Fwd: [Dewayne-Net] TAXING HIGH SPEED SERVICES: A QUANTIFICATION OF THE EFFECTS ON THE DSL INDUSTRY AND UNIVERSAL SERVICE

[Dave Farber <dave () farber net>]

Delivered-To: dfarber+ () ux13 sp cs cmu edu
Date: Tue, 27 Apr 2004 21:17:21 -0700
From: Dewayne Hendricks <dewayne () warpspeed com>

TAXING HIGH SPEED SERVICES: A QUANTIFICATION OF THE EFFECTS ON THE DSL 
INDUSTRY AND UNIVERSAL SERVICE

Curiously, on the day the Senate began deliberation on Internet taxation, a 
new research report on the issue was released. The imposition of state and 
local telecommunications taxes on digital subscriber line (DSL) services 
would slash federal Universal Service Fund (USF) contributions by $280 
million and lead to $4.3 billion in reduced industry revenues available for 
investment in new union jobs and expanded availability of broadband 
technologies, according to a new study released today by the New Millennium 
Research Council (NMRC). The NMRC study, "Taxing High-Speed Services: A 
Quantification of the Effects on the DSL Industry and Universal Service," 
was written by economist Stephen Pociask. Mr. Pociask is president of 
TeleNomic Research, a consulting firm specializing in public policy 
analysis for information technology industries. Pociask said: "DSL service 
is price-sensitive and an increase in taxes would produce an increase in 
price, leading to a significant reduction in demand and a decrease in total 
industry revenues." He explained that consumers would migrate to tax-exempt 
cable-modem service, or abandon high-speed access altogether. "Since cable 
operators do not pay into the Universal Service Fund, an increase in 
cable-modem demand would not help state and local governments raise taxes 
nor would it help fund universal service programs." USF contributions are 
paid on all interstate telecommunications services and are used to support 
telecom service for low income customers, underwrite network development in 
high-cost areas, and fund Internet services for schools, libraries, and 
rural healthcare providers. Pociask warned: "Because universal service 
programs are already under financial strain, this substantial contribution 
loss would put these social programs in serious jeopardy."

[SOURCE: New Millennium Research Council Press Release]
<http://www.newmillenniumresearch.org/news/042604release.pdf>
See full report at:
<http://www.newmillenniumresearch.org/archive/042604report.pdf>


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