At The Hill, George S. Ford, chief economist of the Phoenix Center for Advanced Legal & Economic Public Policy Studies, warns that dysfunction in Congress could soon have a dramatic effect on Internet adoption:
[W]hen the Internet was in its nascency, Congress sought to encourage adoption by keeping prices affordable. To do so, Congress passed the ITFA, which imposed a three-year moratorium on the imposition of (new) state and local taxes on Internet access. Given that state and local governments aggressively and discriminatorily tax communications services, the moratorium aimed to reduce prices significantly and, consequently, encourage adoption. Since 1998, this moratorium has been extended three times, and is due to expire again in November 2014. While there is generally broad bipartisan support to extend — if not make permanent — the ITFA’s moratorium, given congressional gridlock, there are no guarantees.
With November 2014 rapidly approaching, the question policymakers now need to ask themselves is how a failure to extend the ITFA will affect these efforts to expand broadband adoption? Using both economic theory and empirical evidence, it is possible to make some predictions about the economic effects of failing to extend the ITFA. It isn’t pretty.
Ford predicts a potential loss of 30-60 million broadband connections if Congress fails to act on extending ITFA. Not pretty indeed.