Qwest, Comcast spar over taxes

Two powerhouse companies, Qwest Corp. and Comcast Corp., are battling over property taxes — specifically, who assesses them.

Qwest wants to amend an administrative rule so that the properties of Comcast and other cable companies would be treated the same as those of telecommunication companies, meaning they would be assessed by the state rather than local entities. At a Utah Tax Commission meeting Tuesday, Qwest attorney David Crapo said Comcast operates as a unit across county lines and therefore should be subject to state assessment.

Cable companies, once solely TV-programming providers, have moved "heavily into two-way communications," he said, adding that Comcast proclaims itself as the fourth-largest phone-service provider in the United States, with 190 million calls weekly placed through its "national network."

The companies' data, Internet and voice service "is interconnected through and across county lines, and through and across state lines and requires central assessment," Crapo said. "The time has come that the cable companies should be centrally assessed by this commission."

But Jerry Oldroyd, an attorney representing Comcast, said that Qwest's argument does not account for the "very localized nature" of cable-company operations. Never considered public utilities, cable companies are subject to local franchising authority — and in Utah, that means 130 agreements with local entities. "That's not like a public utility," Oldroyd said. "It's certainly not like a 'unit."'

And, he said, the service handling 190 million calls "is a data service, an Internet service." It is not a phone service and therefore is not regulated by the Utah Public Service Commission. "It's an Internet-based traffic," Oldroyd said.

Crapo, however, questioned that distinction. "It is a phone call," he said.

Salt Lake County Assessor Lee Gardner and John McCarrey, an assistant attorney general for the Utah Property Tax Division, said Comcast's operations appear to go over county lines. McCarrey also said that the state is better equipped than local assessors to assess cable companies' complex properties.

Oldroyd and several others are suggesting that the Legislature should decide whether cable companies are assessed by the state or locally. A letter to the tax commission from Senate Majority Leader Curt Bramble and Sen. Wayne Niederhauser, chairman of the Senate Revenue and Taxation Committee, said they prefer that the matter be addressed by the Legislature. However, HB367, which would have had cable companies assessed by the state, died in committee during the 2008 general session.

Among those supporting legislative purview were the Utah League of Cities and Towns and the Salt Lake Chapter of the Utah Mortgage Lenders Association. Opposing Qwest's petition in letters to the commission were the Utah Cable & Telecommunications Association, with six association members, including Comcast; Charles Davis of Republic Strategies in Lehi; the Utah Coalition of La Raza; and Russell Skousen. Davis and La Raza expressed concern about additional taxes being passed on to cable customers. Skousen worried about stifling competition and innovation.

Comcast representatives say it is too early to know what financial hit, if any, the company would sustain if Qwest succeeds. Crapo contended that "this isn't a tax increase matter." But Douglas Mo of Thomson Property Tax Services in Oakland, Calif., and a representative for Comcast and Time Warner, said, "If cable moves to central assessment, their taxes will go up."

In documents submitted to the commission, Qwest said it "currently experiences economic disadvantage as a result of inequitable property tax treatment." At Tuesday's meeting, Oldroyd said Qwest has presented only "unsubstantiated statements as to what that harm is."

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E-mail: bwallace@desnews.com

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