Customs Duty

Washington’s Utilities and Transportation Commission seeks comment on an update of a “concept paper” proposing how the state should restructure its universal service fund, the commission said Thursday. The extensive document, submitted Wednesday by the Washington Independent Telecommunications Association, reflects revisions to a July proposal and goes into significant detail in recommendations. The commission tentatively set Oct. 4 for a third workshop on the document and related matters. Comments are due Sept. 17.

AT&T asked the FCC for more time to implement the commission’s new fixed customer premises equipment (CPE) duty cycle requirement, according to an FCC filing on Wednesday. The company asked the FCC to allow it to continue to use WCS spectrum until Nov. 30 while it deploys the new firmware to about 1,500 of its existing customer sites. If the FCC doesn’t grant the petitions, it’s likely some AT&T broadband customers could experience service disruptions. AT&T also asked the commission to waive its prohibition on outdoor antennas for CPE stations at existing customer sites while the agency considers AT&T’s request to reconsider and modify the new prohibition.

There’s a duty to ask whether the average Internet user fully understands “what information is being collected about them and whether or not they are empowered to stop certain practices from taking place,” said Sen. Jay Rockefeller, D-W.Va., chair of the Senate Commerce Committee during its first hearing on online privacy.

Taxes that target the mobile communications sector hamper mobile broadband rollout, the GSM Association said Wednesday. It examined the tax policies of developing countries Malaysia, South Africa, Mexico, Bangladesh and Brazil, where fixed broadband is significantly undeveloped and governments are looking to mobile broadband to address the digital divide and boost economic growth. Despite the critical importance of wireless broadband to their economies, all countries except Malaysia have a tax approach that reduces its penetration potential by imposing an additional financial burden on the purchase of handsets and services, the GSMA said. Besides a value-added tax, all four levy a customs duty on handsets; Mexico, Bangladesh and Brazil tax service; and Brazil and Bangladesh also tax handsets, it said. Based on various economic models, the GSMA estimated that for every dollar that wireless and non-wireless-sector taxes are reduced over the five years ending in 2014: (1) Mexico will see up to an additional 600,000 mobile subscribers and as much as $2.4 billion in added Gross Domestic Product. (2) Brazil’s subscriber base will grow by over 1 million, with wealth creation of up to $3.4 billion. (3) South Africa could see up to 620,000 new subscribers and an additional $1.34 billion GDP. (4) The number of Bangladeshi subscribers could grow by 277,000, with up to $53 million additional GDP. (5) Malaysia will have up to 530,000 new subscribers, with as much as $1.44 billion added to the GDP. The implications for fiscal policy are clear, the GSMA said. While it’s “imperative” that governments use taxation to finance spending and generate activities in sectors where private investment is lacking, these tax regimes are often inefficient. Developing countries in particular face high public funds costs because they have distorting tax systems, it said. Putting special taxes on the telecom sector discourages private spending and diminishes welfare, it said. Many countries have policy inconsistencies between regulations aimed at developing the information and communication technologies sector through investment incentives and a culture where ICT companies are perceived as “cash cows” on which taxes are levied, it said. These nations must align their ICT strategies to sustain the ongoing growth of the mobile sector, the GSMA said.

Telephone service providers asked to be relieved of the duty of verifying customers’ eligibility for the Lifeline program. Verification should be a government function, they said in comments to the Federal-State Joint Board on Universal Service on proposed changes to the Lifeline and Link-Up programs. They split on the question of whether the Lifeline program should include broadband and whether households should be eligible for more than one discounted phone connection.

A weakness in FCC Chairman Julius Genachowski’s proposed approach to broadband reclassification is that the commission would regulate only broadband transport in the last mile, leaving out other layers of the Internet, critics said this week. The FCC wouldn’t assert control over ISPs and or over actions at the Transmission Control Protocol (TCP) level, where Comcast’s throttling of BitTorrent took place, they said.

The Title II sections of the Communications Act the FCC would apply to broadband under Chairman Julius Genachowski’s reclassification plan could still burden operators with cumbersome rules and expose them to costly legal challenges, communications attorneys said Friday. Statements from Genachowski and FCC General Counsel Austin Schlick Thursday indicated Sections 201, 202, 208, 222, 254 and 255 would remain in place after a substantial forbearance from other Title II elements (CD May 7 p1). Sections 201 and 202 “are the key provisions of the Communications Act that have sort of kept behavior in check for almost 80 years,” said telecom lawyer Glenn Richards of Pillsbury Winthrop. “Anything that folks do, they're always thinking about it in terms of ‘Will it cause a 201 or 202 issue?'"

Companies large and small, public interest groups and trade associations offered a divided FCC very different takes on whether proposed net neutrality rules would stifle or spur competition, in replies in the net neutrality proceeding. The biggest change from the first comment round, in January, is that many filers focused on the Comcast decision and the complicated question of whether the FCC has authority to proceed with new net neutrality rules or first would have to change the way broadband is classified to gain clear authority.

In a surprise, CenturyLink agreed to buy Qwest in a $22.4 billion deal, including a $10.6 billion all-stock transaction and $11.8 billion debt, the companies said Thursday. The deal is expected to close in the first half of 2011. It’s likely to be approved by regulators within a year with attached conditions, such as an obligation to expand broadband access or to provide it at certain prices, analysts said.

Disparate reactions greeted an order proposed Monday by an administrative law judge with the Illinois Commerce Commission opposing the proposed acquisition by Frontier Communications of Verizon landlines in that state. The companies questioned the order’s logic. The International Brotherhood of Electrical Workers and the Communications Workers of America, foes of the deal in Illinois and elsewhere, lauded the proposed order.