White House tax plan will never fly.

February 8, 2006

2 Min Read
Spectrum Tax Odds

6:00 PM -- There's been a fair amount of confusion the last couple of days about the Bush administration's proposal to tax unauctioned spectrum licenses -- which sounds like a move to impose taxes on unlicensed spectrum used for burgeoning WiFi hotspots, among other applications.

In fact, the taxes, which would yield about $3.6 billion over the next decade, would target organizations that have licenses freely assigned by the government, rather than acquired at auctions. This would include mobile phone companies, certain satellite service providers, and industrial users of radio-frequency technology, as well as public safety networks. The Federal Communications Commission (FCC) (which would have to sign off on such a tax) would presumably have the power to tax commercial broadcasters, like the cellphone providers, while giving the EMS techs and firemen a break. WiFi would not be included in this proposal. (A good thing, 'cause how you going to collect taxes on free public hotspots? Pass the hat?)

The Bush administration has traditionally opposed taxing unlicensed spectrum, rebuking Japan when it proposed such a tax in 2004. The Japanese government ultimately backed away from that proposal.

Still, "unlicensed" vs. "unauctioned licenses" is close to a distinction without a difference, and most commentators, including Harold Feld of Wetmachine, think this proposal hasn't a chance in hell of passing anyway. One interesting subtext is that the newly appointed fifth member of the FCC, Robert McDowell, is currently the senior VP and assistant general counsel to the Incompas -- a telecom industry lobbying group that has traditionally opposed such spectrum taxation. It will be interesting to see if McDowell, whose appointment restores the Republican majority to the Commission, sticks to his principles or goes along with the White House on this one.

— Richard Martin, Senior Editor, Unstrung

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