Lower taxes. Reduced subsidies. Increased competition. New services. Better prices.
That pretty much sums up the benefits of the telecommunications bill that just passed the Texas House of Representatives.
House Bill 789, by Rep. Phil King, R-Weatherford, is a major step toward freeing consumers from the high taxes and burdensome regulations that have hindered the delivery of telecommunications services in Texas.
Telecommunications remains one of the most highly taxed and regulated industries in Texas. In addition, a vast network of cross-subsidies shifts hundreds of millions of dollars per year from the pocket of one consumer to another and adds at least $200 million a year to the overall cost of our telephone service.
HB 789 contains significant reforms that will eliminate many of these problems. For instance, it lowers taxes, reduces intrastate long distance access charges from around six cents a minute to almost one cent, removes burdensome regulations on broadband and video services and allows companies to compete against each other on price.
These are all part of a remarkable shift toward allowing consumers, rather than regulators, to determine the prices they are willing to pay, and the services they want to purchase. This is accomplished in the bill in three ways.
First, substantial progress is made toward removing the subsidies that have formed the foundation of telecommunications policy in Texas. Policy makers have tried to keep voters happy by using subsidies to keep their basic phone bill low. However, this resulted in making other services more expensive. HB 789 would completely end long distance subsidies, greatly reduces the business to residential subsidy and takes baby steps toward reducing the urban to rural subsidy.
Second, the bill cuts our taxes by $125 million per year by eliminating the Telecommunications Infrastructure Fund tax, originally created for hooking up schools and libraries to the Internet. But recently it has funded general government spending. Senfronia Thompson, D-Houston, who led the charge to repeal the tax, said, “If we are charging a tax to wire our schools and libraries, and that purpose has been accomplished, then why should people keep paying because we are having a budgetary problem. We should let the people have their money back.” Finally, voice, video and information providers are relieved of numerous regulations that set prices, restricted competition and mandated services.
Chairman Phil King should be commended on a job very well done. He has authored and passed a bill that will benefit all of Texas. We will soon be the beneficiaries of a freer market, resulting in lower costs, better services and a stronger economy.
Bill Peacock is the Economic Freedom Policy Analyst at the Texas Public Policy Foundation, an Austin-based research institute.