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Oregon tax policy could have bearing on the future of telecom in the state -- including on whether Google Fiber comes to Portland.

(Mike Rogoway/The Oregonian)

Comcast lost a pair of major tax rulings in Oregon this week in unrelated cases, each of which could have broad implications on telecommunications in the state. One ruling could even have bearing on whether Google Fiber comes to Portland.

The Oregon Department of Revenue ruled Tuesday that Comcast is not eligible for a tax break designed for companies that provide superfast, "gigabit" Internet service to their customers.

And the Oregon Supreme Court affirmed Thursday that Comcast must pay a license fee on its cable modem service in Eugene, a fee the company has been fighting for years.

Here's the rundown on each case:

The "gigabit" tax break

The Oregon Legislature created a tax exemption last year in hopes of luring Google Fiber's superfast Internet service to Portland. It offers an exemption from an unusual Oregon property tax to companies that offer Internet connections of at least 1 gigabit per second - that's 1,000 megabits per second, 40 times the current federal broadband standard.

That's Google Fiber's basic service in markets where it operates but Comcast argued it should qualify, too, because it offers a 2 gigabit service to customers who will pay a premium for it - up to $4,600 in the first year.

State lawmakers said their tax break wasn't intended for that kind of premium service and premium pricing, but state utility regulators said Comcast met the letter of the law and ruled in February that Comcast qualifies. The tax break was worth "tens of millions" of dollars to Comcast, according to local government officials who hoped to keep that revenue for cities and counties.

This week, though, the state Department of Revenue ruled Comcast ineligible for the tax break, at least for this year. The department declined to disclose its reasoning, citing taxpayer confidentiality, and referred questions to Comcast. Comcast said any information would have to come from the Revenue Department.

Google Fiber and Frontier Communications each had their applications denied, too, but neither currently offers gigabit service in Oregon. They had each applied prospectively, and Revenue may have declined their applications on those grounds. But Google Fiber has said previously that if it has to pay this unusual tax, known as "central assessment," it won't come to Oregon.

The company didn't immediately respond to an inquiry seeking comment on the Department of Revenue rulings.

Mike Dewey, director of the Oregon Cable Telecommunications Association, said Comcast will likely appeal to the director of the Department of Revenue. He warned the current ruling could dissuade tax-averse companies from bringing new services to Oregon.

"If DoR doesn't change its mind," he said, "we're going to lose some investments."

License fees in Eugene

Comcast and the city of Eugene have been fighting in court since 2010 over a license fee the city charges on cable modems, arguing the fee violates two federal laws that prohibit local taxation. When Comcast refused to pay, Eugene took the company to court.

On Thursday, the Oregon Supreme Court unanimously upheld an appeals court ruling in favor of the city. Among other things, the court concluded that federal law allows a license fee in addition to a franchise fee.

Comcast could seek a reconsideration before the Supreme Court and indicated it may do so.

"We believe the City of Eugene does not have the legal authority to levy a tax on Internet access," spokeswoman Amy Keiter said in a written statement. "We are reviewing today's ruling from the Oregon Supreme Court and will determine the best course of action going forward to prevent local taxation of internet access."

Eugene said it's not sure how much money is at stake because it hasn't seen a revenue report from Comcast in many years. The city appears to be the only one levying such fees now, but Dewey said the Supreme Court opens the way for other local governments to do so, too.

"I don't know why they wouldn't," he said, warning that added taxes could drive up telecom prices.

"There are going to be those that just can't afford it," Dewey said.

-- Mike Rogoway

mrogoway@oregonian.com

503-294-7699

@rogoway