October 15, 2007
Dear House Judiciary Committee Member:
The National Rural Telecommunications Cooperative (NRTC) represents over 1400 rural utilities throughout the United States. On their behalf, I am writing to express our strong support for H.R. 3679, The State Video Tax Fairness Act, sponsored by Reps. Conyers, Cannon, Boucher and Franks.
H.R. 3679 seeks to end the practice of states imposing discriminatory taxes on different providers of multi-channel television services. This legislation is necessary because, to date, six states have imposed taxes that specifically target subscribers of Direct Broadcast Satellite (DBS) television services, resulting in higher costs for DBS subscribers and competitive disadvantage for DBS companies.
As you know, NRTC's primary mission is to bring telecommunications solutions to rural America. Our first enterprise was the launch of C-band satellite television in 1987 and then, in the early 1990’s, NRTC entered into an agreement with DIRECTV that allowed our members to promote and distribute that service in their rural markets. Ultimately, NRTC reached nearly 2 million homes in rural areas bringing far greater choice than had been available through off-air or cable service. Even today, DBS subscribership is heavily deployed in rural areas. Accordingly, the burden of state taxes which discriminate against DBS customers fall disproportionately on rural consumers.
We are aware of the specious argument put forward by cable interests that state DBS taxes are merely an effort to offset the competitive effects of the franchise fees that cable television companies pay. Franchise fees are not state taxes; they are payments to local governments to compensate those governments for the cable provider's use of public rights-of-way, damage to streets, etc. Those costs are inherent to cable television's technology, just as the costs of spectrum, orbital slots, satellites, and customer premise equipment are inherent to DBS technology. It is anti-competitive for states to tax DBS subscribers in order to impose on DBS a cost which is inherent to cable technology.
I am therefore writing to urge you to cosponsor H.R. 3679 to preserve tax fairness, promote video competition, and promote quality of life for rural television consumers.
Thank you for your consideration.
Sincerely,
/s/
Mark C. Ellison
Senior Vice President, Business Affairs & General Counsel
National Rural Telecommunications Cooperative
2121 Cooperative Way
Herdon, Virginia
20171-4542
T: 703 787 0874
F: 703 464 5300
www.nrtc.coop
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