Update: Florida Legislature Headed to Special Session to Address Budget, Wireless Tax Cuts

Last month, the Florida House passed House Bill 7141, which among other things, sought to reduce the state’s Communications Services Tax (CST) on consumers’ wireless service, cable and satellite TV bills by $470 million annually. The bill, sponsored by Representative Matt Gaetz, passed the House with a virtually unanimous 112-3 vote.

Unfortunately, disagreements over healthcare funding between the state House and Senate led to the abrupt end of Florida’s legislative session before the state’s budget could be finalized. As a result, the companion tax cuts bill (SB110) in the Florida Senate, sponsored by Senator Dorothy Hukill, was not voted on in time.

Luckily, there is still hope. On June 1st, the Florida Legislature will be reconvening for a special session to address the state’s budget and the proposed CST cuts. It is crucial that the state’s lawmakers resolve their differences on the budget and pass the tax cuts before it is too late.

As we’ve mentioned before, these tax cuts are much needed in Florida. Wireless consumers in the Sunshine State currently pay over 22 percent in federal, state and local taxes on their monthly wireless bills, which is the 4th highest wireless tax rate in the country and three times higher than the general sales tax of other goods and services in the state.

CST reduction should be something everyone can agree on during the special session. The proposal as outlined in HB7141 and SB110 would save Floridians an estimated $470 million annually in wireless and TV taxes, which amounts to an annual consumer savings of $43 on every $100 spent on monthly wireless and TV services.

Wireless tax cuts are long overdue in Florida. Tell your legislators to pass the Communications Services Tax cuts during the special session!

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Spectrum is vital for wireless – and more is needed!

Earlier this week, The Brattle Group released a study highlighting the essential value of licensed spectrum to America’s economy, job creation, technological innovation, and most specifically, the wireless sector and consumers.

For a quick refresher, “spectrum” refers to the radio frequencies that allow hundreds of millions of people to use wireless service across the country. Only a finite amount of those frequencies are usable for mobile broadband service today, creating heavy demand for access to this critical resource. The spectrum used by your wireless provider is licensed (meaning dedicated for specific network use.) This licensed spectrum is the crucial highway that all wireless network information travels on – without it, your service wouldn’t exist. Chances are the phone you are using is dependent upon spectrum sold at auction in 2006 and 2008.

Not surprising, the licensed spectrum currently being used by providers is incredibly valuable. In the report, The Brattle Group reveals, “We estimate that the economic value of the 645.5 MHz of licensed spectrum is almost $500 billion.” Even more shocking is the finding that the current value of social welfare from the benefits of wireless services generated by licensed spectrum is 10 to 20 times that of its direct market value (between $5 trillion and $10 trillion).

Additionally, this licensed spectrum has a huge positive impact on the national economy, resulting in over $400 billion in economic activity per year throughout the country due to wireless companies and industry employees. This figure does not even include the economic benefits from innovations in mobile education, mobile health, and other similar business and services now reliant on licensed spectrum. That additional impact is especially evident in states where the booming app economy is a key driver of economic activity and job creation.

As more of these wireless-reliant industries emerge and wireless devices such as smartphones and smart devices continue to advance in functionality, larger amounts of licensed spectrum will be required to operate networks and transport information.

What is being done to meet this rising demand? In the paper, the Brattle Group notes that a net of 98.5 megahertz of licensed spectrum has been reallocated for commercial use since the 2010 release of the Federal Communications Commission’s National Broadband Plan, which called for an additional 300 MHz of spectrum to be made available for licensed use by this year and a total of 500 MHz by 2020.

To help meet these targets, the FCC has scheduled an incentive auction for next year where television broadcasters will be able to voluntarily sell their spectrum to the FCC, which will then repackage and auction it off to wireless providers. A similar auction resulted in more than $40 billion in proceeds last winter.

These auctions are significant steps forward, but unfortunately won’t meet the full demands of American consumers. It is urgent that Congress, the FCC and NTIA work in collaboration with the private sector to identify a future pipeline of additional spectrum for licensed use before it’s too late and the looming wireless traffic jam brings your smartphone to a screeching halt. We have no plan for after 2020 as a nation to address our mobile needs. It is time to start that dialogue.

 


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Pennsylvania 911 Fee Increase Debate Moves to the Senate

Last week the Pennsylvania House of Representatives voted in favor of HB911, which includes a 65 percent increase in the state 911 fee on wireless service ($1.00 to $1.65), resulting in a $78 million annual increase on wireless consumers and the third highest statewide 911 fee in the country. The fee increase is now being considered in the state Senate.

As we’ve said before, we strongly support 911 being efficiently funded because it allows emergency personnel to respond when a caller dials 911. However, the proposed fee increase in Pennsylvania only exacerbates further the tax burden on wireless consumers, who already pay the 8th highest combined federal, state and local wireless tax and fee rate in the country at almost 20 percent. The Commonwealth will jump to 6th highest (over 21 percent) if the 911 fee increase passes.

An FCC report to Congress noted that the Commonwealth collected almost $193 million 911 fees in 2013, which was more than states with much higher populations, such as California, Florida and Illinois. This report shows that Pennsylvania’s 911 fee totals were the second highest in the country, behind only Texas ($213 million), which has twice the population of Pennsylvania. This begs the question: Why should Pennsylvania lawmakers even be considering further increases without sufficient explanations for why the current 911 system is so costly compared to these larger states?

Instead of placing a heavy new burden on wireless consumers without justification, lawmakers in the Commonwealth should focus on reforming the current system to create a fair, reliable and uniform system of collecting and distributing 911 fees.

 

 


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Alert: Pennsylvania Lawmakers on the Brink of Approving $78 Million Wireless Fee Increase

In a troubling new development since our January update, Pennsylvania legislators have introduced a bill, House Bill 911 (HB911), that would increase the state 911 fee on wireless service. This bill is now moving through the Pennsylvania House of Representatives, and the news is not good. The bill would raise the fee 65%, from  $1.00 to $1.65, representing an annual $78 million fee increase on wireless consumers and a $114 million fee increase on all telecommunications consumers (including home phone and VOIP services), adding up to a staggering $570 million fee increase over 5 years!

First, let me be clear: We believe that 911 should be efficiently funded because it allows emergency personnel to respond when a caller dials 911. However, this fee increase is beyond excessive and discriminatory for wireless consumers – especially those in lower income households.

There are few important facts to bear in mind regarding Pennsylvania’s CURRENT 911 system:

  • Today, wireless consumers in Pennsylvania pay $1.00 per month in 911 fees. According to the National Emergency Number Association (NENA), there are only 7 states with a higher statewide 911 fee.
  • Further, according to Congressional reports, Pennsylvania collected more than $192 MILLION in 911 fees in 2013. This is the second highest collection of 911 fees in the country, just behind Texas.
  • Today, the Commonwealth has the 8th highest wireless tax burden on consumers through a combined federal, state and local tax rate of almost 20%. This is almost triple the average state/local sales tax of 7% on other goods and services.

This is what HB911 would do to Pennsylvania wireless consumers:

  • A family of 4 in Philadelphia with a typical “family share plan” with 4 lines would pay almost $240 per year in taxes and fees just on their wireless plan. Other families throughout the Commonwealth would pay nearly $215 per year.
  • A 911 fee at $1.65 would be the third highest statewide 911 fee in the country, just behind West Virginia and Alabama.
  • The overall wireless tax burden in Pennsylvania would rise to over 21%, sticking Pennsylvania consumers with the 6th highest wireless tax burden in the country.

Wireless consumers in the Commonwealth already pay more than their fair share of state, federal and local taxes and fees. This enormous fee increase is the last thing they need.

HB911 could be voted on the House floor as soon as Tuesday. Contact your legislators today and tell them to say NO to the current plan to dramatically hike fees in HB911!

Take action now!

 


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Alert: Prince George’s County Wants to Increase Wireless Taxes by 50 Percent

If Prince George’s County Executive Rushern Baker has his way, county residents could soon see a painful 50% increase in the county tax on their monthly wireless services.

County Executive Baker’s proposed budget for Prince George’s County includes a 50% increase in the county’s Telecommunications Tax. Specifically this proposed increase from 8% to 12% would result in families potentially paying up to a whopping $360 per year in wireless taxes. This tax increase not only applies to wireless bills – it also hikes taxes on your home phone service whether provided by your phone company or your cable company.

Wireless consumers in Prince George’s County already pay more than their fair share of state, federal and local taxes, including:

  • 8% Prince George’s county tax (which would increase to 12%)
  • 6% state sales tax
  • $0.25 monthly state 911 tax
  • $0.75 monthly County 911 tax
  • 5.82% federal USF charge

This burden is already too high. Unfortunately, if the tax increase proposal passes, Prince George’s County residents will be faced with a jaw-dropping combined wireless tax and fee burden of 26%, which is the second highest wireless tax rate of any jurisdiction in the country. Only Chicago would be higher.

What’s more, this new wireless rate would be nearly four and a half times higher than the 6% sales tax rate! The already high tax rates on wireless services are particularly harmful for families and small businesses who view their wireless service as essential in the modern, connected world. This is especially true for individuals in lower income households who rely more on their wireless device as their sole means of communication and Internet access. Why place an even greater burden on those who need their wireless service the most?

Back in 2008, Prince George’s County voters overwhelmingly rejected a similar wireless tax increase proposal by a 71% to 29% margin. The message is clear: Prince George’s County residents do NOT want a wireless tax increase.

Contact the Prince George’s County Executive and County Council members today and tell them to say NO to a wireless tax increase!

Take action now!

 


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