By Johnny Kampis | The Center Square
Americans for Tax Reform (ATR) released a report last week examining best practices among states to promote private broadband investment, urging leaders to cut unnecessary fees and taxes and reduce onerous regulations.
The group notes that the pandemic has highlighted the importance of good connectivity as many more Americans are working or learning from home. The report also notes that 6 percent of the population still lacks high-speed internet access.
ATR pointed out that cities and states have tried to build their own networks, to resounding failure – as a study by the Taxpayers Protection Alliance (TPA) found when examining the unrealistic take rates promised by advisors.
“It is clear that the private sector is best positioned to bring access to the unserved six percent,” ATR President Grover Norquist said. “The government just needs to get out of the way.”
The group believes that lower taxes and fees will yield more investment. ATR noted that more than half of states levy sales taxes on capital expenditures for wireless, wireline and cable network equipment and facilities. Several other states impose taxes on at least one of these categories.
A report previously released by the Broadband Tax Institute estimated that if all states repealed these taxes, communications network investments would jump by 9 percent, or almost $4 billion, annually.
ATR points out that federal law allows local governments to charge franchise fees of up to 5 percent of cable service revenues, money intended to help governments recover costs associated with usage of rights-of-way. But governments now bring in revenues from these fees that far exceed actual costs, resulting in a money grab and higher costs for consumers, the organization said.
Other points made by ATR in its report include:
- Local governments should streamline permitting processes and regulatory hurdles. The report notes that gaining access to rights-of-way and receiving approval of applications is often a timely and costly process and is an impediment to both fiber and 5G deployment.
- States should reduce the cost of pole attachments and make them less cumbersome. Cities and electric cooperatives are exempt from federal requirements for fees, which can result in anti-competitive rates when municipal or cooperative broadband projects compete with the private sector.
- Cities should not build their own networks, which often discourages private competition and leads to taxpayer waste. TPA highlights many such failures on its Broadband Boondoggles page.
- Grant funding for broadband projects should include “guardrails.” ATR said grants should be designed as one-time expenditures, used only for unserved areas, awarded through a reverse-auction process and not used for unrelated policy objectives.
- “These guardrails will ensure tax dollars are used efficiently, while also promoting fair competition among private-sector providers, who are most capable at building out and maintaining state-of-the-art networks,” the report states.
Johnny Kampis is a senior fellow and investigative reporter for the Taxpayers Protection Alliance.