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 © 2025 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

XBIZ Retreat Concludes With Business, Banter and Beach Vibes

The 2025 XBIZ Retreat in Miami wrapped last week with top vendors and key buyers immersing themselves in business while enjoying a relaxed environment, productive one-on-one meetings, and a dance party.

Kiiroo Unveils 'PowerShot' Stroker

Kiiroo has introduced its PowerShot masturbator.

Fleshlight Debuts Bootydevine Stroker

Fleshlight has introduced its new Pro Fleshlight stroker molded from Bootydevine.

Honey's Place Launches Revamped B2B Website

Pleasure product retailer Honey's Place has launched an updated website for wholesalers at HoneysPlace.com.

Creator of Hentaied, Parasited Launches New Site 'Vampired'

Romero Mr. Alien, the creator of Parasited and Hentaied, has launched Vampired.com as both a stand-alone paysite and part of the Hentaied.Pro streaming platform.

Australian eSafety Commissioner Demands Stricter Child Protection Codes

Australia’s online safety regulator, eSafety, is once again reviewing a “final” draft of industry codes to protect children from pornography and other age-inappropriate content, after eSafety Commissioner Julie Inman Grant rejected the previously announced “final” codes as insufficiently stringent.

Playful Icebreakers Spark Serious Business for Miami XBIZ Retreat Attendees

From a casual welcome reception at Miami’s Grand Beach Hotel to a creative speed networking session to break the ice, candid panels, and dozens of creative in-suite product displays, the first two days of XBIZ Retreat blended business, connection, and just the right amount of fun.

Nerdgasm: A Look at the Naughty Side of Pop Culture Geekdom

From “Call of Duty” to cosplay, from tabletop dice rolls to dungeon-inspired dirty talk, the worlds of geek fandom and fantasy are no longer confined to the basement. They’ve kicked down the door, shed the “Firefly” tee and gone full frontal.

Kyrgyzstan Parliament Moves to Outlaw Internet Pornography

A parliamentary committee of the Supreme Council of Kyrgyzstan on Tuesday approved a measure to outlaw online adult content in the country.

A Look at What's Driving the Booming Demand for Imagination-Inspired Sex Toys

It’s a tale as old as time. In childhood, we are captivated by fantasy stories that allow us to escape into a world of make-believe, where anything is possible. For adults, fantasy can also shape sensual experiences, allowing people to be whoever they want, do whatever they wish and go wherever they desire through role-playing — and an expanding array of imagination-inspired pleasure products.

Show More