Oregon Winds Up Giving Comcast A Huge Tax Break For Doing Nothing Differently

from the great-work-everybody dept

A well-intentioned effort in Oregon to drive more competition to the broadband market has instead netted Comcast a $15 million annual tax break for effectively doing nothing differently.

Back in 2014 the Oregon State Supreme Court issued a hugely-controversial ruling that allowed companies to be taxed based on “intangible” assets such as the value of their brands. Lobbied by Google, the state in 2015 signed a new law rolling back those assessments to try and incentivize competitors looking to deploy faster broadband networks. But in 2015, Google was quick to point out that the sloppily-worded bill actually exempted it from gleaning any tax breaks for deploying gigabit broadband:

“SB611 offers an exemption from the state’s tax methodology to companies with the capacity to offer Internet service of “at least one gigabit.” Google Fiber offers speeds “up to a gigabit” per second – that’s 1,000 megabits per second, 25 times faster than the current broadband standard. So the law, as written, would make Google Fiber ineligible for the tax exemption.”

In other words, a well-intentioned bill intended to incentivize deployment of next-generation broadband actually exempted the one company actually promising to do so.

Oddly, this was only the start of the problem. Google Fiber had spent several years promising Portland locals that gigabit fiber would be deployed to the city. This promise was at the heart of the entire state-level legislative tax adjustments in the first place. But by late 2016, Google Fiber had indicated that it was getting bored by the whole broadband disruption thing, and had decided to put its fiber expansion plans on hold. Needless to say Portland, one of several cities that had been strung along as potential launch markets, wasn’t impressed.

But wait: it gets better. Comcast, which had already been planning to deploy gigabit broadband service via relatively inexpensive DOCSIS 3.1 upgrades, was quick to take full advantage of a law intended to bring more competition to bear on the incumbent giant. Its lawyers quickly got to work successfully arguing that its modest and already-planned cable-based upgrades qualified it for $15 million in annual tax breaks. But because Comcast’s gigabit service costs $300 per month and came with a $1000 installation fee (plus usage caps), lawmakers were quick to argue that this massive Comcast gift wasn’t what they had intended:

“Comcast argues it qualifies, too, by virtue of its obscure new service. Oregon cities are crying foul, but the staff of the Oregon Public Utility Commission says Comcast meets the letter of the broadly written law – even if hardly anyone signs up for a service critics say would cost subscribers $4,600 in the first year alone.”

Since Comcast technically adhered to the letter of the law (even if the service it was deploying was already planned and priced uncompetitively), it was able to begin enjoying the huge tax break. So was Frontier Communications, a company under fire in other states for being almost as large of an anti-competitive shitshow as Comcast. And while Oregon lawmakers tried to reboot the whole mess and repeal the law last week, procedural missteps and Comcast’s lobbying influence over state leaders made sure that wasn’t successful:

“Count Comcast among the big winners in this year’s legislative session in Salem.

Efforts to repeal a tax break worth millions of dollars a year to big internet companies faltered at the last minute Thursday during the Oregon Legislature’s short session.

“I’m really disappointed we weren’t able to get that one over the finish line,” said Senate Majority Leader Ginny Burdick, D-Portland, who chairs the rules committee where House Bill 4027 died. She said the measure didn’t clear the House early enough to avoid a potential Republican slowdown, and with the Legislature set to adjourn Saturday or Sunday she said the clock ran out on the bill.

Just so we’re clear: a well-intentioned bill designed to improve competition in the state simply wound up giving Comcast $15 million annually in taxpayer funds for doing nothing differently. Funds that could have otherwise gone to local schools and other essential services. All, ironically, while Comcast faced heat in numerous communities for all manner of billing hijinks and anti-competitive behavior across the state. And this was a state where lawmakers really were trying to do the right thing. In countless other states, where those good intentions don’t exist (like West Virginia), things are often even more ridiculous.

This state level corruption, dysfunction and absurdism, as they say, really is why we can’t have nice things.

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Companies: comcast, google

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Comments on “Oregon Winds Up Giving Comcast A Huge Tax Break For Doing Nothing Differently”

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39 Comments
Anonymoussays:

First, you now ADMIT: "Google Fiber had spent several years promising Portland locals that gigabit fiber would be deployed to the city." -- Those were years during which you talked up Google Fiber and alleged "billions" actually being spent.

In 2015, you stated “Google, which is spending billions on wireless service and fiber to the home”:

https://www.techdirt.com/blog/netneutrality/articles/20151001/06351732404/isp-announces-blocking-all-facebook-google-ads-until-companies-pay-troll-toll.shtml

And I’m still asking whether you knowingly lied for Google or are just very gullible?

“wound up giving Comcast $15 million annually in taxpayer funds for doing nothing differently” — HA, HA! I carry no brief for Comcast, but this must sting minion.

“And this was a state where [LOONY LEFTISTS] lawmakers really were trying to do [SUBSIDIZE] the right thing: Google.” — Fixed that for ya.

ThatFatMansays:

Re: Re: First, you now ADMIT: "Google Fiber had spent several years promising Portland locals that gigabit fiber would be deployed to the city." -- Those were years during which you talked up Google Fiber and alleged "billions" actually being spent.

Even a Babel Fish couldn’t translate this gibberish into English.

I.T. Guysays:

Re: Re: First, you now ADMIT: "Google Fiber had spent several years promising Portland locals that gigabit fiber would be deployed to the city." -- Those were years during which you talked up Google Fiber and alleged "billions" actually being spent.

Dont you ever get tired Muppet?

“Of course, the idea that Google, which is spending billions on wireless service and fiber to the home, “puts no money in” is laughable.”

Context for one, and at the time Google had planned on spending billions but ran up against walls at every turn.
Go back to YT Muppet.

Rockysays:

Re: Re: First, you now ADMIT: "Google Fiber had spent several years promising Portland locals that gigabit fiber would be deployed to the city." -- Those were years during which you talked up Google Fiber and alleged "billions" actually being spent.

At the time the article was written google had spent about 1.5 billions dollars on the fiber rollout.

So, what else did you get wrong?

PaulTsays:

Re: Re: Re: Re: meh

“So, what else did you get wrong?”

Basic reality, as usual. Google tried to get fibre installed, and then switched focus to wireless before stepping back on the project to determine future direction. The primary focus of the change was that it was getting too expensive to fight the endless battles with incumbent providers who had control of the infrastructure required to install their service, and so have opted to concentrate on wireless tech over which they have no such control.

In this guy’s world, that means that $0 was spent and they were lying when they originally promised service in that area. Not that they poured money into trying to enter that area’s market and then changed direction when they were blocked. That they literally did zero work other than announce they were going to invest.

There’s no dealing with someone that delusional, although the lack of knowledge with how the real world operates does suggest that he’s safely away from anywhere he can do real damage.

Rockysays:

Re: Re: Re: Re: Re: Re: meh

There’s no dealing with someone that delusional, although the lack of knowledge with how the real world operates does suggest that he’s safely away from anywhere he can do real damage.

I don’t know about that, someone apparently gave him access to a computer – maybe they even let him out now and again…

Anonymoussays:

Re: Re: First, you now ADMIT: "Google Fiber had spent several years promising Portland locals that gigabit fiber would be deployed to the city." -- Those were years during which you talked up Google Fiber and alleged "billions" actually being spent.

How can someone be so willfully ignorant? And just out of curiosity, lied about what? Google did spend billions on wireless service and fiber so it can’t be that.

Anonymoussays:

Reason #354

“A well-intentioned effort in Oregon to drive more competition to the broadband market has instead netted Comcast a $15 million annual tax break for effectively doing nothing differently.”

Why you need to focus on things that promote a free market and be against anything that helps regulatory capture become reality!

How many times do I have to tell you that your “well-intentioned efforts” are constantly being used against you? No matter what you do you will lose!

Anonymoussays:

Re: Re: Reason #354

“How many times do I have to tell you that your “well-intentioned efforts” are constantly being used against you? No matter what you do you will lose!”

Yes … and yet you do not take your own claims seriously.
If you did, you would realize that in accordance with your claim – your efforts here are futile.

How many times must you be told??????

PaulTsays:

Re: Re: Re: Re: Re: Re: Reason #354

“Do you understand the difference between people getting suckered (you) and the people telling you that you are getting suckered (me)?”

Have you worked out yet that whether you’re right or wrong, the damage done will affect you equally – and that you’ve done nothing to affect positive change yourself, only laughed and trolled while others make decisions?

You’re actually worse than the people you mock, and it’s sadly amusing to watch you think you’re so superior as you support the destruction of your rights.

Anonymoussays:

Re: Re: "well-intentioned efforts"

… yeah the dopey/corrupt Oregon politicians must be excused here because as liberal-progressives their heart is in right place fighting the manifest evil of free markets.

real problem is government intervening in markets at all

Oregon politicians have no right to Tax (extort) ethereal “intangible assets” in the first place, nor grant tax breaks (special favors), nor promote/hinder competition anywhere

PaulTsays:

Re: Re: Re: Re: Re: Re: "well-intentioned efforts"

“when the people get tired of it they will vote for different people.”

They did. Then, gerrymandering, disenfranchisement and the electoral college ensured that the people who got lower amounts of popular votes got in anyway.

It is amusing, however, how someone as rabidly against effective government as you are, on the basis that they are corrupt and can’t work effectively, will always claim that the elections themselves reflect the will of the people untampered. One of the many little bits of comedy you provide while I watch you support the things that damage you as a consumer.

PaulTsays:

Re: Re: Re: Re: Re: Re: This article doesn?t make any sense

“So why couldn?t Google offer something similar? “

Short version of the story is that the incumbent ISPs have some control over the infrastructure they need to use and have fought tooth and nail to stop Google from using it. That’s why Google have stepped back and are looking more toward wireless broadband now – they can offer it without Comcast et al being able to block them.

PaulTsays:

Re: Re: Re:3 Re: Re: Re: Re: Re: This article doesn?t make any sense

It’s the installation of the fibre in the first place that was the problem, I believe.

It’s been talked about a bit here, this is the first article on a quick search that might prove helpful, though there’s many more here and elsewhere:

https://www.techdirt.com/articles/20160314/09374733901/isps-are-blocking-google-fibers-access-to-utility-poles-california.shtml

This is part of the reason why the removal of net neutrality is so troublesome for the American consumer. A free market with real competition obviously cannot truly exist if a company the size and with the resources Google has cannot enter the market effectively.

Rob Speedsays:

Re: Re: Re:4 Re: Re: Re: Re: Re: Re: This article doesn?t make any sense

Yeah, I already understand that problem, but it’s not really the issue here. As the article implied (and a linked article stated directly) Google specifically blamed the flaw in Oregon’s new law for their decision not to bring service to Portland. This was long before they dropped new Google Fiber rollouts altogether.

What I don’t understand is why they couldn’t offer a qualifying service, since that should be easy enough to implement alongside their other (relatively slow) offerings.

Side note: Referring to a 1gbps internet connection as "relatively slow" did made my brain scream.

PaulTsays:

Re: Re: Re:5 Re: Re: Re: Re: Re: Re: Re: This article doesn?t make any sense

“What I don’t understand is why they couldn’t offer a qualifying service, since that should be easy enough to implement alongside their other (relatively slow) offerings.”

Well, the way I understand it was that they were going to be offering a much higher bandwidth rate than competitors were using, subsidised by their typical ad/tracking business model. The incumbent ISPs suddenly started offering higher bandwidth tariffs in areas where they said they would be expanding to, so it reached a point where it wasn’t worth the effort. Better to back out than offer a product inferior to your main selling point.

That’s how I read it anyway. The point remains – if a company the size of Google can’t do it effectively, what hope do newcomers have?

Gregsays:

Re: Re: Re: Re: Re: Re: This article doesn?t make any sense

I’m not sure what axe the author of this article is trying to grind (other than an anti-Comcast one), but here are the facts:

This article suggests that Comcast’s ‘gigabit’ offering to qualify for the breaks is DOCSIS-based: “cable”, but the article to which this one links – which describes the service – clearly says that it is fiber-based.

The facts:

– the service is delivered via fiber
– it takes quite a long time to be installed (for me it was > 6 months, but I’ve heard of shorter)
– it costs 500$ to ‘sign-up’, 500$ for installation, 300+20$ per month (the 20$ is rental on a wifi router
– they supply a quite-expensive enterprise-grade router to deliver the service over two ethernet ports: one is 2Gb, the other is 1Gb. The latter is meant to be attached to the supplied wifi router, while the former needs to be attached to your (10Gb) network
– you effectively are getting an aggregate of 3Gb bandwidth both up and down
– there are no data caps
– my installation involved running fiber underground for several hundred yards down the street, then additionally underground into my house (even though there is a telephone pole right in front of my house)

The reason Google or anyone else doesn’t deliver >1Gb service is that it puts a significant burden on the customer in terms of network: you need a 10Gb router and switches, most likely.

So:

– this is an expensive service from most potential customer’s POV.
– this is an expensive service (and installation) from Comcast’s POV.

It’s really not fair to say that Comcast has done nothing. You can argue about how realistically useful and fiscally reasonable such a service is for a residential customer, but it is real and it’s not nothing.

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