California Commission Proposes Plan to Tax Text Messages

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December 13, 2018

A California commission is proposing a monthly tax on cell phone bills, specifically text-message services, to increase state funds for programs that help bring connectivity to low-income residents and the deaf.

The California Public Utilities Commission (CPUC) has received backlash from the CTIA trade association, which represents AT&T Mobility, Sprint, and T-Mobile, in response to the commission's tax proposal. The surcharge proposal would levy a monthly tax based on any fees for text-message services versus a per-text tax.

Most cell phone carriers offer a flat fee for text messaging services, so the CPUC charge structure will vary based on the carrier, according to CNN.

The CTIA pushed back on the proposal in a legal filing, which argues the proposal may contradict federal law and would be harmful to consumers.

"Subjecting wireless carriers' text messaging traffic to surcharges that cannot be applied to the lion's share of messaging traffic and messaging providers is illogical, anticompetitive, and harmful to consumers," the CTIA said in its filing.

The commission will vote on CPUC commissioner Carla J. Peterman's 52-page proposal on Jan. 10, 2019. In the proposal, Peterman says the state's Public Purpose Program budget is increasing, but the incoming fees to fill it are decreasing. The surcharge rate is currently less than 7 percent.

The proposed plan could be complicated by a new Federal Communication Commission ruling. On Wednesday, the FCC approved a new rule that classifies text messages as an "information service" like email. Proponents of the rule say it will give carriers the ability to crack down on spam messages, and critics say it could lead to carriers censoring messages.

The CTIA argued in a legal filing submitted Wednesday that if texts are an information service, then the CPUC doesn't have authority over them and can't add on surcharges. It claims the proposal would go against federal law.

The industry group also says the proposal would create inequity "between wireless carriers and other providers of messaging services," such as WhatsApp, iMessage and Skype.

The commission can change its draft proposal before the vote next month in light of CTIA's filing and the FCC ruling. The taxes from the proposal would go to several programs, including 911 emergency services, subsidized phone service for low-income residents, and services for the deaf and hard-of-hearing residents, according to the CPUC.

Published under: California , Taxes