DirecTV and Dish Network are calling on Michigan legislators to reject a new 5% tax on satellite service under consideration by the state legislature.
Cable operators argue that such taxes level the competitive playing field since they have to pay franchise fees, while satellite operators don't. The taxes are increasingly attractive to states looking to fill budget gaps in tough economic times.
But in a joint letter to the legislators, the satellite companies argue franchise fees and a tax are not comparable.
"Satellite companies do not pay franchise fees for one simple reason," they wrote. "[S]atellite uses an innovative technology that does not disrupt the public rights-of-way. Satellite TV providers have their own costs of doing business-building, launching, and maintaining a fleet of satellites in outer space. The only difference is that the satellite companies do not separate these costs out as individual line items on their bills."
A respresentative of the Michigan Cable Association was not available for comment at press time.