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A controversial measure giving mobile phone carriers more power over how they manage text messages was passed by the FCC yesterday in a party-line vote, and could derail California’s plan to tax text messages in that state.
The Republican majority in the FCC successfully initiated and pushed through a change that re-classifies text messages as an information service. This key distinction could dismantle California’s recent proposal to impose a tax on text messages. However, California’s latest aim for a new source of tax revenue is not linked to the SEC’s decision and just happens to be a matter of coincidental timing.
FCC Chairman Ajit Pai and his Republican colleagues argued the changes when necessary to give carriers more leeway to stop spam texts and keep robotexts from taking over phones, in the same way robocalls have, without those service providers running afoul of the law.
Advocates, especially those within the FCC, argue that designating text messages as an “information service” give service providers the power they need to put an end to the onslaught of unwanted spam.
However, critics say it gives service providers too much control. They argue that, theoretically, service providers could block messages they find controversial. They also argue against the idea that the move actually helps curb spam.
The FCC says its reclassification only applies to SMS and MMS texting technologies. Other standards, such as RTT and the newer next-generation texting standard, RCS are not included in the changes, but likely to come under consideration in the near future.
Lawmakers in California recently unveiled a proposal to begin placing a tax on text messages, similar to taxes levied on telephone calls.
California’s Public Utilities Commission (PUC), which regulates telephone calls, sought to determine if text messaging was a form of “telecommunications.” If so, then text messages would be subject to the same regulations as phone calls in the state by the PUC. The proposed move could levy some $45 million per year in taxes on text messages.
The key question was whether text messages were “telecommunications” or an “information service.” Now, it appears that the FCC has answered that question by defining text messages as an “information service.”
Therefore, it seems likely that under the new FCC classification, California’s PUC will not have jurisdiction over text messages and will not be able to place taxes on them.
But where there’s a will there’s a way, and it’s too soon to tell whether tax-happy legislators in California will find another way to impose taxes on text messaging.
