CPUC endorses extending lifeline tax to broadband service

by Steve Blum • , , ,

One of the ways that broadband service and infrastructure is subsidised is through universal service taxes paid by consumers on their telephone bills, both in California and at the federal level. Broadband itself, however, is not taxed in that way.

Earlier this year, the Federal Communications Commission decided that broadband is a telecommunications service that, to one extent or another, falls under common carrier rules and universal service obligations previously reserved for traditional telephone service. At the time, there was the usual partisan bickering over whether the FCC intended to use the new rules to extend universal service taxes to broadband. The official answer was no, but it seemed obvious that the real answer was not yet.

Now the FCC is asking for comments on whether subsidised, inexpensive “lifeline” telephone programs for low income people should include some level of broadband service. Which raises the question of where the money to pay for it will come from.

At its meeting last week, the California Public Utilities Commission looked at several issues surrounding lifeline broadband service – you can read the entire analysis here – including how to pay for it. The CPUC’s answer, which it’s submitting to the FCC, is essentially that telephone and broadband bills should be treated the same

[Federal telecoms law] requires “all providers of telecommunications service . . . [to] make an equitable and nondiscriminatory contribution to the preservation and advancement of universal service.” Since [Broadband Internet access service (BIAS)] is now a telecommunications service, and BIAS providers are telecommunications carriers under federal law, they should be required to contribute to the universal service fund.

I’m not a fan of the tax system, but I agree with the logic. Putting telephone and broadband into different policy buckets is an increasingly artificial and unsustainable practice.