New Maneuvers on Internet Access Ban

Debate on the Internet access tax moratorium continued Tuesday afternoon in
the United States Senate with compromise seemingly as elusive as it has been
for the last five months since the original federal tax ban on Internet
connections lapsed on Nov. 1.

Senators George Allen (R-Va.) and Ron Wyden (D-Ore.) introduced legislation
almost a year ago to permanently ban Internet access taxes and to expand the
definitions of access to include DSL and cable modem connections. The House
of Representatives overwhelmingly passed similar legislation last year.

Both bills also phase out a grandfather clause for the 10 states already
taxing access in 1998, when the first moratorium was passed by Congress. The
Senate version has run into staunch opposition from lawmakers, particularly
those from the grand-fathered states, who fear the revenue loss to state and
local authorities.

“We are here debating this measure because the two opposing sides will not
budge from their positions,” Sen. John McCain (R-Ariz.) said as he
introduced a compromise amendment calling for a four-year ban on access
taxes. “Under this amendment, an overwhelming amount of state and local
taxes will be protected.”

Sen. Lamar Alexander (R.-Tenn.), who has led the opposition, wasn’t

“The definitions [in the McCain amendment] of Internet access are the same
as in the Allen-Wyden bill,” said Alexander, who is supporting an amendment
to keep a new ban limited to two years and narrow in scope.

By late Tuesday afternoon, the McCain amendment was still awaiting a vote
while Alexander and others engaged in parliamentary maneuvers to delay
consideration of the legislation. Senate Majority Leader Bill Frist
(R.-Tenn.) has set a Thursday night deadline for the Senate to deal with the

At press time, the Senate had tabled a motion by Texas Republican Kay Bailey
Hutchinson and was considering an energy amendment attached to the McCain
measure by Senate Minority Leader Tom Daschle (D.-SD).

“I urge my colleagues to not make this bill a punching bag. It’ll show we
can’t get anything done,” Sen. Trent Lott (R.-Miss.) said. “Senators can
dump their out baskets on this bill “that is their right” but we need to
get this bill done. Lets not attach amendments that are not germane to the
substantive part of the bill.”

The original moratorium specifically covered dial-up connections but was
vague about other types of connections. As Alexander said Monday, “In 1998
when the moratorium was passed, I’d be willing to bet no one in the United
States Senate knew what high-speed Internet access meant.”

Even when the access tax moratorium was in place, some state and local
authorities began taxing DSL, the broadband service offered by incumbent
telephone companies. Cable broadband connections have been beyond the reach
of state and local tax boards since the Federal Communications Commission
ruled cable modems were an information service and not subject to the same
regulations as telecommunications services such Verizon and
Bell South .

That decision was called into question last October when a federal appeals
court ruled the FCC erred in its ruling and that cable modems did have a
telecommunications factor to it. Both the House version and Allen’s bill
would exempt both DSL and cable broadband connections from access taxes.

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