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 © 2024 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

Age Verification: FSC's Mike Stabile Reports from the Frontlines

Two years into the religiously-inspired crusade to ban free access to adult material in the U.S. through carefully drafted "age verification" legislation, the constant onslaught of state-by-state proposals and laws — many of them copied from each other — can be hard to follow.

Written Erotica Platform 'Hevvn' Launches

Hevvn, a new platform aimed at erotica writers seeking to publish, promote and profit from their work, debuted Thursday.

Sssh.com's Angie Rowntree Speaks at Brown University

Sssh.com founder Angie Rowntree spoke at a Brown University class last week, discussing several topics related to adult filmmaking.

Holiday Products Signs Distro Deal With Emojibator

Holiday Products has signed a distribution deal with pleasure brand Emojibator.

Online Industry Veteran Joe E. Passes Away

Online industry veteran Joe E has passed away, according to friends and industry associates.

SWPA to Hold Facebook Live Event Next Month

The Sexual Wellness Professionals Alliance (SWPA) will be holding a Facebook Live event on May 1 at 6 p.m. (PDT).

Judge Acquits Backpage Defendants of Most Charges Before 2nd Retrial

A federal judge acquitted former co-owner of Backpage.com Michael Lacey and two co-defendants on most of the counts remaining from the protracted trial launched against the website operators by the Justice Department in 2018.

Adult Time Partners With Animation Studio 3DGspot

Adult Time has signed a deal to distribute content on its streaming platform from animation studio 3DGspot.

Georgia Gov. Brian Kemp Signs Age Verification Bill Into Law

Republican Gov. Brian Kemp this week signed into law a bill that includes provisions requiring age verification for viewing adult content in Georgia, mirroring legislation being sponsored around the country by anti-porn religious conservative activists.

Honey Play Box Signs Canadian Distro Deal With EP Products

Honey Play Box has signed a deal with Canadian distributor EP Products.

Show More