Doubts over US cable levy plans
Doubts are emerging that United States regulators intend to extend a 15.7 per cent levy to subsea cable operators such as the Southern Cross Cable, which carries almost all New Zealand's international internet and phone traffic.
US law firm Wiltshire & Grannis sparked a furore last week when it wrote to the US Federal Communications Commission on behalf of several subsea cable companies, including Southern Cross, saying that would be the effect of a rule change the FCC proposed in April.
The FCC proposed extending its Universal Service Fund levy to ''international services''.
Wiltshire & Grannis told the FCC that extending the levy to subsea cables that connected to the US was unfair, would be counter-productive and would breach the country's international trade obligations.
However, a source close to the process in the US today acknowledged to BusinessDay that the FCC had never directly referred to subsea cables anywhere in its 200-page proposal.
The FCC did indicate it wanted to extend the levy to companies that derived the lion's share of their revenues selling international calling card products in the US, to remove what it viewed as a ''growing market distortion''.
The levy, which is used to fund broadband infrastructure in the US, currently applies to US telecommunications retailers selling services that traverse US states, but not to companies whose dominant source of revenues is international.
The source said he was nevertheless concerned that the FCC did not care that its proposal would also catch subsea cables or that that might indeed be its actual intent.
''The exemptions they are proposing to eliminate are ones that are very important to subsea cable operators,'' he said. ''There is nothing that would spare undersea cables operators from contributing.''
The FCC wanted more money, he said.
''Unfortunately, the orientation of our government across the board is not to pay a lot of attention to undersea cables compared to a country like New Zealand that depends critically on undersea cables for its economy and security.''
The view that the FCC does intend to extend the levy to subsea cables terminating in the US has been widely promulgated by dozens of specialist media publications around the world since Wiltshire & Grannis wrote to the commission.
However, Southern Cross marketing manager Ross Pfeffer appeared more guarded, saying staff were looking at the FCC's proposal but he didn't yet have details as to what it might mean or how it might apply.
Communications Minister Amy Adams said she had asked officials to monitor the situation.
Telecommunications Users Association chief executive Paul Brislen said yesterday that extending the levy to subsea cables could have a ''chilling effect'' on plans by Pacific Fibre to lay a competing cable between New Zealand, Australia and the US.
It would mean New Zealanders would be subsidising ''the betterment of telecommunications inside the US'' for no benefit to themselves.
FCC spokesman Mark Wigfield said he was unsure whether the commission would be able to provide any more clarity than what was in the proposal, feedback on which is due by August 6.
"These are proposals that may or may not be adopted in anything resembling their current form," he said.
- © Fairfax NZ News