House Moves to Halt Internet Access Taxes

, otherwise know as the Internet Access Charge Prohibition Act of
2000, passed the U.S. House of
late Tuesday.

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:

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

atorium 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.”

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