CPUC Surcharge Is Broadband 'Tax' on Lower-Income Homes: Amici

The California Public Utilities Commission decision to switch state USF contribution to a connections-based mechanism “increases the cost of the surcharge for most wireless customers,” said an amicus brief Friday (docket 3:23-cv-00483) from four nonprofits on behalf of the disadvantaged in support of T-Mobile’s challenge of the surcharge in U.S. District Court for Northern California in San Francisco (see 2302020058). The methodology change “will substantially increase the portion of the total CPUC funding costs borne by lower-income, minority communities,” said the Multicultural Media, Telecom and Internet Council, ALLvanza, the NAACP’s California Hawaii State Conference and LatinoJustice. The new methodology “will harm the many Americans who remain on the wrong side of the digital divide,” they said. A hearing on T-Mobile’s challenge is set for March 16 (see 2302150043). With its “flat-fee per access-line approach,” the CPUC places “the same burden on a low-income individual who buys the minimal option for connectivity as a business or a millionaire who purchases every possible service for connectivity,” said the nonprofits. The “disproportionate and unfair” price change will ultimately force low-income individuals that rely on mobile wireless services to access broadband “to lose that access,” they said. Affordable and “varying wireless options” in the past several years “have helped bridge the digital divide that prevents low-income and communities of color from accessing broadband services in the same proportion as people in more affluent communities,” said the nonprofits. The CPUC’s shift to flat-fee access-line surcharges “threatens that progress by increasing the price of wireless services and decreasing carriers’ ability to offer options accessible to a variety of consumers,” they said. Though the CPUC “purports to avoid directly imposing a tax on broadband,” the practical effect of the increased surcharge “would be to impose an additional tax on individuals who rely on their wireless phone primarily, if not exclusively, for non-taxable broadband access,” said the nonprofits. Higher-income individuals who can afford to buy a home broadband subscription don’t pay the surcharge on that service, they said. “The result is not a fee proportionate with use, but instead an effective higher tax rate on individuals least able to afford it,” they said. The access-line surcharge “results in an end run around the preemption on taxing broadband services, but only for those often lower-income and people in communities of color, that do not have stand-alone broadband,” they said.