In February of 2010, Google announced its plan to build and test several ultra high-speed broadband networks in a few trial locations in the United States. Known as Google Fiber, it promised “Internet speeds more than 100 times faster than what most Americans have access to.” The goal at the time was to “help make Internet access better and faster for everyone,” utilizing next generation apps, new ways to build fiber networks, and open access networks to give users a choice of multiple service providers.
A little more than a year later, and after hearing from more than 1,110 cities, Google Fiber revealed that Kansas City was to be its first test location. It went live in the summer of 2012.
In 2013, Inc. magazine assessed how things were going a year into it, noting that “it is still not quite clear exactly how most Kansas City entrepreneurs can take advantage of it.” Notwithstanding speeds that are unimaginably fast, one problem was that the rest of the country is still years away from having access to it. As a result, at least one start-up founder opined that it did not make sense to build a product that would require that kind of speed.
Beyond Kansas City, Google Fiber is now deployed in Austin, Texas and Provo, Utah. Last month, PCMag reported intentions to expand into 18 additional cities across four metropolitan areas: Atlanta, Charlotte, Nashville, and Raleigh-Durham. And later this year, it hopes to have news about Phoenix, Portland, Salt Lake City, San Antonio, and San Jose.
Just last week in a follow up article, PCMag declared that AT&T had followed suit with GigaPower, which it also launched in Kansas City. GigaPower is currently available in Austin, Dallas, Fort Worth, Kansas City, Raleigh-Durham, and Winston-Salem and it plans to expand into Atlanta, Charlotte, Greensboro, Chicago, Cupertino, Houston, Jacksonville, Miami, Nashville, St. Louis, and San Antonio.
Problems in Oregon
The State of Oregon has what OregonLive characterized as a “tangled thicket” of tax rules that could ensnare Google Fiber and others. As far back as 2009, the state moved from a local assessment of cable company networks to a central assessment model which triggered a new tax formula based upon the value of the company’s intangible assets, including the value of the brand.
The cable giant Comcast sued Oregon over that move in the case Comcast Corporation v. Department of Revenue. The lawsuit went all the way to the Oregon Supreme Court, which ultimately held that the property Comcast uses to provide its cable television and Internet access services is subject to central assessment by the Oregon Department of Revenue (ODOR) by virtue of the fact that Comcast’s data transmission services constitute “communication” under Oregon’s statutory definition.
OregonLive described a recent legislative hearing in which business interests and state officials “warned [that] the current formula could scare off Oregon's $1 billion in prospective investment—and could deter competitive Internet and cable TV services from coming to the state.” That said, two years ago, Facebook lobbied for and received an exemption after being surprised with a large tax bill for its data storage center in Prineville.
In light of the tax implications for companies considering expanding to, or continuing to operate in, Oregon, including companies such as Apple and Amazon, the legislature has taken up the assessment problem. OregonLive quoted state Sen. Mark Hass (D-Beaverton) the incoming chairman of the Senate Finance and Revenue Committee, as saying that “dealing with central assessment is now a top priority for the upcoming legislative session.”
Oregon’s Committee on Finance and Revenue (Committee) has sponsored two bills, both of which were introduced on Feb. 3, 2015. Senate Bill 570 provides that for purposes of central assessment, the value of a company's intangible property will be capped at a to-be-determined percent of historical or original cost of the company's real and tangible personal property. The provision would be applicable to property tax years beginning on or after July 1, 2016.
Also for purposes of exclusion from central assessment, Senate Bill 571 removes a requirement for data centers that they have tax abatement agreement with sponsors of enterprise zones. Clarifying that the statute only affects companies in the business of communication, the amendments apply to property tax years beginning on or after July 1, 2015.
In a letter to the Committee, the Oregon Economic Development Association (OEDA) confirmed its support for SB 571. More generally, the OEDA wants a “tax environment that is both reasonable and ascertainable,” after uncertainty created by Comcast Corporation v. Department of Revenue.