Where it all began… • Monopoly Roots • Luxury History • Regulated Rate of Return • Break-up in 1984 – really only 26 years…all this change • Cable & DBS almost exact same story MA BELL
What you are and how you sell it… Differing Taxation Issue has become - who is providing the services, not what the service is?
What’s the big deal? • One of most heavily taxed services in US • Hundreds of tax types, hundreds of tax bases • Fed, State & Local, Fed + State Reg, lifeline, social treasury… • Rate differential over 8% more vs. standard TPP* • Issues: • Situsing (Goldberg) • Resale • Bundling • Ever-changing technology • What is communications? * Per latest COST Study
Texas generally defined as “the electronic or electrical transmission, conveyance, routing, or reception of sounds, signals, data, or information utilizing wires, cable, radio waves, microwaves, satellites, fiber optics, or any other method now in existence or that may be devised, including but not limited to long-distance telephone service.” Maryland “Taxable services” include (1) cellular telephone or other mobile telecommunications service; (2) "900," "976," "915," and other "900"- type telecommunications service; (3) custom calling service provided in connection with basic telephone service; (4) telephone answering services; (5) pay per view television service; and (6) a prepaid telephone calling arrangement. What is Communications?
M2M/Location-based services Qualcomm Inc. v. Commissioner, Tenn. Ct. App. (September 26, 2007) TN Court of Appeals affirmed - “true object” of certain tracking services was transmitting information regarding the location and status of vehicles, not version of taxable telecommunication services. • service did not replace a truck driver’s personal cell phone…rarely used to carry on a conversation between the driver and the client’s fleet management center. • while the system contained the ability to transmit “free form” text messages…not the principal aim of its purchasers…did little more than allow information concerning a vehicle’s status to be combined with information on its location. Qualcomm Inc. v. Dep't of Revenue, Wash. Ct. App. (August 25, 2009) WA Court of Appeals held that system, including the basic automatic position polls, fell within the definition of a network telephone system. • the main issue is whether Qualcomm provides the medium over which the data are communicated and not whether it provides new information to its customers. • the network management center converts raw data sent from the trucking companies' mobile communication terminals via satellites into a usable format for the companies without providing significant new information.
Tightrope Customer Class Action Lawsuits Competitors/New Entrants Audit Liability Technology
Taxes/Fees/Surcharges Imposed on Communications Services Communications Excise/Sales Taxes Gross Receipts Taxes User Taxes
Taxes/Fees/Surcharges Imposed on Communications Services Industry Specific Fees 911 Fees License Fees