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Comment by tptacek | Hacker News Reader

I don't know what this means, but local franchise fees are in fact taxes.

When you eat at a restaurant do you see property tax on the bill? It is a cost of doing business, everyone has them.

When I eat at a restaurant, that business is not paying a per-seating fee to the city it's sited in. But that's what the ISPs are doing.

Why does that matter?

Because property taxes are a predictable, fixed fee, and ISP fees are usage taxes applied per-customer.

Let's make this imaginary restaurant more fun: not only is it required to charge a per-seating fee, but it's not the same fee for each customer. Instead, they have to inquire about the residential address of each guest, and compute a locality-specific seating fee.

Isn't fee based on location of where the service is provided? My ISP at the rental property doesn't care about my residential address. They only care about the address where their service is consumed. You can stop worrying about that restaurant, they will charge same fee all their customers as long as they don't deliver.

This is about labeling requirements at the point of sale, not about about the details of your bill, which already list these fees.

Are you saying that ISPs already have all this information and there is no problem for them to calculate these (checking the thread...) "unpredictable" fees?

They are allowed to list the maximum total price

No, in their objection they're specifically asking as an alternative to be allowed to do that.

They want to continue to spring it on you at the last step of signup

This is not necessarily true for all businesses in all locals. For instance if you buy a car in CA, they charge sales tax based on your home address, so two people could in fact buy the same product at the same dealer and pay different prices

This imaginary restaurant could just pay all these fees itself as a cost of doing business and transparently charge a slightly higher whole number to the average customer.

No, it can't!

Why not?

If my bill looks like this:

$50 Steak Meal

$10.54 Municipal We Hate You tax

$5.87 Local ditch digging tax

$2.15 State paperwork shredding tax

$0.04 Federal fuck you tax

Why can't instead the restaurant just write on the menu:

$70 Steak ($50 + taxes and fees)

...and eat the costs itself? It's entirely within the businesses' power to do this. They choose not to.

Sorry, I thought you were implying that ISPs could opt instead to pay some lump sum to the various governments charging these fees, and not break them out per customer. They can't do that. Nor can they charge "$70 steak ($50 + taxes and fees)" --- that's what they want to do. It's the FCC that's saying the bill has to look the way you're complaining about.

Per the article, the FCC says ISPs are free to eat those costs behind the scenes and charge customers of the same plan the same flat rate (thus avoiding the need to itemize any taxes). The FCC is essentially creating an incentive structure that favors simplicity for consumers (possibly at the cost of making customers in low-tax areas pay a little more while those in high-tax areas pay a little less).

No, they can't --- the fees are different in neighboring municipalities. There isn't one single all-in rate they can charge everybody who walks in the door, which is the whole problem they're complaining about.

The ISPs are asking, explicitly, to be allowed to quote a "maximum possible" price inclusive all fees, non-itemized, like you suggest.

This part of the article seems to suggest that charging a flat rate that includes the base price plus the maximum possible taxes and fees would be allowed: "'A provider that opts to combine all of its monthly discretionary fees with its base monthly price may do so and list that total price. In that case, the provider need not separately itemize those fees in the label,' the FCC order said." I wonder what the ISPs' objection to this is, maybe that it would overcomplicate accounting?

You keep repeating your objection as though you haven't read any of the replies. I really think what you're saying is not true.

> No, they can't --- the fees are different in neighboring municipalities.

So? Who cares? Why do I need to know this as a consumer? I'm sure a McDonald's in the city pays higher rents than one in the country, yet both will sell me a coke for $1 without ever making me think about that fact.

> There isn't one single all-in rate they can charge everybody who walks in the door, which is the whole problem they're complaining about.

If the current pricing for a 100mbps Internet plan is $40 + $1 (local tax) in one town and $40 + $3 (local tax) in the next town over, the ISP is welcome to just create one label for that plan at a $42 price point (with no enumerated taxes/fees shown at all) and abstract away the computation/remittance of those taxes internally. Call it $45 to really play it safe. Sucks for the people in the lower-tax town, but this solves the problem the ISPs are crying about.

Either way, it really drives home the point that businesses don't pay taxes, the consumer does.

>ISP fees are usage taxes applied per-customer

Can you please explain what you meant by this?

Sure, but they are paying those fees in exchange for the incredibly valuable privilege of (usually) an exclusive monopoly on broadband in an entire city.

This was the contract they accepted when they eagerly signed such a deal, because the last thing those companies want is to have a bunch of little fiber outfits going around wiring up all the richest and easiest-to-deploy neighborhoods with quality fiber internet service. Or -- g-d forbid -- municipalities cutting them out and laying fiber themselves. Their franchise fee protects them from either of those horrors.

Pretending they're the victim for covering the costs they agreed to, and then acting like consumers are being unreasonable when we don't pay what was forced on us by our one choice of ISP is the boldest hypocrite move I've heard of yet from telcos.

Franchise agreements usually do not grant exclusivity to providers. And they're not the only fees we're talking about; counties, states, and the federal government apply pass-through taxes to ISP customers as well.

Go look yours up. I just did, to make sure (I have opinions on this weird issue because I'm on my town's governing commission for this stuff --- go join yours too, I've gotten to do all sorts of cool stuff that I wouldn't have predicted from the nerdy charter of the commission --- and after 18 months of falling asleep every time the topic of the franchise agreement came up, I finally stayed awake and learned we were making a fairly huge amount of money by soaking residents for their ISP connections).

I just pulled up an old comcast bill and it has: "Federal Cost Recovery Fee" and "Universal Service Fund Surcharge (State)" and "Utility User’s Tax /Business" and "Universal Connectivity Charge" and "911 Line Tax (State)"

Those are all pass-through fees. They are just taxes.

They are not just taxes. Reimbursing the telco for their compliance costs makes about as much sense and reimbursing a restaurant for complying with local health code.

If they were actually taxes Comcast wouldn’t be fighting this rule, which does not apply to government mandated taxes.

I tracked down the FCC filing this article is about and read it. They are just taxes. There may be other things in the FCC rule that aren't about taxes, but the NCTA's objection is exclusively to the taxes.

Like most things, the government creates a problem then convinces everyone they aren't the reason.

I can't get broadband at my home despite being less than a mile from multiple providers in 3 different directions. I literally have an att fiber running down my row to a neighborhood less than a mile a way.

After being pissed at att for several years I finally looked into it and realized the county won't approve att putting in the service for anything but developer projects. Basically crony capitalism...

Do you think ATT is for or against not having to compete on every block?

Most of these fees have nothing to do with exclusivity, and for the most part AT&T and Comcast don't get exclusivity in their franchise agreements. Go look yours up (your city or township should make it very simple to find, and if it doesn't, there's a reason for that!) and see if they got exclusivity.

I don't follow. In my specific case there has been one developer locked up already for collusion with the county so I think I'm fair in assuming the issue is not ATT in this case.

Plus what's stopping Comcast from coming down my street other than the countys rules about new developments only?

In the UK, for most bills, it is line rental + provider fee. Line rental is to pay for the copper wiring that is still used for landline phones and all of the infra for it (via local loop unbundling). It goes to OpenReach and every ISP resells it unless they plant their own infra (Virgin, Hyperoptic)

Most ISPs sell broadband only plans now, even on copper installations.

As a tax lawyer, I must rebut your ridiculous claim that "franchise fees are in fact taxes."

Franchise fees are fees paid by an ISP for the right to provide their service in a territory; paying the franchise fee entitles the ISP to access the public right of way (such as by installing lines under roads, in sewers, etc.). That they happen to commonly be calculated as a % of gross charges paid by ISP customers is irrelevant; royalties are calculated the same way and nobody calls a royalty a tax.

So it’s a compulsory contribution to state revenue levied by the government and added to the cost of the service? Because that’s what a tax is…

> a compulsory contribution to state revenue, levied by the government on workers' income and business profits, or added to the cost of some goods, services, and transactions.

Sounds like it's not compulsory though? The ISP is perfectly welcome to lay their lines via private lands (having negotiated permission with each landowner, naturally) if they'd prefer.

Well it’s not compulsory to pay your vehicle registration tax either, if you only want to drive your vehicle on private land.

I wouldn't consider that a "tax" either if that's all it's for. Do you consider national park entrance passes to be a tax?

Contrived arguments about whether something is a tax or a user fee has been a feature of politically motivated spin since basically forever. I would say any essential service (like access to internet, roads, healthcare, etc…) that requires for money to be paid to the government is taxes. There is no way to get access to the internet without paying these taxes to the government, and your suggestion to implement a private-land-only infrastructure is silly. There is no contiguous area of private land between my house and an ISP POP that doesn’t cross over publicly owned land. That’s almost certainly true for you too, and anybody else who’s reading this.

> I would say any essential service (like access to internet, roads, healthcare, etc…) that requires for money to be paid to the government is taxes. There is no way to get access to the internet without paying these taxes to the government, and your suggestion to implement a private-land-only infrastructure is silly. There is no contiguous area of private land between my house and an ISP POP that doesn’t cross over publicly owned land.

If it's both an essential service and effectively impossible to implement without making use of public land (and I don't disagree), then there's no reasonable basis for it to be a private industry operation at all. These ISPs can't have it both ways.

Most taxes and fees from an ISP or telco have absolutely nothing to do with passing over public property. Many telco fees are in portion or in full a profit for the provider!

> Sounds like it's not compulsory though? The ISP is perfectly welcome to lay their lines via private lands (having negotiated permission with each landowner, naturally) if they'd prefer.

Streets cut cities into small islands of private lands. Therefore, you cannot reach anyone without crossing the public right of way.

Perhaps mere crossing should be treated as de minimis. But when you're closing and digging up the public street for days at a time, or perhaps even running your lines through publicly-maintained conduits and accessing them through publicly-maintained manholes, you're taking a lot more from the commons than that.

It's not compulsory. It's a fee for access to public rights of way. If the ISP doesn't want to pay the fee, they are free to figure out a way to provide connectivity without access to the public right of way.

And on that note...my ISP (Starry) does exactly that. They don't use the public rights of way so they don't have to charge many of the franchise fees that Comcast et al do.

A royalty, paid to a government, as a condition of business?

Yes, I’d call it a sales tax, property tax, income tax, etc. based on what it was grounded in.

To put this as an example of why your logic doesn't work: it would mean that an utility bill is just a bill if paid to Comcast or Pacific Gas, but a tax if paid to a publicly-owned utility like LADWP for exactly the same services.

A bill isn't a tax just because it's a bill from the government.

Royalty != bill. When I pay the DMV to get replacement license plates, that's likewise not a tax just because the DMV is the government.

As a tax lawyer, you may not be allowed to call them taxes. Since I'm not one, I can apply the common sense definition, rather than the technical one.

The ISPs allow you to add "free television" with your internet service, then it turns out to be very NOT free. They do get lots of ad revenue even though they "don't charge" for the TV.

This comment doesn’t make a lot of sense, and with all the quotes it’s hard to tell if you mean it’s actually free or not.

If they are not charging you for the TV service then why are you complaining about ads? Complain about paying for ads, not getting an ad supported service for free.

Years ago when signing up with a cable isp, I was offered cable television/cable box for no additional cost.

Except no additional cost sidestepped the monthly surcharges and taxes that ended up on the bill anyway.

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