FCC's Genachowski Backs Away From Broadband Tax Proposal

Genachowski blamed Republicans for the agency’s initial consideration of the new tax

FCC Chairman Julius Genachowski is sounding his retreat from a controversial agency proposal to tax internet service.

Getty Images

Genachowski (pictured) said in a statement on Monday that the agency has all but pulled the plug on the concept of imposing an assessment on broadband internet service to help raise money to subsidize telecommunications services to rural and low-income consumers.

The agency’s existing subsidy fund — the so-called Universal Service Fund — currently raises about $8 billion a year through assessments on a variety of conventional telephone services, but not from Internet services.

To spread the costs of the fund, the agency earlier this year asked for comment from the public on whether to expand the pool of taxed services to include broadband internet and texting services.

Also read: AT&T Lashes Out at FCC Over T-Mobile Deal, FCC Responds (Updated)

The FCC proposal, though endorsed by high-tech media industry giants including AT&T and Google, was panned by some consumer advocates.

“The FCC needs to focus on making USF more efficient and accountable before it reaches further into our wallets,” S. Derek Turner, research director of the consumer advocate group Free Press, said in a recent Op-Ed piece.

Genachowski blamed Republicans for the agency’s consideration of the new tax proposal in a statement released Monday.

“Following the urging of Republican commissioners and members of Congress, including to broaden the base, earlier this year the commission sought comment on proposals to reform Universal Service Fund contributions,” Genachowski’s statement said. “The chairman remains unconvinced that including broadband is the right choice,” Genachowski added.

Said Turner, in response: “Continuing the efforts to rein in wasteful spending and to make the program more accountable is the best way to strengthen the Universal Service Fund and to help ensure it achieves its important goals."