CA Ditches Plan to Tax Text Messages

December 17, 2018 - 7:48 am
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(KNX 1070/AP) - ​California is now ditching a plan to place a tax on text messages.

California regulators were considering a plan to charge a fee for text messaging on mobile phones to help support programs that make phone service accessible to the poor, according to a newspaper report.

But it may not have legs thanks to a decision by the Federal Communications Commission. 

The plan to ditch the tax follows last week's ruling by the Federal Communications Commission that said text messages are an information service, not a telecommunications service.

The California Public Utilities Commission initially proposed the fee, suggesting the money could be used to fund phone service for low-income residents.

The FCC ruled that texts should be considered information services, similar to emails, and not a telecommunications service. The Fed's ruling is aimed at protecting consumers from text-messaging spam.

The wireless industry and business groups have been working to defeat the plan.

"It's a dumb idea," said Jim Wunderman, president of the Bay Area Council business-sponsored advocacy group. "This is how conversations take place in this day and age, and it's almost like saying there should be a tax on the conversations we have."

It's unclear how much money individual consumers would be asked to pay their wireless carrier for texting services under the proposal, the Mercury News newspaper said. But it is likely would be billed as a flat surcharge — not a fee per text.

Wunderman said he's unaware of any other local, state or federal program that taxes texting. And the wireless industry has argued the state commission lacks legal grounds for doing so.

Business groups calculated the new charges for wireless consumers could total about $44.5 million a year. They said that under the regulators' proposal the charge could be applied retroactively for five years — and could amount to a bill of more than $220 million for California consumers.

A CPUC report proposing the texting surcharge says the Public Purpose Program budget has climbed from $670 million in 2011 to $998 million last year. But the telecommunications industry revenues that fund the program fell from $16.5 billion in 2011 to $11.3 billion in 2017, it said.

"This is unsustainable over time," the report says, arguing that adding surcharges on text messaging will increase the revenue base that funds programs that help low-income Californians afford phone service.

"From a consumer's point of view, surcharges may be a wash, because if more surcharge revenues come from texting services, less would be needed from voice services," CPUC spokeswoman Constance Gordon said in a statement.

One business group is already slamming it as a dumb idea while Carl Guardino of the Silicon Valley Leadership Group thinks it's misguided:

"Right now in California, it is already an incredibly expensive state and to place one core tax for something that is ubiquitous, all of us texting on an hourly basis isn't something that California consumers should have to bear," he said.