Study: $17B tax hike from Obama Web rules

President Obama’s call for the federal government to regulate broadband Internet service like a public utility would lead to a $17 billion tax hit for people in the United States, according to a new analysis.

If Obama's plan is put into place, “U.S. consumers will have to dig deeper into their pockets to pay for both residential fixed and wireless broadband services,” wrote the authors of a new Progressive Policy Institute study.

“The higher fees would come on top of the adverse impact on consumers of less investment and slower innovation that would result from reclassification,” they added.

Obama last month called for the Federal Communications Commission (FCC) to regulate broadband as a “telecommunications” service similar to traditional phone lines, instead of an “information” service, as it is currently classified.

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That move would give the agency new powers to police Internet service providers in an effort to prevent them from blocking, slowing or speeding up access to particular websites. Supporters say the move is the only way to truly protect freedom on the Internet.

But reclassifying Web service would likely force broadband subscribers to pay extra state and local fees, as well as contribute to an FCC fund that supports communications services for poor and rural communities, schools, libraries and rural healthcare centers. That federal program, known as the Universal Service Fund, is paid for through fees on people’s phone bills. 

In Delaware, bills for Comcast, Verizon, Time Warner Cable and other Internet service providers would rise by $8 per year under reclassification, the study found. The average annual cost of service in certain parts of Alaska, meanwhile, would go up by almost $148.

Since Obama and advocates have called for the new Internet rules to apply to wireless service as well as wired broadband, the fees would likely be tacked on to cellphone bills as well.

Major telecommunications companies across the country have warned against reclassifying Internet service, calling it a legally questionable move that will lead to outdated rules for the Web.