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CenturyLink, Frontier protest Portland, Ore. wireline tax hike

Telcos say it will raise prices; Comcast, Integra argue it will create tax parity
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Portland, Ore.'s proposal to raise the taxes that wireline service providers pay is facing fire from the state's two dominant telcos, CenturyLink (NYSE: CTL) and Frontier Communications (Nasdaq: FTR).

Both service providers said during the Portland City Council's meeting on Thursday that the expanded tax, which is designed to raise up to $5 million in revenue for police department reforms, would raise prices for their customers. They added the tax also is unfair because it does not include wireless operators.

The two telcos, reports The Oregonian, said they don't agree with Mayor Sam Adams' argument that the new tax would help make the city's telecom service taxes "more equitable."

If the tax hike is approved by the city council, CenturyLink and Frontier would have to pay the city 5 percent of their revenues beginning on Jan. 1.

However, competitive carriers see the proposed tax as a victory. Mark Trinchero, vice president of government affairs for Comcast (Nasdaq: CMCSA), and Ted Gilliam, of Integra Telecom, whose companies have paid the 5 percent rate since the late 1990s, think the new bill will create tax parity for all wireline service providers that operate in the state.

Under the current structure, the two ILECs pay 7 percent of their local voice services revenue to the city, while Comcast and CLEC Integra are required to pay 5 percent of their gross revenues to the city.

This proposed tax is also drawing fire from AT&T (NYSE: T), which at this point said it does not know if the telco would see an increase in the taxes they pay.  

Adam Grzybicki, president of AT&T Oregon, said the idea of imposing a new tax on the state's telcos "simply to pay for a new obligation the city has incurred sets a dangerous precedent."

Reforming state taxes on wireline operators is an issue in other states, too. In New Hampshire, FairPoint Communications (Nasdaq: FRP), the state's dominant wireline telco, in October filed a suit against 100 communities, including Berlin, over not reinstating a tax exemption on its telephone poles.

For more:
- The Oregonian has this article

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