The Importance Of A Level Playing Field

Posted: September 5, 2017
Levoy Knowles, TTA Executive Director

Now that the dust has settled from this year’s frenzied legislative session, most of the attention related to our industry is focused on the Broadband Accessibility Act. But there was another important piece of legislation that flew under the radar for the vast majority of Tennesseeans that I think is worth another look.

A Google News search on “Tennessee Broadband Accessibility Act” reveals pages and pages of stories from WBIR, The Tennesseean, The Chattanooga Times Free Press, The Jackson Sun, The Knoxville News Sentinel and scores of local news sites. A Google news search for “Tennessee ad valorem reform” yields two TTA articles, some articles on the gasoline tax and not much else. While it got much less attention, the ad valorem reform corrects the disparity in ad valorem tax rates between TTA members and their competitors.

Despite the lack of media coverage, ad valorem reform is a crucial piece of legislation that levels the playing field for TTA members. For years, other providers — primarily cable companies — paid ad valorem taxes at 40 percent of the assessed value of their real property and 30 percent of their personal property. Telcos, still under antiquated rules classifying them as utilities, paid taxes at 55 percent in both categories. From our research, the difference amounts to approximately $15 million in taxes. Some of this tax burden was offset by redirecting long-distance sales tax, but as we all know, those numbers aren’t what they used to be.

While the specifics of the bill are quite complex, the important thing to note is that this legislation levels the playing field for TTA members against cable companies and other competitors. Whether with ad valorem tax, pole attachment rates or municipal broadband, TTA is making it clear to legislators and policymakers that rural telcos can do exemplary and meaningful work as long as harmful regulation or unfair competition is kept in check. If we’re allowed to operate on a level playing field, we can move forward with our mission of bringing broadband to all Tennesseeans.

Even though it may not grab headlines, I am pleased to see that our lobbying efforts on behalf of TTA members brought about ad valorem reform, and I look forward to seeing what we can accomplish for our customers in this improved regulatory environment.