The Federal Communications Commission is considering a proposal to tax broadband Internet service, reports The Hill. The funds raised by the proposed tax would be used to expand access to high-speed Internet for the estimated 19 million Americans who do not have broadband.
This is not exactly fresh news, as the FCC issued a request for comments on the proposal in April of 2012. However, as The Hill notes, the proposed tax has gone largely unnoticed in the public perception, even though dozens of companies and trade associations have already voiced their opinions on the matter. Companies including AT&T, Sprint and Google have expressed support for the tax.
The tax would supplement the Connect America Fund, which is a subsidy of the FCC with the goal of expanding Internet access in America. A similar Universal Service Fund exists, which ensures that even those in the remotest areas of the country have access to telephone service. Consumers contribute to the Universal Service Fund via fees on landline and cellular phone bills.
In 2011, the FCC converted $4.5 billion of the Universal Service Fund to create the Connect America Fund. Because fewer and fewer people are using phone services, contributions to the Universal Service Fund, and as a result the Connect America Fund, are drying up. Julius Genachowski, chairman of the FCC, believes that expanding high-speed Internet access is the next great infrastructure challenge, so funds must be raised somehow.
The Hill points out that the proposed tax could run afoul of the Internet Tax Freedom Act, the 1998 law that bans the government from taxing Internet access. The FCC argues that this would not be a tax, but a "fee" that the providers choose to pass onto the consumers.
As for a timeline on the tax, it is believed that the FCC will probably not make any drastic, controversial moves ahead of the election in November.
Source: The Hill