AT&T sues Eugene over local telco levy

Mobile Phone News, Nov 17, 1997 by Stephen Bouvet, Mike Maynard, John Sullivan, Ellen B. Mullally

In addition to the 2 percent tax, there is also a one-time processing fee. In its April ordinance, the city also imposed an additional 7 percent license fee on telecommunications companies whose facilities use or are located on public rights of way - a plus for those against new cell sites. The ordinance itself apparently takes more specific aim at cell sites, declaring that they [are] "a concern to the public health, welfare and safety and therefore, an emergency is hereby declared to exist."

Under the ordinance, $180,000 from expected revenues would be earmarked to run a new program regulating towers and other telecommunications facilities. The rest would fund a range of public projects, from community Internet access to increased TV coverage of City Hall meetings.

...None Too Successful - Yet

Like other carriers that have fought municipalities, including BellSouth [BLS], which successfully sued the city of Chattanooga, Tenn., AT&T hopes to head off a trend. There have been other cases in Oregon, Texas and elsewhere in which municipalities or states have tried to levy taxes on wireless carriers.

Michael Altschul, vice president and general counsel for the Cellular Telecommunications Industry Association, said the industry can expect more attempts from towns and states to target wireless carriers. "We know local and state governments are going to be looking for new revenue sources," he said. "[Local taxation attempts] are going to be with us for some time."

Section 332 of the Telecommunications Act of 1996, however, prohibits taxation that discriminates against wireless companies or creates the effect of such discrimination. Altschul said he knew of no state or municipality that has successfully levied a special tax against wireless companies.

"We're increasingly concerned, that as a competitive business, we be taxed more like a McDonald's than like a local exchange carrier or an electric company, which can pass through those charges to customers without reducing services," Altschul said. "The old monopolistic paradigm doesn't fit in a competitive environment."