NCTA Outlines Potential Title II Tax Hikes

Tells FCC of State, Local Tax Implications of Reclassification

The National Cable & Telecommunications Association wants the FCC to know just how much of a state and local tax hit Title II reclassification could mean to cable operators and their customers.

That is in addition to additional Universal Service Fund fees and FCC regulatory fees, which also wind up on cable bills.

In a follow-up to a meeting between NCTA EVP James Assey and FCC General Counsel Jonathan Sallet, Assey drilled down on the issue to three key types of tax: property taxes, transaction-based taxes, and income, franchise and gross receipts taxes.

Historically, many state and local governments imposed higher taxes on telecom companies as regulated monopolies, and that remains the same even as telecoms now compete broadly. By contrast, he says, broadband access providers are generally taxed in the same was as other general businesses.

"Reclassifying broadband service as a regulated telecommunications service may subject cable operators that provide broadband and their customers to materially higher taxes and fees, either because a statute specifically references the federal definitions or because a state tax authority interprets state law in a manner that follows the federal definitions," he told Sallet, according to an ex parte letter Dec. 2.

Tax increases could translate to higher costs for building out broadband and higher prices to consumers, he said, both of which work against the universal access mandate in statute.

NCTA is pushing back hard on efforts, including by President Barack Obama, to get the FCC to reclassify Internet access under Title II.