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

Le Wand 'Dive' Featured in InStyle's List of Recommended Sex Toys

Le Wand’s Dive submersible wand vibrator is featured in “The 7 Best Sex Toys Sexperts Want You to Stash In Your Nightstand” roundup from InStyle.

Kiiroo Debuts 'PowerShot Case' Stroker Add-On

Kiiroo has introduced the PowerShot Case add-on for its Keon, PowerBlow, and PowerShot Strokers.

UPDATED: Court Approves Class Action in Labor Claims Against VMG

A U.S. district court has granted class certification in a civil lawsuit filed against Vixen Media Group (VMG) by retired performer Kenzie Anne, making it possible for additional performers to join in a class action against the company.

LELO Debuts 'Boomerang' Double-Sided Vibrator

LELO has introduced its new Boomerang, the pleasure brand's first double-sided vibrator.

Brazil Invites Public Input on Guidelines for New Digital Law

Brazil’s National Data Protection Authority (ANPD) is soliciting public comments to help improve interpretation and application of the country’s Digital Statute for Children and Adolescents (Digital ECA), which requires adult websites to age-verify users located in Brazil.

Svakom Debuts 'Klitty' 3-in-1 Vibe

Svakom has introduced its new Klitty three-function vibrator.

X3 Expo Unveils Euro All-Stars for Inaugural Amsterdam Edition

X3 Expo, Hollywood's premier adult entertainment expo, makes its European debut at Passenger Terminal Amsterdam Sept. 11-12, bringing together fans, creators, and industry insiders for the Continent’s largest assembly of adult entertainment stars, alongside a dazzling lineup of attractions spotlighting the cutting edge of modern media and pleasure tech.

2026 Pornhub Awards Nominees Announced

The list of nominees has been revealed for the eighth annual Pornhub Awards, presented by gaming platform 1win, which will be held May 27 in Los Angeles.

AEBN Publishes Popular Searches by Country for February, March

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

Magic Silk Debuts 'Wisteria Mist' Collection

Magic Silk has introduced its new Wisteria Mist line of lingerie.

Show More