FCC kills CPUC plan to tax text messages

by Steve Blum •

Klingon texting

A plan to tax text messaging services in California is dead. The California Public Utilities Commission will not do that. That’s the conclusion of a new proposed decision, released on Friday by outgoing commissioner Carla Peterman.

They don’t have much choice.

CPUC was originally scheduled to vote on approving the tax on 13 December 2018. But the day before, the Federal Communications Commission decided to classify text messaging as an “information service”, and not as a taxable “telecommunications service”. The proposed decision doesn’t declare information services to be non-taxable. It just says that “the commission declines to exercise authority under state law” in that regard.

Both measures generated political heat. The CPUC’s proposed tax was slammed as a money grab; the FCC reclassification was criticised as yet another gift to telecoms companies. But the FCC reclassification, um, trumped the CPUC proceeding. The CPUC’s claimed regulatory authority to levy the tax amounted to nobody says we can’t. The FCC, in effect, replied we say you can’t.

At the CPUC meeting, Carla Peterman said her objective was to spread telecoms taxes more evenly across different types of services…

Some wireless carriers already assess surcharges for texting, other carriers do not…The amount we collect to run the six universal service programs that the CPUC oversees is finite and set independently of this proceeding. If texting surcharge revenues are not collected to support these programs then more revenue would need to come from voice services…

We will also be considering changes needed in light of the FCC’s order yesterday classifying text messaging as an information service.

The plan to tax text messages will be back on the CPUC agenda, probably at the end of January, simply to say no and end the matter. To do anything else would have required figuring out how to get around the new classification. If the CPUC could do that for text messaging, it could also start taxing broadband access, which is likewise reckoned to be an information service by the FCC. It’s a high barrier that Peterman couldn’t climb over.