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

Brazil Invites Public Input on AV Guidelines

Brazil’s National Data Protection Authority (ANPD) on Friday launched a public consultation on developing guidelines for age verification mechanisms under the country’s Digital Statute for Children and Adolescents (Digital ECA), which requires adult websites to age-verify users located in Brazil.

WSST Partners With OEJ to Launch 'Cristal Collection'

We Sell Sex Toys (WSST) has partnered with Our Erotic Journey (OEJ), adding the Cristal Collection to its curated catalog of pleasure products.

E-Stim Introduces 'The Slider' System

E-Stim Systems has introduced The Slider insertable electrode system.

Orion Expands 'Bad Kitty' Line

Orion Wholesale has added two new chain collars to its Bad Kitty collection of fetish accessories.

Eldorado Releases 2026 Lingerie Catalog

Eldorado Trading Co. has released its 2026 Lingerie Catalog.

Pipedream Names Sunny Winkleman Account Executive

Pipedream Products has appointed Sunny Winkleman as its new account executive.

Nexus Expands 'Ascend' Line

Nexus has expanded its Ascend collection with the new Extreme thrusting and rotating massager.

Blush Expands 'Performance' Line With 3 New Penis Extender Sleeves

Blush has expanded its Performance collection with three new extender sleeves.

Paysite Confidential: Inside the Creator Economy's Shift Toward Ownership

For years, the adult industry’s creator economy has been defined by platforms — powerful engines of discovery, monetization and scale that reshaped how performers connect with their audiences.

Nexus Expands 'Bendz' Collection

Nexus has introduced a collection of anal plugs from its Bendz line.

Show More