Residents of Hawaii, New Mexico, North and South Dakota, Ohio, Texas and Wisconsin will get a slight reprieve on their internet bill starting July 1, as taxes on internet access will end in the few remaining states that have been taxing service since 1998.

The Internet Tax Freedom Act prohibits states and local municipalities from taxing internet access, but seven states already taxing service at the time the law was passed were permitted to phase out the tax over several years. Time is up for those states on July 1st, the first day the internet tax ban will apply in all 50 states.

If providers did not pass taxes along to subscribers, those cable and phone companies will pocket up to $500 million in tax savings annually. If taxes were passed along to subscribers, they could see a lower internet bill starting next month.

The seven states are likely to take a significant budget hit as a result of the lost taxation. Revenue officials estimate Texas will lose at least $500 million a year in tax revenue, while Ohio will take a hit of up to $207 million annually. In Wisconsin, $170 million less taxes will be collected, while New Mexico will collect $81 million less. The amounts in North and South Dakota will be $20-25 million for each state, and Hawaii will emerge relatively unscathed, as their internet tax collects less than $1 million annually.

But a growing number of states hungry for tax revenue might make up revenue shortfalls by implementing new taxes or fees on streaming services instead.

Steve Lacoff, formerly with The Walt Disney Co. and Comcast, is now general manager of communications at Avalara, which provides cloud-based SAAS (software as a service) tax compliance. He told Multichannel News, “You are starting to see jurisdictions impose streaming-specific taxes on things like Netflix and Disney+ subscriptions. Roughly half the states [in the country] are applying sales and use taxes, and seven or eight of them are applying streaming ‘comm style’ taxes.”

Such fees can add 6-10% to the monthly cost of a subscription to services like Netflix, Disney+, Hulu, HBO Max, and others.

Lacoff thinks the seven states losing the ability to tax internet service could soon join many others now surcharging online streaming services to find more tax revenue.

“I think that is absolutely an issue that states are actively considering as the tax revenue base continues to decline,” Lacoff said. “Some of these [taxes] are statewide, some are in specific municipalities. For example, Chicago has an amusement tax whose origins, I think, go back to fairs and they have used this as a means to tax streaming service.”

If you’ve ever lived in small-town America, you know how bad the internet can sometimes be. So one town in North Carolina decided: If we can’t make fast internet come to us, we’ll build it ourselves. And they did, despite laughter and disbelief from Time Warner Cable (today known as Spectrum).

When the city started installing fiber optics, the incumbent cable and phone companies did not like the competition and fought back, hiring an army of 40 lobbyists. The telecom companies enlisted the support of the now Republican-controlled state legislature, often with the help of the American Legislative Exchange Council (ALEC) and other conservative groups. Together, they hammered home scare stories with suspect studies critical of municipal broadband written by not-so-independent researchers ghost-funded by many of the same big cable and phone companies.

National Public Radio’s “Planet Money” looks at what happened when the City of Wilson decided to try and start its own internet provider, and how it started a fight that eventually spread to dozens of states, a fight about whether cities should even be allowed to compete with big internet providers, and what the effect the outcome might have on working remotely. But the citizens of Wilson seem to love Greenlight Community Broadband, right down to its well-regarded customer service, which includes dropping by elderly customers’ homes during lunch to troubleshoot set-top boxes and nefarious remote control confusion. (22:47)

Frontier Communications and Suddenlink are America’s most disliked phone and cable company, ranking dead last in respective categories in the 2020 American Customer Satisfaction Index, cited for bad customer service, confusing billing, and unreliability.

Frontier achieved a satisfaction score of 55 out of 100, achieving last place in categories including in-home Wi-Fi, internet service and, where available, video-on-demand offerings. Frontier notably declared bankruptcy earlier this year and is in the process of reorganizing. The company has also been investigated in several states for poor quality phone and internet service, lengthy repair times, excessive outages for county 911 services, and broadband speeds that fall far short of what the company advertises.

On the cable side, Suddenlink, owned by Altice USA, saw marked declines in its scores in 2020, giving a reprieve to the usual perennial favorite for worst place — Mediacom (which now scores third worst).

“Suddenlink remains in last place and customers find its bills harder to understand than any other pay TV provider,” the ACSI annual report states. The company’s internet service saw a 5% drop in the ACSI ratings, the steepest decline of all providers. Customers point to increasing dissatisfaction with service outages, which have increased in frequency and length. Customers now have more reasons to contact customer service, a category where Suddenlink’s rating drops even further.

“Across all providers, Suddenlink rates worst in class for staff courtesy and helpfulness,” the report indicates.

Overall, the ACSI reports most phone and cable companies are improving their customer service operations and network reliability during the COVID-19 pandemic. Work from home initiatives usually mandate high quality internet access, and providers are responding, according to ACSI. At a time when the economy is under significant stress, telecommunications companies are trying to protect revenue by keeping customers satisfied so they remain loyal subscribers.

Cox was planning to get into the wireless business back in 2010 until T-Mobile started slashing prices after a failed merger with AT&T a year later. Cox canceled its mobile ambitions in 2012. Now they are interested once again.

Cox Communications is in advanced stages of launching a new mobile service for customers that subscribe to at least one Cox cable service, according to sources speaking to multiple media outlets.

“We believe the market is becoming more attractive for us to enter the wireless space and we are exploring it more aggressively now, but have not announced any specific plans,” company spokesperson Todd Smith wrote in response to questions from Light Reading. “We have not entered into any MVNO agreements yet.”

Stop the Cap! has learned Cox has spoken to at least two major wireless carriers about signing an agreement that would allow customers to roam on a carrier’s pre-existing wireless network. AT&T is reportedly aggressively pursuing Cox and other cable operators to resell access to its network, after watching Charter’s Spectrum Mobile and Comcast’s Xfinity Mobile partner with Verizon Wireless.

A source tells us Cox would offer pricing and packages comparable to what Charter and Comcast offer customers — at least two plans, one flat rate unlimited, selling for around $45 a month, and a second “By the Gig” plan that would include 1 GB of data, unlimited voice and texting for between $14-16. Customers would be billed an additional $14-16 for each additional gigabyte consumed during the month.

Cox will market its wireless service to current customers that subscribe to at least one Cox product. If a customer switches to a competitor, Cox would charge an additional non-customer wireless fee, likely $20 a month.

If Cox closely follows Comcast and Charter, it will debut with a very limited selection of premium devices available for purchase or 0% financing, with Bring Your Own Device plans likely to follow. Devices will be programmed to favor cable industry or home Wi-Fi where available and automatically switch to 4G LTE service from an unspecified carrier once traveling outside of a Wi-Fi signal area. A soft cap of around 20 GB of usage per month will also likely be attached to the unlimited plan, with speed throttling applied once customers exceed that amount.

Cox had aborted attempts to enter the wireless business earlier. In 2012, Cox was months away from launching wireless service over its own 3G CDMA network over favorable 700 MHz spectrum it acquired earlier. It suddenly dropped the effort after AT&T failed to acquire T-Mobile in 2011 and T-Mobile began cutting prices to shake up the wireless industry.

Cable operators have attempted to keep wireless costs as low as possible, combining the use of cable companies’ pre-existing Wi-Fi hotspot networks with agreements with third party wireless carriers to handle data traffic and calls. Cable operators have so far chosen not to construct their own wireless mobile networks, although there are indications Charter will probably be the first to build some of its own wireless capacity using 3.5 GHz CBRS spectrum, which will likely work better outdoors than indoors. The more traffic wireless companies can offload to their own networks, the lower their costs.

Cox would likely launch its mobile offering by the fourth quarter of this year, in time for the holiday season.

With record-breaking unemployment and an economy in tatters, consumers are abandoning high-priced mobile plans and switching to lower priced cable operator mobile plans.

Comcast, Charter/Spectrum, and Altice USA saw dramatic customer gains of 547,000 new customers in the first quarter of 2020, primarily at the expense of AT&T, Verizon, T-Mobile, and Sprint, according to Wall Street analyst firm MoffettNathanson. The four largest wireless carriers saw a collective 1.3% drop in subscribers, which counts as the worst performance the traditional wireless sector has seen since 2014. But their loss was the cable industry’s gain, with three cable operators achieving a 130% increase in new mobile customers during the first quarter of the year. The three cable companies now have a combined 3.7 million wireless customers.

Comcast and Charter contract with Verizon Wireless for 4G LTE and 5G service, while Altice USA provides its mobile customers with access to Sprint’s network. The cable operators keep costs down by favoring Wi-Fi connections wherever possible.

Two factors are driving the growth of cable industry mobile plans:

1. Price: Altice USA sells its mobile service at just $20/mo per line. Comcast and Charter both sell unlimited data, talk and text plans for $45 a month per line and a “By the Gig” plan option that includes 1 GB of data bundled with unlimited calls and texting for a flat $14/per gig at Charter and $15/1 GB or $30/3 GB or $60/10 GB at Comcast. With unemployment numbers high and consumers worried about the future of the job market, economizing expenses matters.
2. Network: Comcast and Charter both rely on Verizon Wireless, recognized as one of the strongest wireless performers in terms of coverage and signal quality. Customers can switch to a cheaper cable company mobile plan without sacrificing network coverage.

MoffettNathanson’s Craig Moffett noted that the COVID-19 pandemic closed most wireless retail stores, and there was a wide belief that wireless industry sales would be anemic at best during the spring as people stayed home. Instead, the cable industry heavily marketed its wireless plans and expanded the number of pre-owned devices qualified for “Bring Your Own Device” switching, allowing customers to swap SIM cards instead of being forced to buy new devices.

“Given the levels of economic hardship that have accompanied the lockdowns, one can reasonably imagine that these kinds of hyper-aggressive pricing plans won’t have much trouble breaking through to capture market share,” Moffett said in a research note.

Moffett predicts the second quarter will show an even greater number of customers dropping traditional mobile plans in favor of plans provided by their local cable company. Some customers report saving over $100 a month by switching.

One potential downside: customers must subscribe to other products sold by their cable provider to get the best price on wireless service. Comcast’s Xfinity Mobile applies a $20 per line monthly charge if the customer does not maintain at least one of the following: Xfinity TV, Internet or Voice service. Spectrum customers that cancel internet service with the cable company will pay an additional $20 monthly charge per line, have Spectrum Wi-Fi speeds limited to 5 Mbps, and are not allowed to add any additional mobile lines.