While the bill still needs U.S. Senate and White House approvals to become law, the legislative initiative has created a firestorm of controversy due to misinformation purported by online resources.

Specifically, the act has been viewed as a law that could kill Internet telephony in the cradle of its deployment.

Mike Waldron, director of communication for the bill's sponsor, Rep. Fred Upton (R-MI), said nothing could be further from the truth.

"Voice is a completely separate issue, HR 1291 only deals with data," Waldron said.

Waldron added that the bill is intentionally silent on the issue of Internet telephony and is simply the first step is keeping the Internet free from cumbersome taxes.

"We're taking the first step in Congress to keep the Internet affordable for all people," Waldron said. "The stir among the Internet community is completely unfounded. The bill strips the Federal Communication Commission of the ability to tax per minute Internet access."

While some online news sources have reported that the bill leaves the door open for the FCC to apply universal service fees to Internet telephony, the bills mark-up language as engrossed by the House does not concern itself with VoIP technology. It does not even attempt to define VoIP services nor does it deem Internet telephony as a taxable service.

The act specifically prohibits the imposition of access charges on Internet service providers. The bill would amend Section 254 of the Communications Act of 1934 (47 U.S.C. 254) to reads:

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The commission shall not impose on any provider of Internet access service (as such term is defined in section 231(e)) any contribution for the support of universal service that is based on a measure of the time that telecommunications services are used in the provision of such Internet access service.

Chat rooms and discussion groups this week quickly spread rumors about bill "602P" as proposed by Congressman Tony Schnell. E-mail messages have circulated on the Web once again alerting Internet users that a monthly surcharge was coming their way. However, there is no lawmaker Schnell and no bill titled 602P.

HR 1291 contains rule of construction language that has been further misinterpreted on the Internet. It states that "Nothing in this subsection shall preclude the Commission from imposing access charges on the providers of Internet telephone services, irrespective of the type of customer premises equipment used in connection with such services."

VoIP enthusiasts contend that the bill would leave the door wide open for the FCC to apply Universal Service Fees to Internet telephony. But the bill's language remains strictly limited to per minute Internet access fees, not Internet telephony and VoIP services.

Meanwhile, the FCC is working on rulemaking that would streamline the commission's involvement in the setting of technical criteria and make sure customer premises equipment does not harm the telephone network. The change could save CPE manufacturer's millions of dollars each year and increase equipment choices available to consumers.

Michael Balmoris, FCC spokesperson, said there is no connection between the House legislative action and the FCC's regulatory initiative.

"There are no plans here at the FCC to begin a proceeding to start levying access toward IP telephony," Balmoris said.

Last week the House overwhelmingly voted in favor of extending the current moratorium on new Internet taxes for an additional five years through to 2006. The Senate continues to work on the bill that would extend the three-year moratorium set to expire Oct. 21, 2001.

The House Commerce Committee is working on a separate measure to end the 102-year-old 3 percent telephone access charges applied to long distance services that were first applied in 1898 to help finance the Spanish-American war.

Industry insiders contend that all of the tax-reducing initiatives on Capitol Hill are a clear indication that there will not be VoIP tax issues for consumers in the future. To do so would require legislation completely separate from HR 1291.

Because VoIP remains nascent technology, the FCC would most likely treat it like cable regulation and keep their hands off the Internet.

Joy Howell, FCC spokesperson, said we have no intention of imposing access charges to the Internet.

"Congress has the prerogative to legislate policy and we respect that right. But in this case we think it is superfluous," Howell said. "The Chairman has no interest in imposing old regulatory schemes on new technology."