February 28, 2006 11:37 AM PST

Senators back new broadband taxes

WASHINGTON--New broadband taxes may be on the horizon, if an influential senator and his like-minded colleagues get their way.

At a Tuesday hearing convened by the Senate Commerce Committee, several senators from largely rural states called for expansion of the Universal Service Fund (USF), a multibillion-dollar pool of money that's currently used to subsidize telecommunications services in rural and other high-cost areas, schools and libraries.

Committee Chairman Ted Stevens, an Alaska Republican who counts himself among the fund's staunch supporters, said Tuesday that "without Universal Service, just having a dial tone would average about $200 per month" for many residents in his home state.

Right now, long-distance, wireless, pay-phone and wireline telephone services are required to contribute a fixed percentage of their revenues to the fund, which they typically do by tacking an additional fee onto their customers' bills.

But supporters of the fund, which gives out on average more than $5 billion each year, say it has dwindled because traditional services, such as long-distance, are taking in less money, while unanticipated voice technologies, such as voice over Internet protocol (VoIP), are not expressly required to pay up. (A number of the larger voice over Internet protocol providers, including Vonage, have said they already pay into the fund, but there doesn't appear to be a formal regulation requiring them to do so.)

Several senators said they want to change that by making USF contributions "technology neutral," which for many means scooping up broadband services both as contributors to--and benefactors of--the fund. The debate reflects Congress's broader attempt this year to update the 1996 Telecommunications Act, which critics have deemed outdated because it fails to account for the explosion of the Internet.

Stevens, for one, said he thinks all "communications" services, which he defined for reporters after the hearing as "transmitting knowledge from one person to another," should be forced to pay into the USF. "I believe fax is a communication, I think e-mail is a communication, and I do believe they all should contribute," he said.

He isn't the only one. Sen. Conrad Burns, a Montana Republican on the Commerce Committee, introduced a bill earlier this month that would require contributions from "every provider of "telecommunications, broadband service or broadband voice service," including all cable, DSL, spectrum, and other broadband providers.

His bill, however, appears to word its contribution mandate for "broadband voice" services broadly enough to include not only voice over Internet protocol providers but also free, voice-based instant messaging services. Derek Hunter, a spokesman for Burns, told CNET News.com recently that his boss's bill isn't intended to sweep up the latter breed of services.

Politicos in the U.S. House of Representatives are also drafting a proposal designed to restructure the subsidies in a similar way, so that they can be used toward deployment of broadband as well as traditional telephone service.

Who pays?
At Tuesday's hearing, debate also centered on the appropriate methodology for the Federal Communications Commission to use to determine payments to the fund. Representatives from smaller cable and telecommunications companies urged the senators at Tuesday's hearing to leave federal regulators the flexibility to settle on any tactics they please.

FCC Chairman Kevin Martin has indicated he is leaning toward a "numbers-based" approach, in which anyone with a phone number would pay into the fund. The National Cable and Telecommunications Association, and the VON Coalition, which represents VoIP interests, also support that approach.

"Simply to say that broadband as broadband, whatever that might be, has to pay into USF would be an error, but the telephone service portion of that certainly should pay into USF," Tom Simmons, vice president of public policy for Midcontinent Communications, a small South Dakota-based cable company, told the senators.

Paul Garnett, assistant vice president of regulatory affairs for the Cellular Telecommunications Industry Association, countered that a numbers-based approach would be unfair. He said the cell phone industry, which already pays into the fund, thinks broadband providers should also have to pay a fee for each active connection--what it calls a "capacity-based" approach.

Though all the senators at Tuesday's hearing clearly agreed on the need for USF reform, their priorities differed. For instance, Jim DeMint, a South Carolina senator who has introduced a broadly deregulatory proposal advocated phasing out USF handouts entirely in certain areas where new broadband technology is actually less inexpensive to deploy than its telecommunications predecessors.

"As we look for fairer ways to spread the cost out," he said, "I think we need some ideas on how we can move areas away from subsidization and move into competition."

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14 comments

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Alaska is such a welfare queen
It gets the most federal assistance of any state, per capita.
Alaskans are welfare queens. Maybe we should <a href="#">sell it back to Russia</a>.
Posted by chassoto--2008 (71 comments )
Reply Link Flag
One way or another the politicians will get your money
They'll use whatever excuse they can think of.
Posted by bobby_brady (765 comments )
Reply Link Flag
He's the "bridge to nowhere" guy...
See this editorial for a nice summary of what our dear Senator Ted Stevens is all about.
Posted by 206538395198018178908092208948 (141 comments )
Reply Link Flag
Here's the link:
<a class="jive-link-external" href="http://www.washingtonpost.com/wp-dyn/content/article/2005/10/22/AR2005102201040.html" target="_newWindow">http://www.washingtonpost.com/wp-dyn/content/article/2005/10/22/AR2005102201040.html</a>
Posted by 206538395198018178908092208948 (141 comments )
Link Flag
They need to be careful with definitions.
"Stevens, for one, said he thinks all "communications" services, which he defined for reporters after the hearing as "transmitting knowledge from one person to another," should be forced to pay into the USF. "I believe fax is a communication, I think e-mail is a communication, and I do believe they all should contribute," he said."

With a definition that broad you could, in theory, include television, radio, CB radio, two cans and a string, etc. I think Stevens needs to have his head checked to make sure his last marble hasn't fallen out.
Posted by Wyndle (4 comments )
Reply Link Flag
subsidies dont work
USF - to provide services which are more expensive in rural areas? Maybe the rural guys should pay one URF for maintaining roads in the cities and pay another UHF for maintaining health for city dwellers because it is more expensive to do so in the cities.
I am pretty sure the senators propose such bills due to lobbying by the telecom companies.
Posted by tapaskm (10 comments )
Reply Link Flag
Here we Go AGAIN!!!!!
Unbelievable.. once again politicians want to TAX .... and TAX and TAX the Internet... ENOUGH is ENOUGH!!!!
Posted by Soldado_de_Amor (3 comments )
Reply Link Flag
Here they come
Politicians are finally getting their way
TAXING THE INTERNET.
Come on people. Don't buy it for a second that it's intended to finance access in rural areas or whatever. This is the ticket in they want to start taxing the internet in the same manner everything else gets taxed in the real world. Think about it. We're taxed on every little thing we do, buy, and eat. The internet has been the untouched child. Not anymore.

Shameless.
Posted by Dead Soulman (245 comments )
Reply Link Flag
BINGO - On the money
Just my opinion but you got it all the way. The internet is just another source of income for them. They are trying to reign in something they view as having no control over (so that makes it SCAREY), eh?
Posted by TelecomLady (2 comments )
Link Flag
your house, your choice, your bill
You move to the middle of nowhere, and we're supposed to contribute to your internet bill? And broadband at that? How about you get dial-up and use it on top of those phone lines we bought you.
Posted by suziequeue666 (2 comments )
Reply Link Flag
45 min from the capital on NY State, NO BB
of any sort available. Obviously you people are a bunch of snobs. Subsidies do work. Albeit not efficiently. But then again its you snobs that have broad band living in major rural and urban areas like Albany NY that administers these programs isnt it.

Time Warner will not bring road runner through my street unless it has a density of 25 houses per mile. Thats what they tell me. But my street does not have million dollar houses on it. Not two miles from me there is a street with half million and up houses and there are only 8 in a mile yet they have broadband. Hmmmm.

It took two minutes for the CNet page to load. It took me fifteen minutes to read your arrogant replies.
Posted by gfsdfge (130 comments )
Reply Link Flag
Oh, and obviously paying for cellular wi-fi is not ok.
You don't have cable modem. So you won't pay for cellular wi-fi. Why? Cause it cause YOU money. You'd rather everyone ELSE pays for YOU.

Parasite.
Posted by kamwmail-cnet1 (292 comments )
Link Flag
Just a thought for you
I don't believe any one is trying to be 'snobbish' and some of them do have a point. It is something to consider before purchasing or renting a home. One cannot assume that services other than a telephone will be available in all areas.

You say that 2 miles away from you is a street that has broadband, yet they do not have the appropriate number of houses on the street. Well, cabling has signal limitations (in feet) and repeaters cost money too. Could be they are at the end of the line and the company figured they might as well run the cable.

I feel your pain as I live in an area that does not offer broadband, but I knowingly made this choice. I would suggest that you invest in satellite broadband. It is pricey at $600 just for equipment and install, but if you have your heart set on faster net speeds, it may be worth it to you.

Good luck.
Posted by TelecomLady (2 comments )
Link Flag
1.5 hours from San Francisco, DIY Broadband
I hear you. We had to put in our own system
using wireless and directional antennas in order
to get broadband. The alternative was to wait
a _very_ long time for the monopolies to come out.

Much of the original equipment was recycled from
a dead dot-com, so I can't actually suggest that
this is practical for everyone. . .
The fact is that current technology is pretty good
for suburbs and high-density areas, but falls down
badly in semi-rural areas. (We're right around
25 houses per mile.)

I think that the real solution to low-density
broadband is a hybrid system of power-line trunks
and wireless last-mile.
Posted by (139 comments )
Link Flag
 

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