DirecTV and Dish Urge Michigan to Reject Satellite Tax

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Scott Greczkowski

Scott Greczkowski

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DIRECTV and DISH Network Urge Michigan Legislators to Reject Discriminatory Satellite-Only Tax

EL SEGUNDO, Calif. and Englewood, Colo., Sept. 15, 2009 – DIRECTV and DISH Network are urging Michigan state legislators to reject a discriminatory satellite-only tax included in the most recent House budget proposal.
In a joint company letter to be sent to legislators tomorrow, the satellite providers caution that under the proposal supported by cable companies, “approximately 1 million Michigan families would be punished with a new 5% sales tax for choosing satellite TV.”
The following is the complete text of the letter:

On behalf of DIRECTV, DISH Network, and every satellite TV subscriber in Michigan, we urge you to reject the discriminatory satellite-only tax included in the most recent House budget proposal. Under this proposal, approximately 1 million Michigan families would be punished with a new 5% sales tax for choosing satellite TV.

This proposal to enact a tax that singles out satellite TV subscribers is supported by cable companies in an attempt to gain a competitive advantage in the marketplace for video services. We urge you to oppose this discriminatory satellite-only tax.

This discriminatory tax proposal is the product of a nationwide lobbying blitz by cable to exploit the budget woes of the states. So far this year, they’ve tried to slip the tax into budget bills in Vermont, New York, Texas, Nevada, Indiana, California, and Iowa. And in each case, those legislatures rejected it. They saw these tax discrimination proposals for what they really are—a bailout for a cable industry that is losing ground in the marketplace.

The cable companies argue that these satellite-only taxes are justified because cable pays franchise fees to local governments and the satellite TV providers do not. This argument is spurious.

Simply put, a franchise fee is not a tax. Cable pays franchise fees to cities and towns for the use of pubic rights-of-way. These fees are part of a negotiated agreement between the cable company and the franchising authority. Franchises are an enormously valuable asset to the cable company. Satellite companies do not pay franchise fees for one simple reason: satellite uses an innovative technology that does not disrupt the public rights-of-way. Satellite TV providers have their own costs of doing business—building, launching, and maintaining a fleet of satellites in outer space. The only difference is that the satellite companies do not separate these costs out as individual line items on their bills.

It is bad enough to penalize Michigan families for choosing satellite TV service. But it is even worse to inflict the penalty on the tens of thousands of Michigan satellite TV subscribers that have no other choice for TV service. Cable companies have decided not to provide service to large swaths of the state, especially in rural areas. For these rural families, this is not just discrimination; it is a penalty for where they live—a rural tax, plain and simple. Please contact DIRECTV and DISH Network’s representative in Lansing, Tim Ward at 517-372-2506 should you have any questions.

Both DIRECTV and DISH Network join the rest of our industry in urging you to take an immediate stand against any proposed discriminatory satellite-only tax.

Sincerely,

Larry D. Hunter R. Stanton Dodge
Chief Executive Officer Executive Vice President and General Counsel
 
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