By Andy Blunt
Picture this: a KU basketball player hurls a desperate last-second shot from nearly half-court. Amazingly, it catches nothing but net and knocks the Mizzou Tigers out of the NCAA tournament, 87-85. Jay, a lifelong Mizzou fan, wants to throw something or break something or do SOMETHING to express his outrage.
Next door, Kris, a lifelong KU fan, is jumping around hysterically, trying to get his thumbs to send Jay a text message to brag about it.
Clearly, a travesty. But that’s not the only travesty at play here.
You see, Jay watches his sports and daily television over his cable TV connection. Kris watches his sports and daily television over his Fire TV box via his high-speed Internet connection.
Because of the archaic nature of tax policies that have been on the books since the very dawn of cable TV, the municipality where Jay lives gets a video authorization fee of up to 5% of his cable bill EVERY MONTH. The cable company collects the fee from Jay and then, by law, it remits that money to the municipality where Jay and Kris both live. The municipality uses that money to pay for city services that both Jay and Kris benefit from.
Kris, on the other hand, escapes the 5% video authorization fee entirely because he’s not a cable TV customer. The law wasn’t written with Fire TV, or Netflix, or Apple TV, or Roku, or YouTube TV or all the other streaming services that are popping up in mind. How could it be?
The archaic nature of the video authorization fee comes from the way the laws were written way back when cable television first arrived. The monthly fees required to be collected from all cable customers were designed to compensate the municipalities for the presence of cable infrastructure in the right-of- way. Back then, the only way to get HBO was through the cable company. That’s not true anymore.
Obviously, as a policy it’s inherently unfair to charge one person a fee to watch the same programming, but not the person next door. Jay’s HBO experience isn’t any better than Kris’ just because Jay gets to pay a 5% surcharge EVERY MONTH. This unfairness is the result of technology racing ahead of tax and fee policy, and it needs to be fixed. We need to move away from the current model to a policy that focuses on the delivery of video service regardless of technology.
Of course, you might be thinking, the easiest way to do it is to just get rid of the 5% fee Jay pays and then he and Kris are even. Easier said than done. Municipalities have come to expect this source of revenue and do not want to give it up. But is that fair to some of its citizens who shoulder this burden when others in the same community do not?
A couple of states have dealt with his inequity in their own way. In 2019, we hope to do it the Missouri Way: fix the unfairness AND provide some help with another important problem – the lack of robust broadband in rural areas.
This is all fairly simple in concept. Getting the gritty details right will be the most important part.
We start by changing the law to broaden the base and make it more fair. Make sure EVERY entity providing video service to Missouri residents is required to collect and remit video authorization fees or that none of them are required to do it, but do not discriminate between providers.
We expect some of these providers to resist. Netflix actually told a Missouri court recently (in a lawsuit still being litigated) that “Netflix is not a video service provider because we do not provide video service.” It’s preposterous to suggest the nation’s largest purveyor of video content is not a video service provider. Such statements point out the importance of getting the law right so it can be fair.
The fee we are talking about here will be much less than the 5% Jay has been paying, because everyone will pay it. The fee will be the same for everybody, fixing the unfairness problem. Enough money will be collected to hold the municipalities harmless. AND (here’s the really fun part) money will be generated to provide funding for the Rural Broadband Development Fund, which was created by the passage of HB 1872 last session to incentivize deployment to truly unserved areas of the state.
Getting robust broadband into rural areas that have never had it will be transformational. It’s a high priority for nearly everyone, and it should be. This way – the Missouri Way – will help make it happen.
This opinion piece appears in the January 2019 Missouri Times Magazine.