President Bush’s 2007 budget released last week proposes a tax on un-auctioned spectrum licenses, which immediately caused an uproar in the telecom industry with news that Wi-Fi devices could be taxed. Later, the Office of Management and Budget clarified (backtracked?) that radio channels for Wi-Fi and cordless phones, which also use un-auctioned spectrum, are not included in the proposal. (However, the OMB said that the Federal Communications Commission ultimately would determine where fees would be assessed, so who knows what the final mandate could look like.)
I’ve always had trouble with how the government chooses to tax and not tax spectrum. Bush’s proposal includes taxes on satellite and two-way radio spectrum users, raising an estimated $3.6 billion during the next 10 years. Spectrum user fees could bring some parity among diverse wireless users. Why should commercial mobile satellite companies not have to pay for spectrum that houses a service that could compete with commercial terrestrial-based systems? There is no rhyme or reason to that. The feds determined in the early 1990s that auctioning PCS spectrum made sense. Those who value the spectrum most should be willing to pay for it. But more than a decade later, the government gave existing MSS carriers-which already got their spectrum for free-more spectrum for free. And then gave them permission to offer land-based services using that spectrum, which conceivably could compete against commercial wireless carriers.
To further muddy the waters, should 800 MHz cellular operators, which also have un-auctioned spectrum licenses, be required to pay user fees for those networks? What is the best way to tax existing services?
Public-safety spectrum should not be taxed because law enforcement and public-safety players are usually funded by U.S. taxpayers anyway. But here the line blurs too. How is a private ambulance service using un-auctioned wireless spectrum different than a taxi service that uses un-auctioned wireless spectrum? Both are private businesses created to make money, but one is a first responder and one isn’t.
Where does a garbage-hauling business that uses wireless spectrum to communicate come into play?
Expect many more questions as this idea gets debated. Perhaps in the end, a sane, logical and uniform policy will be realized.
