Senate Once Again Ponders Internet Tax

WASHINGTON — The Senate Commerce Community met yesterday to talk about the possibility of extending the Universal Service Fund (USF), the 1996 tax on telephone services, to Internet services.

While no specific numbers were discussed, any extension of the USF would mean increased costs to consumers.

Currently, all phone companies, including mobile and long-distance providers, are required to pay into the fund, originally designed to keep the price of basic telephone service affordable throughout the country by subsidizing phone services in rural areas.

The companies cover the expense by passing it onto customers. Accordingly, Internet companies would likely also pay for their contributions by tacking on additional user fees.

The idea of making broadband providers also contribute to the fund is backed mainly by lawmakers from rural states, including Committee Chairman Ted Stevens, R-Alaska.

Stevens said during the hearing that without the USF, Alaska residents would have to pay up to $200 per month just to get a dial tone.

When asked by reporters after the hearing exactly what types of companies should have to pay into the USF, Stevens cast a wide cloth that included any company that “[transmits] knowledge from one person to another.”

He elaborated, “I believe fax is a communication, I think email is a communication, and I do believe they all should contribute.”

In 2005, the Senate mulled the possibility of extending the century-old federal excise tax on telephone services to the Internet, with opponents ultimately convincing proponents that such a measure would not gain enough votes to pass.

Last month, Sen. Conrad Burns, R-Mont., introduced legislation that would require VoIP providers to pay into the USF, but was clear to point out that he felt contributions should be limited only to broadband voice service.

Legislators in the House also have promised a bill that would extend the USF to Internet services, but rather than funds going to subsidize phone service, they would be used to bring broadband services to remote areas.

Some senators have expressed fear that, while the stated goal is admirable, they doubt its execution would produce the desired results. Recent government audits of the program’s administration hint at widespread mismanagement of funds.

Critics point out that deployment of USF funds is not handled by the federal government, but by nonprofit corporation called USAC whose board members are mostly telecommunications industry executives.

Also, according to a recent Pew Internet and American Life Project report, broadband service is moving into rural areas without government assistance.

Copyright © 2026 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More News

AEBN Publishes Popular Searches by Country for December, January

AEBN has released the list of popular searches from its straight and gay theaters, by country, for December and January.

Jim Austin Joins CrakRevenue Team

Strategist Jim Austin has been hired by CrakRevenue.

Starship Unveils New Executive Team

Starship Enterprises has announced its updated executive leadership team.

Judge Dismisses NCOSE-Backed Suits Against Adult Sites Over Kansas AV Law

A federal judge on Tuesday dismissed lawsuits brought against two adult websites in Kansas for alleged violations of the state’s age verification law.

Aylo/SWOP Panel Spotlights Creators' Struggle for Digital, Financial Rights

Aylo and Sex Workers Outreach Project (SWOP) Behind Bars presented, on Tuesday, an online panel on creators’ rights, debanking and deplatforming.

CC Wellness Opens New Santa Clarita Facility

JO parent company CC Wellness has opened its new operations and warehouse facility in Santa Clarita.

Svakom Launches New Brand 'Kaotik Labs'

Svakom has launched its new male-focused sextech sister brand, Kaotik Labs.

Pjur Introduces 'SachetCard' Dispenser at Düsseldorf's 'Sex Now' Exhibition

Pjur has introduced its SachetCard dispenser at the Sex Now exhibition at NRW-Forum in Düsseldorf.

AV Bulletin: Canada, Italy, Australia Updates

Since the Supreme Court’s decision in Free Speech Coalition v. Paxton, more state age verification laws have been enacted around the United States, as well as proposed at the federal level and in other countries. This roundup provides an update on the latest news and developments on the age verification front as it impacts the adult industry.

Holly Randall Soft Launches 'Wet Ink' Magazine

Holly Randall has officially soft-launched the creator-focused publication Wet Ink Magazine.

Show More