In 1898, the United States Congress enacted the Federal Telephone Excise Tax on telephone bills for the purpose of funding the Spanish-American War. It was designed as a temporary tax on wealthy Americans at a time when telephone service was considered a luxury. For 108 years, the fee remained on consumers' bills and funded unrelated government purposes until finally repealed in 2006.
This year, the Indiana General Assembly has the opportunity to repeal another anachronism: the Indiana Video Service Franchise Fee. This fee is one of several itemized charges that appear on a monthly television bill - in addition to the cost of service - that can add up to hundreds of dollars a year for the typical Hoosier family.
House Bill HB1132 would eliminate the video service franchise fee, enacted in the early 1984, when cable television franchises were granted on a community-by-community basis. The fee represented an exaction from cable television operators by local units of government for the privilege of holding the cable television monopoly in those communities and was passed on to customers as a "franchise fee."
Over time - as voice, video, and data converged - new technologies developed through which television could be provided to Hoosier customers. Traditional wireline providers such at AT&T and Verizon rolled out U-verse and FIOS, respectively. Satellite providers emerged such as Dish Network and DirecTV. The era of monopoly was over.
In 2006, the Indiana General Assembly - recognizing the intense competition that had arrived - deregulated telecommunications in Indiana and created a statewide franchise option to replace the local franchise agreements. Since then, cable providers have opted for the statewide franchise, including Comcast, AT&T, and Verizon among others. National satellite providers, whose customers are exempt from the fee by federal pre-emption, continued to build market share.
Yet the "franchise fee" remains; a fee on the now non-existent franchises. Each month, Hoosier consumers are still charged franchise fees ranging from $4 to $7 on their television bills. Satellite television remains exempt, putting in-state providers at a competitive disadvantage.
Today, the Video Service Franchise Fee continues to exist in Indiana beyond its original purpose. It is time to both level the playing field with the satellite competition and lower Hoosiers' monthly television bills by repealing the Video Service Franchise Fee.