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Free State Foundation: No Tax Break for Muni Networks

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The Free State Foundation has a big issue with the way the House Ways & Means Committee is reconciling President Joe Biden's $3.5 trillion spending plan, which includes big bucks for broadband.

Both houses of Congress have passed a general outline of the budget, but committees in both chambers are now charged with filling in matching details

Randolph May, president of the Potomac, Maryland-based free-market think tank, is calling ill-conceived a provision that would provide a tax break to municipal broadband buildouts.

Also Read: More Muni, More Money

The president has favored such municipal broadband in his proposals for billions of dollars in subsidies to promote universal, affordable and competitive high-speed internet service.

But May said Congress should not give a tax break for the maintenance and operation of government-owned broadband systems.

One knock on such systems historically has been that once funded, they can't cover operating expenses and have been known to fold, leaving taxpayers to foot the bill.

Also Read: Biden Broadband Plan Favoring Government-Owned Networks Lacks a Constitutional Foundation

But May said government-owned networks already get preferential treatment when it comes to “accessing public rights of way, avoiding cumbersome permitting processes, and benefitting from taxpayer-funded subsidies.”

He said the tax break would make it harder for private operators who have to invest their own risk capital to upgrade service. “Marketplace competition for broadband services would be dampened and consumers will be the losers” if the tax break for munis is granted, he said.

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.