SAN FRANCISCO (CNN/Money) -
Even though most Americans stopped thinking about taxes a couple of weeks ago, President Bush has decided to take up the cause once again.
On Monday the president outlined his plan to increase broadband Internet adoption in the United States. He called for more competition in the industry, exploration of alternative technologies, and, most substantively, a moratorium on taxes paid for high-speed Internet access.
"To make sure [broadband] gets spread to all corners of the country, it must be affordable," Bush said. "If you want broadband access throughout the society, Congress must ban taxes on access."
Bush's plan made for good headlines during a slow news day, and put the spotlight on the Senate, which this week is debating an extension and modification of the existing Internet tax moratorium.
But what would Bush's proposal -- if enacted by the Senate -- mean to the industry that provides broadband to Americans?
What does it mean?
The answer is, not much. To be sure, every broadband-company representative I spoke with was in favor of Bush's proposal.
"If you can do something to make [broadband] more affordable, that will help to increase [the number of] subscribers," says Dave Baker, vice president for law and public policy at EarthLink.
"Verizon is encouraged by President Bush's comments today," says Tom Tauke, senior vice president for public policy and external affairs at Verizon. "He's right: The proper role for government is to clear regulatory burdens and ban taxes on Internet access."
In theory, I'm also in favor of what Bush is proposing. A tax moratorium provided a nice boost to the e-commerce sector, for example, and perhaps it could provide middle-inning relief for broadband adoption.
But investors shouldn't get too excited about the proposal until Bush's administration releases more substantive information about how his plan to make broadband available nationwide by 2007 will become reality.
Don't get excited yet
Here's why. According to Forrester Research, cost is the No. 1 reason consumers do not upgrade to broadband from dial-up. But the cost savings from eliminating the access tax would only amount to between $1 and $3. That's hardly a sufficient incentive, I would imagine, for most people who are looking at doubling their monthly access charges if they switch to broadband.
What's more, the access tax is only levied in approximately seven states, and in most cases, consumers receive their broadband in combination with other services, such as cable television or telephone. When taken in tandem with those bills, the $1 to $3 savings becomes even smaller.
"The most important thing is to make sure people have access to broadband," says Forrester's Charles Golvin. Bush discussed this briefly in his speech, but aside from mentioning a few available technologies, he offered no specifics.
"Keeping fed taxes off broadband is well and good," says Joseph Laszlo, a senior analyst with Jupiter Research. "But there's a fair amount of the country that doesn't have access."
Later this week, the Senate will vote on the measure. Already the vote is bringing about more debate than it did in the House, which passed a permanent ban on access taxes in September.
While the tax elimination -- whether permanent or temporary -- isn't expected to boost adoption rates much, investors should pay attention when -- and if -- more details emerge about the president's countrywide broadband ideas.
"Boosting broadband availability would be helpful for the industry," Laszlo says. "Right now, however, there's no firm method to turn that into action."
Sign up to receive the Tech Investor column by e-mail.
Plus, see more tech commentary and get the latest tech news.