Bare State Coffers, Broadband Needs Nix Tax Help, CTIA Told

The big problem is “disparity in the tax rates around the country,” Bassett said. Leveling them would benefit industry planning and innovation, he said. “The only way we can get past this is to have some kind of national structure that makes things more uniform,” he said. “I'm not supporting preemption. I'm supporting a federal-state framework.” Don Balfour, president-elect of the National Conference of State Legislatures, said, “States have rights… The thought of a federal preemption is something I would oppose.” He’s a Republican senator in Georgia’s legislature.

Chuck Martin, a Republican state representative in Georgia, expects cities to push for laws letting them replace with wireless taxes the revenue lost as landlines have declined, he said. He opposes higher taxes as bad for capital investment, Martin added. “This call to tax them like a landline is offensive to me” because it would hurt network development and innovation, agreed Stan Wise, a Republican member of the Georgia PSC. He said broadband has a wide reach in Georgia thanks to state policymakers’ “light touch” and reluctance to tax.

“Someone’s going to have to pay the freight” when a state expands network facilities, allowing wireless carriers to do more business, said Timothy Simon, a Republican California Public Utilities Commission member. California has imposed fees on cellular service to extend broadband availability through its high-cost service fund, he said.

Tax credits would encourage wireless-network development, but “very few” will materialize in the next year, since nearly almost all states have “huge deficits” and “we're cutting heavily,” Balfour said. The federal government is “going to run into similar problems as well,” he said. But if states don’t reduce taxes and create investment incentives and the federal government steps into the breach, “that would be a great waste on our part,” said state Rep. Greg Wren, an Alabama Republican.

“I wish we would fix the broken Universal Service Fund… fix the intercarrier compensation system,” Bassett said, agreeing with Balfour about the fiscal crunch. “Those are dollars that are right there.” But many legislators are influenced by local carriers subsidized by USF. “The question is, are we going to have the political will to do that?” Bassett called tax credits or other financial carrots “essential” to making terrestrial broadband available to everyone. Wise opposed creating new FCC fund to build broadband out. “We don’t need another Universal Service Fund. We don’t need these new taxes."-- Silicon Valley Bureau

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“A centralized compendium of all initiatives” by states toward making broadband available to everyone is due out in November from the Federal-State Joint Conference on Advanced Telecommunications Services, said a member, Commissioner Larry Landis of Indiana Utility Regulatory Commission. “We have not done a good job” of getting out the word on the efforts of at least 20 states to get high-speed access “to the least, the lost and the last,” he said. Lists are made by NARUC and the National Governors Associations, but “none of us” state policymakers “talk to each other” about them, Landis said. ConnectKentucky raised availability to about 95 percent from 80 percent without public dollars, he said. But “for some folks” government dollars are “going to be necessary” to get broadband everywhere, Landis said. “There’s no business plan in the world that’s going to justify $10,000 per household” to build out to the most remote, he said.