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Telecom Industry: Net Neutrality Opening the Door to Internet Service Taxation

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Telecom Industry: Net Neutrality Opening the Door to Internet Service Taxation

December 17, 2015

  By Peter Scott, TMCnet Contributor

The fight for net neutrality may have some collateral damage: the loss of tax-free Internet service.

That’s the contention put forth by the National Cable and Telecommunications Association, CTIA (News - Alert) — The Wireless Association, and USTelecom, industry groups that collectively represent both cable companies and the telecom industry. These groups argue that the Federal Communication Commission’s recent reclassification of broadband service as a Title II telecommunications service, meant to ensure net neutrality, also opens the door to Internet service taxation.

In a letter sent to all U.S. senators on December 14, the three trade groups wrote that the monthly bills customers pay for Internet access was under imminent threat from taxes and fees because the reclassification makes it a common carrier.

“Expiration would likely increase the cost of broadband access as it would become vulnerable to new onerous telecommunication taxes and fees, an imminent threat due to the Federal Communications Commission’s recent reclassification of broadband services as a Title II telecommunications service,” the letter noted.

Right now the 1998 Internet Tax Freedom Act (ITFA) ensures that state and local governments cannot tax broadband Internet service. Critics argue that the reclassification opens the door and taxes certainly will follow unless something is done.

The goal of the letter was to pass a customs enforcement compromise that would permanently extend ITFA. The House approved the soon-to-expire tax ban last week, raising the stakes in the Senate.

The FCC (News - Alert) has rejected the claims that the reclassification will lead to higher Internet service fees, but critics say that new fees are inevitable and will almost surely be passed along to consumers eventually.

Will net neutrality come at the cost of higher prices on Internet service? If that’s the case, many consumers might prefer an unequal Internet based over a fair but more costly connection. Nobody likes taxes, especially on basic services.

Edited by Rory J. Thompson
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