The Internet tax moratorium wouldn't apply, however, to federal taxes on broadband, Wood noted. The FCC's Universal Service Fund, which subsidies telephone and broadband service to rural areas, is funded through a 16 percent tax on telephone bills, and reclassification of broadband could subject it to the USF fees, opponents of reclassification said.
The tax moratorium may protect broadband customers from state and local taxes, but "given past experience with state and local tax authorities, we have every reason to believe that an FCC decision to reclassify broadband as a telecommunications service will lead these authorities to revisit their treatment of these services and to explore ways of circumventing [the law's] protections," the National Cable and Telecommunications Association said in a statement.
The FCC could decide to apply USF fees to broadband independent of reclassification, Wood said. The agency could also decide not to assess the tax even if it reclassifies broadband, he added.
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