Municipalities are starting to understand that the availability of broadband access at reasonable prices is becoming a driving force in where people and companies want to reside. Recently Google has been rolling out 1GB broadband connections and charging consumers only $70 per month in some select markets as a way to create competitive pressure on other broadband providers to increase speed while reducing prices. The program has had some effect but has still not reached enough areas to cause widespread changes in pricing policy nationally. Now, in an attempt to lure Google, Oregon lawmakers just gave away tens of millions of dollars to Comcast by mistake.
When the Oregon legislature decided to alter its tax policy last year, it was directly intended to make Portland Oregon more appealing as a region of Google broadband to become available. The area is already on Google’s short list of sites, and the hope was that the tax incentive would put Portland over the top.
The new tax rule reduces property taxes for companies that offer gigabit-speed Internet service, but it wasn’t enough to get Google to come to Portland just yet. Worse than that, lawmakers failed to specify that companies that provide gigabit service at a particular price point in order to qualify for the tax break.
Comcast has opportunistically claimed the tax benefit because it offers a 2Gbps Internet connection in Oregon, though it charges $300 per month rather than $70 and also tags on another $1,000 in startup fees rather than the free installation Google provides.
Now, Rep. Phil Barnhart (D-Eugene) has told utility regulators that the tax break was meant to spur investments in new networks but the Oregon state Public Utility Commission ruled 3-0 that Comcast’s gigabit service does qualify their company for the tax break because the law as written fails to prevent any company from benefiting, provided that they offer GB internet service.
In fact, the law is so poorly written, that it begs the question, if Starbucks suddenly started allowing customers to use a 1GB connection in their stores for twenty minutes a day from 1:30 to 1:50pm, would that be sufficient to get them a tax break worth tens of millions of dollars per year as well?
The matter is undoubtedly headed for further regulatory debate in court, but Comcast has already issued a statement, saying, “We are pleased with the Oregon Public Utilities Commission’s ruling which affirms Comcast’s significant investment in Oregon. Comcast is proud to provide the infrastructure that powers the fastest residential Internet speeds in Oregon and fuels the state’s ongoing economic vitality and competitiveness.”