The Federal Communications Commission is considering a tax hike in the midst of the country's deepest economic downturn in decades. Consumers would face higher costs for telephone services, with the revenue used to subsidize internet access for rural areas. The cost estimates to bring internet service to every corner of the nation range from $20 billion to $350 billion.

Other aspects of this effort include the possibility of forcing internet providers to share their networks with competitors and reclaiming airwaves from television station owners in order to auction them off to internet service providers. For most investors, CEOs and employees of private enterprises, an influx of government intervention would not be welcome news.

What's The Point?
Bridging the digital divide, increasing competition and driving down prices are the philosophical underpinnings of this effort. Casting aside the government's less-than-successful track record at such efforts (anybody remember the $400 hammer from the 1980s or the fine state of affairs at the Social Security Administration?), let's take an honest look at internet use to see what our money will be used to purchase.

While most internet providers won't release data on their client's web surfing habits, a variety of other studies are available. The Pew Internet & American Life Project survey released in 2005 indicated that 90% of internet users check e-mail on a daily basis. Just over 50% use search engines, fewer than 50% go online to get news, and just over 40% browse for fun. It also noted that 56% of rural America is already connected.

Of the 75 million Americans not connected at the time of the survey, "I don't want it, and I don't need it" topped the list of reasons for remaining offline. A 2008 survey by comScore.com indicates that 36% of internet uses spend time on a least one "adult" website each month. This traffic fuels $2.8 billion in revenue each year. (This ever-changing industry can leave investors scratching their heads. Find out which metrics matter in Dial Up Choice Telecom Stocks.)

The Bottom Line
The government wants to implement a tax hike of up to $350 billion dollars so that people who don't actually want to be online can check their e-mail and entertain themselves online. With an unemployment rate north of 10%, a housing market on shaky ground, a manufacturing base on life support, a healthcare system in shambles and a 401(k) system that leaves people who hope to retire someday at the mercy of the stock market, there seem to be higher priority uses for tens of billions of dollars.

Related Articles
  1. Taxes

    What IRS Form 8949 Is For

    Selling a painting or that lake property? Disposing of your fossil fuel stocks? You need to know about this IRS form.
  2. Economics

    The Top 9 Things to Know About Hillary Clinton's Economic View

    Find out where former secretary of state and Democratic presidential candidate Hillary Clinton stands on the economy, jobs, trade and education.
  3. Retirement

    How do you calculate penalties on a 401(k) early withdrawal?

    Find out how to calculate the penalties on early withdrawals from your 401(k), including the impact of the additional 10% tax penalty, vesting and income tax.
  4. Savings

    A Look at the Cost and Tax Treatment of College

    Is there more we can do to improve the affordability of post-secondary education? We take a look at how students and colleges are taxed today.
  5. Taxes

    What's Wrong with the American Tax System

    American's are highly taxed and we still run a deficit. We explain why.
  6. Taxes

    What's IRS Form 2848 Used For?

    It's a power of attorney tax form and here's what it can, and cannot, do.
  7. Mutual Funds & ETFs

    Understanding Taxation On Leveraged ETFs

    Read about the potential tax implications for investors of leveraged exchange-traded funds, or ETFs, and learn why leveraged ETF taxation can be so complicated.
  8. Taxes

    What's IRS Form 1040 For?

    Most U.S. taxpayers will be familiar with the 1040. By the end of filling it out, you'll know how much tax you owe, or what your refund is.
  9. Retirement

    Ask Your Advisor These 5 401(k) Rollover Questions

    Managing your 401(k) wisely is paramount to a secure retirement. Accordingly, here's a guide to key questions you need to ask your financial advisor.
  10. Retirement

    Advisors Fees: What Are You Paying For?

    Fees or commissions? Which is best? Either way, what matters most is that the investor is aware of each charge and how if impacts their portfolio.
RELATED TERMS
  1. Section 1231 Property

    A tax term relating to depreciable business property that has ...
  2. Exchange-Traded Mutual Funds (ETMF)

    Investopedia explains the definition of exchange-traded mutual ...
  3. Guideline Premium And Corridor ...

    A test used to determine whether an insurance product can be ...
  4. Cash Value Accumulation Test (CVAT)

    A test method used to determine whether a financial product can ...
  5. Section 7702

    The section of the United States Internal Revenue Code that defines ...
  6. Working Tax Credit (WTC)

    A tax credit offered to low-income individuals working in the ...
RELATED FAQS
  1. Are spousal Social Security benefits taxable?

    Your spousal Social Security benefits may be taxable, depending on your total household income for the year. About one-third ... Read Full Answer >>
  2. What is the Social Security tax rate?

    The Social Security tax rate is 12.4% as of 2015. Of that amount, the employee is responsible for half, or 6.2%, and the ... Read Full Answer >>
  3. What is the Social Security administration responsible for?

    The main responsibility of the U.S. Social Security Administration, or SSA, is overseeing the country's Social Security program. ... Read Full Answer >>
  4. How is Social Security tax calculated?

    The Old-Age, Survivors and Disability Insurance program, or OASDI, tax is calculated by taking a set percentage of your income ... Read Full Answer >>
  5. Are my Social Security disability benefits taxable?

    Social Security disability benefits may be taxable if you receive other income that places you above a certain threshold. ... Read Full Answer >>
  6. What are the penalties of cashing out a 401(k) before retirement?

    Standard distribution regulations for 401(k) retirement accounts require that you reach age 59.5 or become unable to work ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!