estimated. Of that, $14 million-$20 million would be paid by cable customers, who would be hit with a double whammy, according to Cianelli. The tax on cable-owned infrastructure would increase, and the higher cost of phone poles would raise pole-attachment rates.

The telecommunications-tax-reform package, H3749, is now expected to be heard in June or July.

Hearings are tentatively scheduled for mid-May on the video-franchising-reform bill, backed by Verizon. The bill would assign authority for franchising to the state Department of Telecommunications and Energy, which would have 15 days to approve an application.

Also, Utah’s legislature ended its session without passing a statewide franchising bill. Shane Baggs, chairman of the Utah Cable Telecommunications Association, said in a prepared statement that the proposal was unfair because it did not require franchise-fee payments, nor did it impose customer-service standards or broad deployment rules on new entrants.

September