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California Nixes Proposal To Charge for Text Messages

California Nixes Proposal To Charge for Text Messages

A proposal to add more surcharges and user fees to text messaging services hit a brick wall last week. The Federal Communications Commission ruled that text messages are “more like emails” and that the California Public Utilities Commission lacks the authority to implement new charges for text messages in the state of California.

The California Public Utilities Commission (Commission) says the new charges are needed to keep funding for public programs in place. Critics say the new charges, which they call a tax, are unnecessary and hurt competition. The sticking point, however, is whether or not the Commission has the authority to add surcharges and fees.

However, the answer to that question depends on how we define text messaging services. For example, we can define them as information services, like email, or  “telecommunications services”. If text messages are defined as the former, then the Commission doesn’t have the authority to add the new charges, the argument goes.

On November 9th Commission officials released a proposal titled “Decision Determining Text Messaging Services Revenue Should be Subject to Public Purpose Program Surcharges and User Fees”.

The 50 plus page document made the case for adding surcharges and user fees to text messaging services.

Specifically, the Commission considered three issues:

1) How to add the new charges;

2) Authority to add the new charges under State Law

3) Authority to add the new charges under Federal Law

According to the Commission, the charges would help keep those services in place.Many telecommunications companies already charge a fee for texting, and California already imposes a tax on some communications services.

Surcharges on communications services pay for programs. One example of such a program might be to “increase broadband in schools, libraries and rural health care providers’ facilities,”  according to the Commission.

Carl Guardino, CEO of the Silicon Valley Leadership Group, responded to this argument saying, “The public purpose program fund has, already, one billion dollars. Sometimes we just don’t need a new tax for every idea that a government agency or official has.”

Founded by David Packard of Hewlett Packard fame, The Silicon Valley Leadership Group is a non-profit advocacy group.

In welcome news to critics of the proposal, the FCC ruled on Wednesday that text messages are in fact more like emails. Importantly, this means the Commission doesn’t have the authority to impose the charges on text messaging. The Commission now says its not going forward with the proposal anymore. Furthermore, citing the FCC ruling, in a late Friday Tweet the Commission said it withdrew the proposal.

It should be noted that any new surcharges and fees would not apply to to individual text messages anyway. Rather, the new charges would have applied to the total bill amount.

Most Californians seem to be glad the proposal to charge for text messages was nixed. Of course, we pay a lot of taxes, surcharges, and random fees in California. Thus, it would be unlikely that that majority of citizens would support such a proposal.

Opponents of the proposal argued that adding new charges for text messaging services put some companies at a disadvantage compared to free messaging services such as WhatsApp and Messenger. They add that the charges, which they refer to as a tax, also hurts consumers.

In a press release, Cellular Telecommunications Industry Association (CTIA) Senior Vice President Jamie Hastings said:

“We hope that the CPUC recognizes that taxing text messages is bad for consumers. Consumers exchanged 1.77 trillion messages in 2017, making text messages one of the most common and effective means of communication for Americans. Taxing this service would burden those who rely on and use this service each and every day.”

Cellular Telecommunications Industry Association is a trade group that represents, among others, AT&T Mobility, Sprint, and T-Mobile.
In light of the announcement, it appears critics will have their way.
The Federal Commuications Commission meetss again pm January 10, 2019.

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About The Author

Chris Lodgson

Chris Lodgson our News & Events Editor. Chris is a researcher and regulatory analyst at a legal information company, where he creates and delivers legal content on current issues on a daily basis. Originally from New York City, he's also a local organizer, business owner, and social media-marketer supporting Sacramento County Black-owned businesses.

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