Cable companies back new tax on satellite television

Kirsten Searer

Tuesday, March 22, 2005 | 9:40 a.m.

CARSON CITY -- Customers of DirecTV and other satellite television systems may soon see a tax hike in their bills.

The state's main cable providers are perturbed that they pay franchise fees but their competitors don't. So the cable companies have backed a bill that would put a 5 percent tax on gross receipts collected by pay television providers.

The catch: Because the bill would exempt companies that pay franchise fees already, it would apply mostly to satellite television providers.

About 187,000 people in Nevada use satellite services, company representatives said.

The tax outlined in Assembly Bill 151 would yield an estimated $5.3 million a year that would go into a trust fund to buy new communications systems for first responders. The Assembly Commerce and Labor Committee heard the bill Monday.

Cox Communications Vice President Steve Schorr said his company is feeling the pinch of the satellite television companies. He pointed out that traditional Nevada cable companies paid almost $14 million in fees last year.

"There's no doubt we're trying to level the playing field," he said. "It's a competitive market."

Satellite companies say that cable companies are paying for the right-of-ways on city streets, just as utility companies do. They argued that targeting a new tax on one industry is a bad tax policy.

"The bottom line is that cable hasn't had to compete and now they're having to compete," said Eric Sahl, a vice president with EchoStar Communications. "They don't want to compete fairly and they want to charge us a tax."

All businesses said they see the necessity of devoting state money to communications systems for first responders. Police and fire officials often have different radio systems, meaning they can't talk easily on the field.

Assemblyman John Oceguera, D-Las Vegas, a captain with the North Las Vegas Fire Department, said he ran into a good example just last weekend. A woman tried to commit suicide and police officers and the ambulance went to different apartments and they couldn't communicate with each other, he said.

"The whole situation was delayed by the fact we couldn't communicate," he said.

Several lawmakers seemed frustrated with the topic.

Assemblyman Morse Arberry, D-Las Vegas, said he felt like the two industries were dragging the Legislature into their battle over taxes, using first responders as their bait.

Assemblywoman Barbara Buckley, D-Las Vegas, chairwoman of the Assembly Commerce and Labor Committee, said she thinks the franchise fees that cable companies pay are outdated and inequitable.

Dan Jacobson, executive director of SBC of Nevada, agreed, but said the bill isn't a fair way to smooth things out. He said he thinks the bill could ultimately be applied to wireless communications completed through the computer and other technology than satellite TV.

"The franchise fee system is antiquated," he said. "It really needs to be restructured. But this bill is not the solution. What this bill does is ignore the fact that technology is changing."

The Commerce and Labor committee has not yet voted on the bill.