WASHINGTON SUBURB IMPLEMENTS TELECOM FEE
November 9, 1998
WASHINGTON Nov. 4 (States) -- A suburban county in Maryland has implemented a new telecommunications fee on Internet access and special telephone features like call waiting and call forwarding.
Any company that needs to use public rights of way in Prince Georges' County in order to provide services that fall outside the parameter of basic local telephone service or access to long distance will need to pay the fee. These so-called "advanced" services include Internet access, call waiting, caller I.D., and most long distance.
The county is taking advantage of a provision in the 1996 Telecommunications Act that allows municipalities to charge companies rent on the rights of way. Approximately 20 other counties or cities have adopted similar ordinances, said Nicholas Miller, a Washington attorney who helped write the legislation.
Any company that uses the rights of way, planting wire or cable, will have to pay three percent of gross receipts for the special features they are selling. The county expects to raise $6 million annually with the regulation, officials said.
The fee legislation, which was passed by the Prince Georges' County Council in late October, sparked a heated debate in the area. AT&T aggressively lobbied against the bill, angering many council members, who found the company's tactics unfair, said M.H. Jim Estepp, the bill's sponsor and a Democratic council member from Upper Marlboro.
The company, Estepp said, took out full-page newspaper advertisements and embarked on a telemarketing campaign that misled local voters about the impact the fee would have on their phone bills.
But a spokeswoman for AT&T said the measure is too broad and will ultimately result in higher customer phone bills.
"The cost for this tax is going to be in the millions of dollars for AT &T," said Candace Humphrey, director of public relations for Maryland, Virginia and West Virginia. She added the company will ask the state to allow it to pass the costs on to customers.
The debate on the issue has even become a rhetorical battle, with proponents characterizing the fee as rent on public space and detractors saying it is more like a tax.
Jones Communications, the only cable company operating in the county, would not comment on the fee. A spokeswoman said she also could not explain why the company refused to respond to questions. Jones is currently renegotiating its franchise agreement with the county, said John Askew, chief of the county's cable television division.
The fee will only apply to advanced telecommunications services, not cable, said Miller. But any Internet access provided by cable modem could be included, depending on how the cable company chooses to characterize the service, he said.
If the cable company decides cable modems are a telecommunications service, the company would have to pay the fee. Of course, if they included cable modem services as part of a company's cable business, that revenue would be included in the cable franchise agreement.
Wayne O'Dell, president of the Cable Association for Maryland, Delaware and Washington, D.C., said the association did not lobby against the legislation. But he said it will clearly affect any cable company that tries to break into the local phone business.
The law will apply to any service not covered by the federal government's universal service guarantee, said Estepp. So, while Bell Atlantic will not have to pay the new fee for basic phone, a competing company just entering the market and only able to hook-up part of the county would be required to pay the fee.
But Estepp downplayed the possibility that the regulation could have a dampening effect on nascent competition in the area. "It is a choice they make to take off the cream of the crop," he said. "If a company is going to take a few customers, they aren't providing a service."
By Laura Maggi
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