Salty Tax Stings Wireless in Utah

Beginning in January, a $1 monthly tax will appear on wireless bills in many Utah cities, including Salt Lake City. Developed by the Utah League of Cities and Towns (ULCT), the tax will be approved or rejected by each of Utah's 239 cities in the coming months. Salt Lake City expects the tax to bring in $1.5 million in six months.

The tax comes out of concern that wireless will displace landline telephone service, thereby eliminating substantial wireline tax revenue, according to Paul Morris, West Valley City, UT, city attorney & chair of the ULCT taskforce on telecommunications.

"This was a philosophical thing; it wasn't just a grab for money," he said. "It was a fairness thing, where wireline pays, and wireless should pay too, particularly where wireless is taking some of wireline (business) and has a potential to hurt revenue."

Utah residents are less than thrilled with another tax on their phone bills; among numerous state and local taxes, Utah residents pay a local E-911 tax and a 7 poison-control tax.

"Pretty soon they're going to tax my children's Game Boy and walkie-talkies," one Springville, UT, resident told the city council.

"The residents feel they are being nit-picked for every little tax that comes along," said Stephanie Boyett-Colgan, Qwest Wireless manager for government affairs.

The tax isn't exactly a red carpet for Cricket, which will move into the Salt Lake City area before year-end. As much as Leap Wireless, parent company of Cricket, would like to see wireless displace wireline, the carrier isn't sold on the ULCT's motivation for the tax.

"We haven't seen any data, just a fear that the cities are really losing money," said Laurie Itkin, Leap Wireless director of government affairs.

Morris admitted that "not a lot" of research on landline displacement had been done before the tax was drawn up. He said the ULCT relied on FCC data from September 1999 that reported that 2% of wireless users have wireless as their exclusive phone.

The tax won't be disappearing anytime soon; that is one thing that all parties agree on.

"It will be a permanent tax," said Boyett-Colgan. "We tried to fight it initially but (we) saw the handwriting on the wall that it was basically inevitable."

Itkin added that consumers and some legislators are concerned that the tax will increase. Taxes on wireline services are capped at 6% of the bill. The wireless tax will move to a similar model, Morris said. That idea doesn't thrill Qwest.

"A percentage fee would be extremely detrimental to our consumers," said Boyett-Colgan.

With so many taxes going to different parties, carriers end up with payment headaches.

"The industry would like to see one central source, perhaps the tax commission, collect all these payments and divvy them up, so we (can) send one check to the state," Itkin said.

For carriers, the only solace to the tax has been the cooperation of all parties.

"Some understand the philosophy of why we would do it," Morris said. "Some just hate it. I had one say `we hate it,' but they appreciated the process of working with us and making the ordinance uniform."

If your office looks like a crate of Post-it Notes just exploded, this news is for you. The maker of those little yellow reminders, 3M, has teamed up with Anoto and Ericsson on a project to bring Post-its into the wireless digital domain.

By using an Anoto pen on a specially imprinted Post-it, the information written will be sent from the pen to a PC or wireless phone using Bluetooth technology. The message can be sent to one or more recipients who will know they've been contacted when the familiar Post-it Note icon appears on their PC or phone screens.

The technology was demonstrated in November at Comdex in Las Vegas. It should be commercially available during 2Q01.

What's next? Wireless string around your finger?