The Honorable John Conyers, Chairman
Judiciary Commitee
United States House of Representatives
Washington, DC 20515

July 30, 2007

Dear Chairman Conyers:

As the House Judiciary Committee considers renewal of the Internet tax moratorium, Consumers Union asks that you use this opportunity to protect consumers from discriminatory cost increases imposed on satellite-TV and other video subscribers.

Strong interest groups with no interest in promoting price competition to cable TV monopolies have advocated higher State sales taxes for satellite subscribers than for cable subscribers, with the effect of raising the price of satellite TV in relation to cable. While Consumers Union in no way opposes the raising of revenue by State governments to pay for the vital services provided at the State level, we are concerned that discriminatory video taxes undermine the price competition offered by satellite TV.

Consumers benefit from competition in the pay-TV market, with lower prices, better programming, and better service. Lower-cost alternatives give lower-income individuals more affordable pay-TV, thereby broadening the television town square in our democracy. They also discipline incumbent cable TV operators—who have raised their rates nearly three times faster than inflation for years—against further steep rate hikes. If the effect of discriminatory State sales taxes against satellite subscribers is to raise the price of satellite TV, then consumers generally suffer.

As you consider legislation regarding the Internet tax moratorium, which already includes a non-discrimination provision addressing online and off-line commerce, Consumers Union supports the enactment of a pay-TV non-discrimination principle that allows States to raise revenue as they see fit, but in an equitable manner between all pay-TV providers. Whether consumers choose to watch video via cable, satellite, the Internet, or any other platform, they should pay a rate that reflects true competition, not artificial inflation based on discriminatory public policy.

Sincerely,

/s/

Chris Murray
Senior Counsel
Consumers Union

101 Truman Avenue
Yonkers, NY 10703-1057
T:(914) 378-2000
www.consumersunion.org