WASHINGTON-Clinton administration telecom adviser Larry Irving said last week there will continue to be strong support for huge deregulatory and tax carve-outs for the Internet, a position starkly at odds with the federal government’s acquiescence to mounting taxation of wireless carriers and one that threatens to cripple one of the few competitive sectors of the telecommunications industry.
“We think we’ve come down on the right side of the debate,” Irving told reporters last Thursday.
Irving heads the National Telecommunications and Information Administration, a unit of the Commerce Department that advises the White House on telecom policy and manages federal government radio spectrum.
Irving said the hands-off regulatory approach to the Internet had backing from Vice President Al Gore and Commerce Secretary William Daley, explaining it was better to monitor the Internet first because government does not want to stifle Internet growth.
But Irving and other U.S. telecom policy makers have yet to reconcile glaring differences between Internet policy and wireless policy on key issues that also have major growth and competitive implications, such as taxation and universal service. While the administration and Congress have come down strongly against electronic commerce taxation (despite protests from cities, counties and states), lawmakers have largely stood on the sidelines as wireless businesses get taxed from all sides.
In addition to traditional local, state and federal business taxes, wireless carriers face antenna siting fees, multijurisdiction roaming levies and costs associated with federal mandates on digital wiretap, enhanced-911 and number portability.
Moreover, wireless carriers must pay into state and federal universal service funds despite the questionable likelihood of being able to withdraw from the multibillion-dollar pool.
“The government told telecommunications companies to change the way they did business and to become more competitive. All levels of government must realize the new competitive market can flourish only if it is not burdened by the costs of new governmental taxes and mandates,” said Thomas Wheeler, president of the Cellular Telecommunications Industry Association.
All said, the wireless industry predicts wireless consumer bills will increase 20 percent to 30 percent as a result of new taxes and federal mandates. In the process, the wireless industry may end up subsidizing not only eligible universal service subscribers but also well-heeled local monopoly telecom service providers, as well as Internet service providers.
