Study: Taxes are Costliest Part of Providing Telecom Services

Published April 26, 2016

Study: Taxes are Costliest Part of Providing Telecom Services
Johnny Kampis

A study on rural broadband found that — wait for it — taxes are far and away the largest cost involved in providing telecommunications services.

This comes after another report last year indicated taxes could slow down wireless broadband expansion.

Hudson Institute’s “The Economic Impact of Rural Broadband” found that excise-type taxes that providers collect and remit to governments make up $1.3 billion of the “purchases” required to produce telecommunications services. That’s more than triple the next category of purchases: about $400 million in advertising and related services.

Hans Kuttner, author of the study, told that taxing telecommunications services has historically been an attractive funding mechanism for governments, going back to 1898 when the federal government used such a tax to help pay for the Spanish-American War.

“I guess it was the kind of thing where it would be on bills and people wouldn’t notice,” Kuttner said. (The war began and ended in 1898; the tax was repealed in 2006.)

That lack of transparency has continued over time.

“Rather than being transparent and saying we need to have a subsidy to get the last farm on the road … we adopted the Universal Service Fund,” Kuttner said.


Johnny Kampis ([email protected]) is a content editor for An earlier version of this article was published at Reprinted with permission.