In recent times, internet has been one of the most important mediums of expression for people living in a country. However, with its growing importance, governments worldwide are increasingly trying to regulate and censor this medium, even in a country like US.
Over the past few years, Congress has taken steps to protect the internet. For example, the ITFA or the Internet Tax Freedom Act makes sure that local authorities can’t regulate or impose taxes on broadband access. The basic motive behind this act is to ensure that internet remains free from tax from local and state authorities which will in turn harm it.
However, even with ITFA in force, the FCC is proposing to expand its authority over internet, thereby enabling it to tax and regulate it. Under FCC’s network neutrality, broadband services which are now classified as information services will be reclassified as a telecommunication service. This reclassification will allow FCC to treat ISPs as public utility services, which will allow it to regulate network deployment and broadband prices. This will further bring broadband services under the purview of local and state taxes which were specifically targeted at telecommunications services.
And once ‘internet access services’ are reclassified as ‘interstate telecommunications services’ under the exclusive authority of FCC, it will be subjected to the 16.1% fee that’s currently applicable to such services. So FCC’s ‘net neutrality’ could result into the largest single tax increase on internet till date.
Also, such reclassification would attract a much higher tax rate for broadband services and property. Many states in the country charge higher rates for public utility services and property than commercial business property and services. So, it would lead to higher taxation on ISPs which will then translate into higher broadband costs.
Once this is in force, it will generate billions of new funds for the commission which will be used for implementing its programs. It will also effectively rule out other local authorities from regulating such internet access services as all telecommunication services come under FCC.
So, these new rules would lead to higher broadband costs and new regulations which will make internet much costlier and complex than it is now. This in turn would reduce the demand for broadband services thereby lowering consumer welfare.
Eventually, with lower broadband adoption and higher prices, it could be the end of growing internet as we know it. So, it looks like FCC’s net neutrality could do more harm than good.
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