Cox Fights Local Cable Internet Taxation

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Cox Communications Inc. is lobbying federal regulators to short-circuit any
attempt by local governments to impose new fees or franchises on cable operators
providing high-speed Internet access.

Cox's campaign on this front comes as the Federal Communications Commission
is preparing to classify cable-provided Internet as a cable service, an
information service, or a telecommunications service. A decision is likely in
March.

The FCC is widely expected to classify cable Internet as an information
service. Such a move might embolden local governments -- which normally have
jurisdiction over cable services, but not information services -- to require
cable operators to pay fees on information services or sign new franchises
authorizing use of public rights of way for information services.

In a Jan. 24 letter to the FCC, Cox said it did not believe 'that local
governments may lawfully impose additional franchising requirements, nor demand
the payment of additional franchise fees, when a franchised cable operator
provides noncable services over its cable network and the provision of those
services imposes no additional burden on public rights-of-way.'

Cox's two-page letter, signed by vice president of public policy Alexandra
Wilson, was addressed to Catherine Bohigian, mass-media adviser to FCC
commissioner Kevin Martin.

Earlier this month, the National Association of Telecommunications Officers
and Advisors, a group representing local governments, told the FCC that
classification of cable Internet as an information service did not preclude the
service from being a cable service subject to local franchising.

Cox warned the FCC that if local governments attempted to assert jurisdiction
over cable-provided information services, leading to new fees and franchises,
the local governments would run the risk of violating the recently extended
Internet Tax Freedom Act, which prohibits an 'Internet-access tax' or a
'discriminatory tax on electronic commerce.'

In weighing in against local regulation, Cox invoked the Supreme Court's Jan.
16 decision in the pole-attachment case and the opinion's admonition that entry
barriers in the form of higher fees frustrate the goal of Congress to expedite
the deployment of high-speed Internet access.

Lastly, Cox addressed another hot-button issue: whether cable operators that
self-provision transmission facilities for Internet access have to contribute to
universal service, the multibillion-dollar program to keep local phone rates
affordable in rural and high-cost areas.

In the letter, Cox did not take a firm stance, saying that the FCC 'has
ancillary jurisdiction to address any distortions to the [FCC's] universal
programs that might arise from classifying cable Internet and other broadband
services as . `information services.''

On Wednesday, Martin said he would be reluctant to see cable operators
contribute to universal service, calling such a step the imposition of legacy
regulations that could hurt cable's investment in broadband
facilities.

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