Wireless phone customers in Illinois can look for a little something extra in their bills next month–a new charge courtesy of the Illinois legislature.
The lawmakers have reinstated a charge against cell phone customers that Illinois courts had thrown out previously.
The original charge amounted to 2 percent of wireless bills for Chicago residents and up to 1 percent for residents of other municipalities. That charge was a right-of-way maintenance fee related to phone lines on poles.
Since the wireless phone carriers don’t have their own poles and lines, some argued in court that their customers shouldn’t have to pay these fees. The courts agreed, and municipalities were irked to see a source of revenue dry up.
In response to cries for help from fiscally strapped city and town officials, state lawmakers agreed to reinstate the charges in the form of a new tax, which takes effect April 1.
While they’re not happy to see the charge come back, the wireless phone companies were able to bargain for some relief along with the charge.
Beginning in January, they can stop dealing with hundreds of individual municipalities to pay these fees. The state will consolidate all state and municipal fees into a single tax and then distribute the money to local governments.
This not only saves the wireless carriers a lot of paperwork, but it may help them to give their customers a break from lawmakers one day, said Mike McDermott, director of state public policy for Verizon Wireless’ Chicago operation.
By streamlining all the taxes into one total, people will clearly see how much they’re paying, and it will help the wireless industry argue to lawmakers that they are taxing wireless phone customers too heavily, McDermott said.
Nationally, wireless users pay 17 percent of their monthly bills for state and federal taxes on average, but it’s much higher in Illinois, running to more than 23 percent. This heavy tax is a throwback to the days when most wireless service was used by business people whose companies footed the bills.
Today wireless phones have become a popular consumer item with big buckets of minutes to be used anytime and at any distance, making wireless a competitive alternative to wired residential service.
“We’re no longer a luxury item, but we’re still taxed about as heavily as gambling, alcohol or cigarettes,” McDermott said. “We ought to be taxed more like any other every day commodity, not something subject to luxury or sin taxes.”
Maybe some day it will shrink, but as of next month, the tax bite will be a bit bigger.
Free Web: As companies continue to search for business models to make money on the Internet, a new survey from Jupiter Media Metrix suggests that consumers continue to resist the notion of paying for content they find on the Web.
That survey found that 70 percent of adults who go online said they cannot understand why anyone would pay for online content.
“While there is money to be made in the online content business, Jupiter’s latest survey and market forecast indicate that the mass market still largely shuns anything that smells like a subscription online,” said David Card, Jupiter’s vice president.
Directory assistance: As the wireless phone industry rolls out advanced networks to deliver data at speeds comparable to dial-up wireline modems or faster, Lee Hancock wonders about the quality of the data they’re fixing to deliver.
“Will it be like the old computer term: `Garbage in, garbage out’? Or will it be useful and timely?” asks Hancock, who is chief executive of Go2 Systems Inc. of Irvine, Calif.
As a pioneer in providing wireless customers with directions to get places, Hancock has had firsthand experience with the unreliability of much information in existing databases. It tends to come from phone books and other public sources that are often a year or more out of date.
When Hancock’s firm checked database information about Burger King stores against the company’s own records, it found an error rate approaching 50 percent.
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“Unless you engage the merchant to keep this information timely, there’s no way anyone can afford to maintain up-to-date records,” Hancock said. “You can’t hire people to call millions of businesses every week to make sure the information is current.”
So Hancock’s firm, working with the keeper of Internet domain names, VeriSign Global Registry, has started a local business registry that aspires to be a sort of central electronic yellow pages.
The idea is that merchants pay a fee of $10 to $20 a month to list their location, phone number, hours, product information and so on in the registry. They update that information whenever there’s a change.
Go2 will make that information freely available to AOL, Yahoo and everyone else who wants it. This should make information offered on the Web, over wired phones and presented through new wireless services more accurate and helpful, Hancock said.
“We’ve adopted the yellow pages business model,” he said. “We charge the merchants and then give away the books, or in our case, the electronic database listings.”
There are about 20 million businesses in the country and so far Go2 has signed up about 100,000.
Hancock says he’s just getting started. The company plans to offer the service to Chicago merchants sometime next month.
Hancock’s hope is that by the time wireless Web users start to access local business information in a big way, it’ll be truly useful to them.