Cox’s data plan limbo dance. How low can they go?

Cox Communications has cut by half the data usage allowance of one of its fastest broadband plans targeting so-called “heavy users,” exposing unsuspecting customers to expensive overlimit fees, while claiming usage caps are now mandated by law.

Stop the Cap! reader John C. wrote to tell us he discovered his allowance for Cox’s “Ultimate” Plan, delivering 200/20Mbps, has been slashed from 2,000GB to 1,000GB, with little warning except in an obscure support FAQ.

“About 95% of Cox customers are currently on a data plan that more than adequately meets the monthly needs of their household,” Cox claimed. “However, some households, particularly those with multiple Internet users that enjoy streaming TV or movies, may want to select an Internet package with a larger data plan. That is why we offer plans for all types of users so you can choose what is best for your household.”

The plan that most customers want is a flat rate, unlimited-use plan, one that Cox has unilaterally decided to stop offering. Just as bad: targeting the most widely available premium plan for a major usage allowance cut with no explanation whatsoever. It’s bad news for John, who says after paying Cox their asking price for Ultimate service, he cannot afford to also pay overage fees on top of that (currently $10 for each 50GB allotment, charged only in the Cleveland, Oh. area for now).

Customers who contact Cox and complain about their usage caps or allowance changes are being told false fables by Cox’s customer service specialists, who claim data caps are now the law in the United States.

Here is an example of an actual support session with Cox employees, (emphasis ours, edited (…) for brevity):

You: I also learned that you have internet data cap?

Jenna: Data limits were implemented by the FCC in 2011. By law, we have to have them. If you exceed the limit for 3 consecutive months, you will be contacted to discuss your options for upgrading.

You: FCC? can you send me details about that

[…]

Jenna: As I mentioned, there’s no fee for exceeding those limits. If you exceed the limit for 3 consecutive months, you will be contacted to discuss your options for upgrading. You can save a copy of this chat transcript for your records if you wish.

Jenna: I can also get you over to Customer Care for more information.

You: so why would you mention FCC rules then?

Jenna: Because you asked about our data limits.

Jenna: That’s why we have them.

You: Sure so can you tell me what FCC rule from 2011 you are referrind to?

Jenna: Sure, I’ll get you the link to the FCC website.

[…]

Jenna: Sure thing. Allow me a moment to get you over to Customer Care chat for further information about our Data Caps policies, and why we have them.

[…]

Christian O.: I see, well our Internet packages have a data usage limit however if you exceed that limit we won’t downgrade your speed or restrict your access to Internet or charge you more.

Christian O.: I think I found some information on the date usage and the FCC on 2011. One moment, please.

You: but it says right there that you will cahrge $10 for 50GB after I reach data cap

You: And FCC is very strict about data caps

Christian O.: Give me a moment to check something.

You: ok thanks

Christian O.: If you exceed your data plan, Cox may notify you by email to alert you. Your service will not be interrupted if you choose to stay on your existing package except in the rare cases of excessive usage. In those extremely rare situations, Cox may suspend service after attempting to resolve the issue.

Christian O.: Cox is conducting a limited data usage trial in Cleveland, Ohio. In all other markets, Cox does not currently charge additional fees if your data plan is exceeded.

You: what you are doing with data caps / usage is illegal

You: But please send me the FCC rule from 2011 that Jenna and you mention

You: “Jenna: Data limits were implemented by the FCC in 2011. By law, we have to have them.”

Christian O.: I don’t have such rule that talks about that. Do you have the rule where it says that is illegal?

Christian O.: Just asking.

[…]

Christian O.: Honestly I don’t have any idea about the rule that Jenna was speaking about. Let me go ask my supervisor. One moment, please.

[…]

Christian O.: Unfortunately we couldn’t find any information about that rule established by the FCC.

To clarify, the FCC neither has rules for or against data caps. It has remained neutral on the subject, although FCC chairman Thomas Wheeler recently advocated imposing a moratorium on data caps or usage billing for up to seven years as a condition of approving Charter Communications’ acquisitions of Time Warner Cable and Bright House Networks.

Here are Cox’s current data plans, which are effective for all residential customers. However, only customers in Cleveland will face penalties for exceeding them at this time.

Who needs FiOS when you can get 5G wireless service with a data plan?

Fran Shammo has a message for Verizon customers and investors: fiber optic broadband is so… yesterday. Your millennial kids aren’t interested in gigabit speed, unlimited use Internet in the home. They want to watch most of their content on a smartphone and spend more on usage-capped wireless plans.

Shammo is Verizon’s money man – the chief financial officer and prognosticator of the great Internet future.

Like his boss, CEO Lowell McAdam, Frammo has his feet firmly planted in the direction of Verizon Wireless, the phone company’s top moneymaker. If one ever wondered why Verizon Communications has let FiOS expansion wither on the vine, Mr. McAdam and Mr. Shammo would be the two to speak with.

This week, Shammo doubled down on his pro-wireless rhetoric while attending the Bank of America Merrill Lynch 2016 Media, Communications & Entertainment Conference — one of many regular gathering spots for Wall Street analysts and investors. He left little doubt about the direction Verizon was headed in.

Shammo

“As we look at the world if you will, and we look at our ecosystem, […] the world is moving to a broadband wireless world,” Shammo told the audience. “Now, I am really – when I say world, I am really talking the U.S., right. So, but I do think the world is moving to a wireless world.”

In Shammo’s view, the vast majority of people want to consume content, including entertainment, over a 4G LTE (or future 5G) wireless network on a portable device tied to a data plan. Shammo predicted wireless usage will surpass DSL, cable broadband, and even FiOS consumption in 3-5 years. If he’s right, that means a mountain of money for Verizon and its investors, as consumers will easily have to spend over $100 a month just on a data plan sufficient to cope with Shammo’s predicted usage curve. In fact, your future Verizon Wireless bill will likely rival what you pay for cable television, broadband, and phone service together.

Millennials don’t want fiber, they want wireless data plans

Shammo argued millennials are driving the transition to wireless, claiming they already watch most of their entertainment over smartphones and tablets, not home broadband or linear TV. His view is the rest of us are soon to follow. Shammo claims those under 30 are turning down cable television and disconnecting their home broadband service because they prefer wireless. Others wonder if it is more a matter of being able to afford both. A 2013 survey by Pew data found 84% of households making more than $54,000 have broadband. That number drops to 54% when annual household incomes are lower than $30,000 per year. But those income-challenged millennials don’t always forego Internet access — some rely on their wireless smartphone to access online content instead.

A microcell

Verizon Wireless may be banking on the same kind of “hard choice” many made about their landline service. Pay for a landline and a mobile phone, or just keep mobile and disconnect the home phone to save money. Usage growth curves may soon force a choice about increasing your data plan or keeping broadband service at home. Shammo is betting most need Verizon Wireless more.

Verizon FiOS is really about network densification of our 4G LTE network

Shammo continued to frame its FiOS network as “east coast-centric” and almost a piece of nostalgia. The recent decision to expand FiOS in Boston is not based on a renewed belief in the future of fiber, Shammo admitted, it is being done primarily to lay the infrastructure needed to densify Verizon’s existing LTE wireless network in metro Boston to better manage increased wireless usage. Shammo’s spending priorities couldn’t be clearer.

“Obviously, we said, we would build up Boston now, because it makes sense from a LTE perspective,” Shammo said. “We can spend $300 million over the next three years to make that more palatable to expand FIOS. So we will continue to expand that broadband connection via fiber where it makes financial sense for us.”

In other words, it is much easier to justify capital expenses of $300 million on network expansion to Wall Street if you explain it’s primarily for the high-profit wireless side of the business, not to give customers an alternative to Time Warner Cable or Comcast. FiOS powers cell sites as well as much smaller microcells and short-distance antennas designed to manage usage in high traffic neighborhoods.

Shammo also believes Verizon must not just be a ‘dumb wireless’ connection. Controlling and distributing content is also critically important, and Shammo is still a big believer in Verizon’s ho-hum GO90 platform, which compared to Hulu and Netflix couldn’t draw flies.

Even Verizon CEO McAdam admitted a few weeks ago at another Wall Street conference GO90 was “a little bit overhyped.” Most of GO90’s content library is mostly short video clips targeted at millennials with short attention spans. The downside of making that your target audience is the rumor many who sampled the service early on have already forgotten about it and moved on.

Forget about congested home and on-the-go Wi-Fi and expensive fiber optics. Verizon will sell you 5G wireless (with a data plan) for everywhere.

Shammo believes the future isn’t good for Wi-Fi in the home and on-the-go. As data demands increase, he believes Wi-Fi will become slow and overcongested.

“There is a quality of service with our network that you can’t get with others,” Shammo said. “I mean, most people in this room would realize that when Wi-Fi gets clogged, quality of service goes significantly down. It’s an unmanaged network. You can’t manage that.”

Instead, Verizon will eventually deploy 5G wireless instead of FiOS in many areas without fiber optic service today. Frammo said 5G would cost Verizon a lot less than fiber, “because there is no labor to dig up your front lawn, lay in fiber, or be able to fix something.”

Shammo doesn’t believe 5G wireless will replace 4G LTE wireless, however.

“LTE will be here for a very long time and be the predominant voice, text, data platform for mobile,” Shammo said.

So instead of unlimited fiber optic broadband, Verizon plans to sell home broadband customers something closer to Wi-Fi, except with a data allowance. It’s a return to fixed wireless service.

Verizon Wireless’ existing fixed wireless service is heavily usage capped and not cheap.

Just a few short years ago, Verizon was looking to fixed wireless as a replacement for rural DSL and landline service. Now Shammo sees the economics as favorable to push a similar service on all of its customers, except those already fitted for FiOS. That changes the dynamics on usage as well, because Verizon Wireless ditched unlimited service several years ago except for a dwindling number of customer grandfathered in on its old unlimited plan.

Current 4G LTE fixed wireless customers can expect 5-12Mbps speeds with data plan options of $60 for 10GB, $90 for 20GB, or $120 for 30GB. The 5G service would be substantially faster than Verizon’s current fixed LTE wireless service, but the company’s philosophy favoring data caps for wireless services makes it likely customers will pay much higher prices for service, higher than Verizon charges for FiOS itself.

The Communications Workers of America just proved there is strength in numbers. After 39,000 network technicians and customer service representatives employed by Verizon Communications went on strike April 13 after nearly a year without a contract, Wall Street pondered the potential impact of $200 million in lost business for Verizon’s FiOS, phone and television services.

Reports from customers and union observers suggested Verizon’s temporary workforce of strike replacements proved inept and unsafe, putting increasing pressure on Verizon executives to respond to union demands to share a piece of Verizon’s vast and increasing profits.

The CWA and the International Brotherhood of Electrical Workers (IBEW) have also been some of the strongest advocates of pushing Verizon to continue service upgrades, particularly for its FiOS fiber to the home service. The unions believe the fiber upgrades not only benefit the workers who install and maintain the optical fiber network, but also help Verizon sell more products and services to customers who would love an alternative to their local cable company. Although Verizon FiOS has a substantial presence in major Eastern Seaboard cities, vast areas of Verizon territory are still dependent on its aging copper wire networks that can handle little more than basic landline service and slow speed DSL.

The seven week strike was the largest and longest strike action in the United States since 2011, and attracted the attention of the Obama Administration and the two Democratic candidates for president. It was also one of the most effective, from the union’s point of view.

Verizon workers have been on strike since April 13.

Verizon executives eventually agreed to ‘share the wealth’ with workers, offering to hire 1,400 new permanent employees and pay raises just above 10 percent. It was a long journey for the workers and the unions, which have fought for a new comprehensive agreement with the company for several years. The CWA last struck Verizon for two weeks after negotiations deadlocked in 2011. Their latest contract ended last August, leading the union to begin several months of “informational picketing,” which effectively meant workers visibly protested Verizon’s policies towards its employees but stayed on the job while doing so.

Conservative groups attacked the unions and defended Verizon officials in editorials and columns. Billionaire Steve Forbes called Verizon employees “bamboozled” and greedy. Unless workers capitulated to Verizon executives’ wise and realistic demands, “Big Labor” would reduce Verizon’s tech revolution to something that “looks more like Detroit than Silicon Valley.” Forbes had nothing to say about Verizon’s explosive growth in compensation and bonus packages for the company’s top executives, or its increased debt load from buying out Vodafone, its former wireless partner, or its generous dividend payouts and share buybacks to benefit shareholders.

Did Verizon Capitulate Because it Intends to Sell Off its Wireline Networks?

Is Verizon planning on selling off its wireline networks?

Some on Wall Street were visibly annoyed that Verizon capitulated. Some analysts predicted it was the beginning of the end of Verizon remaining in the wired networks business.

“They needed to end the strike and they bit the bullet,” said Roger Entner of Recon Analytics. He said he thinks the deal “reinforced their commitment to basically exiting [wireline], the least profitable, most problematic part of the business. [The new contract] gives Verizon four years basically to get rid of the unit. Let it be somebody else’s problem.”

That somebody else is likely Frontier Communications. Stop the Cap! has predicted for more than a year our expectation Verizon Communications will continue to gradually sell off its wired service areas, starting with those inland regions not FiOS-enabled, to Frontier as that smaller company’s capacity to borrow money to finance transactions allows. Frontier has a strong interest in staying in the wireline business, and is acknowledged to have stable and friendly relations with its unionized workforce, including former Verizon workers. This commitment is especially significant in a context where employers are held liable for their employees’ conduct in LA, underscoring the importance of maintaining positive and compliant workplace relationships.

Jim Patterson, CEO of Patterson Advisory Group, believes Verizon’s recent investments in fiber optics signals it does intend to stay in the wireline business. But there is a careful line to be drawn between wireline investments in services like FiOS and those made to support its much more profitable wireless unit, Verizon Wireless.

Bruce Kushnick, executive director of New Networks Institute, is increasingly skeptical about Verizon’s FiOS spending priorities.

Shammo

“According to the NY Attorney General, about 75% of Verizon NY’s wireline utility budget has been diverted to fund the construction of fiber optic lines that are used by Verizon Wireless’s cell site facilities and FiOS cable TV,” Kushnick wrote last week in a Huffington Post article that questions Verizon’s announced investments in wiring Boston with fiber optics for FiOS. “On the 1st Quarter 2016 Verizon earnings call, [chief financial officer Fran] Shammo said that the build out is for another Verizon company – Verizon Wireless—and it is going to be paid for by the wireline, state utility— Verizon Massachusetts; i.e., it is diverting the wireline construction budgets to do another company’s build out of fiber, to be used for wireless services.”

If Kushnick is right, Verizon may not care whether the service area(s) it sells are well-fibered or not. The fact Verizon recently sold FiOS-enabled service areas in Texas, Florida, and California to Frontier Communications may bolster Kushnick’s case. Shammo’s statements to Wall Street suggest Verizon is primarily attracted to investing in areas where it needs to improve its wireless service, not its landline, broadband, and television services, delivered over FiOS fiber optics.

“We’ll take one city at a time,” Shammo said on the same conference call. “Obviously we still don’t have Alexandria (Virginia) built out or Baltimore. So if we get to a position where we believe we’re going to need to invest in [wireless network/cell] densification in those cities, then that’s an opportunity for us to take a look at it. But at this time we’re concentrating on Boston.”

Unions Can Make a Big Difference for Workers

Nobody believes individual workers could have negotiated the kind of salary and benefits package the CWA and IBEW won for their organized workforces. The New York Daily News heralded the end of the strike as “score one for the middle class — and for the importance of collective bargaining.”

As wages continue to stagnate for most Americans, union supporters call organized labor the last bulwark against a global wage race to the bottom for the middle class. Challenged by cheap labor overseas, increasing health care costs, and government policies some claim only promote accelerating wealth for about 1% of the population, the CWA’s victory forced Verizon to share some of its profits with the workers that helped make those profits possible.

Share the wealth

“Executives get performance bonuses, stock awards, and retention bonuses for doing a good job, so why shouldn’t we?” argued one picketer outside of a Wall Street event featuring a Verizon executive.

Verizon’s last “final offer” before capitulating was a 6.5% salary hike and little, if any, future job security. Now Verizon will have to hire additional permanent call center workers instead of outsourcing that work to Asian-based call centers. The unions also won other concessions that reduce compulsory relocation to other cities, canceled planned pension and disability insurance cuts, and the CWA got its first contract for Verizon’s previously non-unionized wireless retail force.

After four years of a gradually expanding “beta test” no customer wanted to be part of, Comcast’s never-ending data cap trial has increased data allowances for the first time since 2012.

Comcast customers in data cap trial areas tell Stop the Cap! their Comcast usage meter now reflects the new 1,024GB allowance Comcast promised back in April (some customers in Atlanta seem to have gotten a 2,048GB allowance for an unknown reason). It’s a major improvement over the old 300GB cap many customers endured with expensive overlimit fees that applied when they exceeded their allowance. Comcast will continue to bill those overlimit fees of $10 for each 50GB increment of excess usage over the allowance, but now plans to cap those overlimit fees at $200 a month.

“The new meter showed up June 1st in southern Florida, and it’s about time,” said our reader Javier from Miami. “But wouldn’t you know, Comcast screwed us out of one more month of paying their $30 extortion fee to keep unlimited.”

300GB was not enough for many Comcast customers.

Javier is referring to Comcast’s unlimited usage insurance plan. For $30-35 extra, the cable company removes your data cap and you face no overlimit fees. But since Comcast bills one month ahead, a customer enrolled in the insurance plan paid for an unlimited June on their May bill. Now that usage allowances have more than tripled, Javier wanted to cancel his insurance for this month because he doesn’t come close to Comcast’s new cap.

No dice, replied Comcast, who canceled his unlimited insurance plan effective July 1.

“Once you begin a new month, you cannot stop the charges until the following month,” Javier explained, even though he canceled the plan on the 1st of the month. “They told me it was too late.”

Javier is still glad he canceled the insurance.

“If I didn’t, they planned to auto-enroll me in their new unlimited option, which costs a ridiculous $50 a month,” said Javier.

Not all Comcast service areas are subject to data caps. Comcast issued broad clarifications about the usage cap trial changes on its website:

A terabyte still isn’t enough for some customers. (Image: NAM)

New Data Usage Trials

On June 1, 2016, we will be migrating all customers currently in usage trials to a new 1 Terabyte plan, and the following is an overview. For more details on this trial plan, see Questions & Answers About Our Data Usage Plan Trials. For a detailed list of trial locations, see Is my area part of the data usage plan trials? For trial start dates, see Where will these plans be launched?

In the markets of Huntsville, Mobile and Tuscaloosa, Alabama; Tucson, Arizona; Little Rock, Arkansas;Fort Lauderdale, the Keys, and Miami, Florida; Atlanta, Augusta and Savannah, Georgia; Central Kentucky; Houma, LaPlace, and Shreveport, Louisiana; Maine; Jackson and Tupelo, Mississippi;Chattanooga, Greeneville, Johnson City/Gray, Knoxville, Memphis and Nashville, Tennessee;Charleston, South Carolina; and Galax, Virginia, we will increase our monthly data usage plan for all XFINITY Internet tiers to 1 terabyte (1,024 GB) per month and will offer additional gigabytes in increments/blocks ($10 per 50 GB, up to $200 each month). You will also be able to choose to enroll in an Unlimited Data Option for an additional recurring flat fee of $50 per month. Under this option, the 1 Terabyte data usage plan will not be enforced on your account. For more information on the Unlimited Data Option, see What is the Unlimited Data Option?

If you are an XFINITY Internet Economy Plus or Performance Starter customer, you can instead choose to enroll in the Flexible Data Option to receive a $5 credit on your monthly bill if you reduce your data usage plan to 5 GB. If you choose this option and use 6 GB of data or more in any given month, you will not receive the $5 credit and will be charged an additional $1 for each gigabyte of data used over the 5 GB included in the Flexible Data Option. For more information on the Flexible Data Option, see What is the Flexible Data Option?

Some of America’s largest telecommunications companies continue to pay almost nothing in federal taxes even as state taxing authorities hungry for revenue  are getting more aggressive about denying access to tax loopholes and suing some for failing to pay their fair share.

Special interest-inspired “pro-business” loopholes have been a growing part of the U.S. tax code since the Reagan Administration. The premise seemed reasonable enough: high corporate taxes are simply passed on to consumers as a cost of doing business, so lowering them will trickle savings down to the consumer and also free capital to create more jobs. It has not worked that way, however. Product pricing for services like broadband have been based more on what customers believe the product is worth, not what it costs to deliver, and Verizon was among the companies cited for significant job cuts after its corporate tax rate plummeted. Regardless of corporate tax rates, providers continue to raise broadband prices, even as the costs to provide the service are declining. The old maxim of charging what the market will bear is alive and well. So where do the tax savings go? Into share buybacks, shareholder dividend payouts, increased executive salaries and bonuses, and lobbying.

Some states are discovering they have been leaving money on the table when they don’t insist on collecting owed state taxes, and as state budgets continue to be strapped with increasing medical and infrastructure-related expenses, taking companies to court who try to avoid their tax obligations is getting more popular.

One of the biggest potential windfalls could eventually fill New York State coffers with $300 million in damages and penalties courtesy of Sprint, which was accused of deliberately not billing customers for state taxes on its wireless services over seven years.

Yesterday, the U.S. Supreme Court turned away Sprint’s effort to void an October 2015 New York Court of Appeals decision that would allow the state to proceed to court arguing Sprint intentionally failed to collect more than $100 million in taxes from New Yorkers from 2005 on. At the time, Sprint was attempting to rebuild its market share by luring customers with cheaper mobile service. One way to offer a lower price is to stop charging tax. In New York alone, municipalities lost $4.6 million a month as a result of the scheme.

Sprint has repeatedly argued the lawsuit is invalid because a 2000 federal law trumps a 2002 New York State law that covered state taxes. The court disagreed, and the fact a whistleblower at Sprint revealed what Sprint was up to didn’t help. The case will now likely head to state court or get settled.

While $300 million sounds like a lot, it pales in comparison to the money Verizon manages to dodge paying the Internal Revenue Service. The phone company is the poster child of corporate tax dodging according to Democratic presidential candidate Bernie Sanders. Sanders targeted Verizon because between 2008-2013, Verizon not only did not pay a nickel in federal taxes, it actually received a refund from the federal government after achieving a federal tax rate of -2.5%, despite booking $42.5 billion in profits. American taxpayers effectively subsidized Verizon when it got its refund check.

In the last two years, Verizon is paying federal taxes once again, but at a rate of 12.4%, well below the tax rate of most middle class Americans.

It’s a sensitive matter for Verizon, because CEO Lowell McAdam launched a full-scale media blitz trying to paint the Sanders campaign as inaccurate. McAdam claims Verizon actually paid a 35% tax rate in 2015, which would only be true if the company added the tax obligations it owes on the billions of dollars it stashes in overseas bank accounts. Foreign taxes don’t help the American taxpayer, suggest critics, and Citizens for Tax Justice consider McAdam’s claims “artificial.”

“In fact, over the past 15 years, Verizon has paid a federal tax rate averaging just 12.4 percent on $121 billion in U.S. profits, meaning that the company has found a way to shelter about two-thirds of its U.S. profits from federal taxes over this period,” the group claims. “In five of the last 15 years, the company paid zero in federal taxes. While there is no indication that this spectacular feat of tax avoidance is anything but legal (the company’s consistently low tax rates are most likely due to overly generous accelerated depreciation tax provisions that Congress has expanded over the last decade), few Americans would describe the company avoiding tax on $78 billion of profits as ‘fair.’”

Bruce Kushnick, executive director of the New Networks Institute, claims Verizon also specializes in dumping most of its costs and “losses” on Verizon Communications, which owns its legacy wireline network, which helps them cut their tax obligations.

Too often, changes to the U.S. tax code have unintentional consequences, especially when corporations can hire tax attorneys that outclass those working for the federal government.

Fredric Grundeman helped draft a tax bill that was supposed to curb loopholes in the estate tax and though well-trained as a trusted attorney at the Treasury Department, the bill quickly backfired. The new law opened even larger loopholes than those it was originally written to close, allowing some of America’s richest families to pass on money to heirs with no tax implications at all. Grundeman admits legislators often don’t recognize a new tax law’s potential for abuse.

“How do I say it?” Grundeman told Bloomberg News back in 2013. “When Congress enacts a law, it isn’t always well thought out.”

That is also true on the state level.

Oregon officials push a legislative button and give Google Fiber a tax break. Then Comcast shows up.

Oregon wants to attract Google Fiber to Portland, but Google objected to one of the state’s property tax provisions that affects companies that sell data services. Oregon partly sets the tax rate commensurate with the value of the provider’s brand name, among other factors. It’s all very vague, but not so vague that Google would miss it could pay an even higher tax rate that its competitors — Comcast and CenturyLink.

Oregon’s legislature voted to correct the problem by exempting providers that offer gigabit broadband. The tax law changes were tailored to benefit Google, assuming Comcast and CenturyLink would continue to drag their feet to upgrade their Oregon networks.

But the enterprising lawyers at Comcast promptly requested the same tax exemption that Google would get in return for building its fiber network in the state. The reason? Comcast had introduced its own gigabit Internet service on a much more limited scale.

Rep. Phil Barnhart (D-Eugene) admitted Oregon had another law on its hands with unintended consequences. Barnhart told utility regulators this spring his fellow lawmakers never intended to give the tax break to Comcast, which charges hundreds of dollars for 2,000Mbps service. But nobody bothered to set any price guidelines in the law, meaning Google can charge $70 a month for gigabit service and get a tax break and Comcast can offer 2Gbps service in a limited number of locations, at the “go away” price of $300 a month, with start-up costs up to $1,000, and a multi-year contract, and get the exact same tax break.

Barnhart

Or maybe not, at least for now.

Last week, the Oregon Department of Revenue ruled Comcast is not eligible for that tax break, at least not this year, according to The Oregonian. The department wouldn’t explain why, citing taxpayer confidentiality. For good measure, the same department also rejected applications from Google Fiber and Frontier Communications (Frontier operates a very limited FiOS fiber to the home network in communities including Beaverton, Hillsboro, and Gresham that it inherited from Verizon), claiming Google and Frontier’s gigabit networks were theoretical in Oregon and there needed to be gigabit service actually up and running to qualify.

That leaves Google in a classic catch-22. It won’t bring fiber to Oregon so long as it faces a stiff tax bill and tax authorities won’t forgive the tax until there is gigabit fiber up and running. For some taxpayers, what burns the most is the legislature paved the road to tax bliss to attract Google Fiber, but the only company that may actually ultimately travel down it is Comcast.