updated 09:41 pm EDT, Mon August 27, 2012
Connect America Fund beneficiary of additional funds
The US Federal Communications Commission (FCC) is evaluating a plan to place a new tax on broadband Internet service. The move would generate funds for the Connect America Fund, a subsidy created from the Universal Service Fund in 2011 to expand Internet access to rural and underserved areas. The FCC issued a request for comment on the proposal in April.
Dozens of companies have agreed in principle to the proposal, such as Google, Sprint, and AT&T. In it's approve of the proposal, Google argued that the current market conditions "strongly supports expanding the [Universal Service Fund] contribution base to include broadband Internet access services."
Google suggested that taxing email or Google Voice wouldn't be the best way to generate the funds as "saddling these offerings with new, direct USF contribution obligations is likely to restrict innovative options for all communications consumers and cause immediate and lasting harm to the users, pioneers, and innovators of Internet-based services."
The Connect America fund is fueled by an additional fee on landline and cell phone bills. Alternative proposals in the FCC text include taxing text messages, or levying a flat fee on each phone line instead of taking a percentage of fees associated with interstate phone calls.
FCC Chairman Julius Genachowski calls the current contribution system outdated and inefficient. "Today we propose three goals for contribution reform: efficiency, fairness, and sustainability," the chairman said. He added that "any reforms to the contribution system must safeguard core Commission objectives, including the promotion of broadband innovation, investment, and adoption."
A law passed in 1998 may interfere with the proposal. The Internet Tax Freedom Act prohibits the government from taxing Internet access, a move intended to boost broadband subscriptions. However, the FCC views the Universal Service Fund contributions as "fees" passed onto customers and not "taxes."