House subcommittee votes to ban Internet fees

In a surprise move, a House subcommittee late last night voted to bar federal regulators from forcing telecommunications companies to pay fees on Internet traffic, including voice services.

The move came in the form of an amendment to a bill eliminating the fees Bell companies pay to competitors when transporting calls to Internet service providers. Lobbyists for the competitive phone companies--and members of the House Telecommunications Subcommittee on both sides of the aisle--had raised fears that eliminating that fee would lead to Internet service providers raising their rates for consumers.

The bill to which the amendment is attached, which moved forward on a voice vote, has only a slim chance of becoming law in the waning days of this Congress. Still, a ban on fees would be a significant step by Congress to ensure that the decades-old regulatory structure that oversees other forms of communication, such as traditional phone service, would not be carried to the Internet.

Net taxation

The amendment could have ramifications beyond the Net, according to one subcommittee member. It "would deny the Federal Communications Commission the opportunity to impose fees on Internet telephony to support the Universal Service Fund," which ensures rural phone access, Rep. Rick Boucher, D-Va., said in an interview.

Boucher said the amendment is unnecessary. "There's no risk of a blanket transfer of legacy regulations" by the FCC to the Internet, he said.

The move came in the form of an amendment to a bill eliminating the fees Bell companies pay to competitors when transporting calls to Internet service providers. Lobbyists for the competitive phone companies--and members of the House Telecommunications Subcommittee on both sides of the aisle--had raised fears that eliminating that fee would lead to Internet service providers raising their rates for consumers.

However, the bill's sponsor, subcommittee chairman Rep. Billy Tauzin, R-La., added language calling for a General Accounting Office study after the bill goes into effect. If the GAO finds Internet fees are rising, the FCC is to develop a new method to compensate competitive carriers that is competitively neutral.

Boucher had concerns with the amendment, which was introduced late in the evening after a long debate with no advance notice to members. He said the problem it addresses, potential fees on Internet telephony, "are three to four years away...There's a right time to decide what remedy" can be used to ensure the continuation of universal service.

When Congress does wrestle with universal service down the road, Boucher said that this provision, if it does become law, could be repealed or modified.

The House has been wrestling with the issue of Internet fees for the past year, driven in part by an email hoax that suggested a nonexistent congressman was going to impose per-minute charges on Internet access.

A bill cleared the House earlier this year barring per-minute charges, although the Senate has yet to vote on it. But the amendment approved yesterday is far more sweeping in that it bars regulators from applying charges to all Internet traffic, including phone services.

The amendment was sponsored by a Republican, Rep. Christopher Cox of California, but the subcommittee's highest-ranking Democrat, Rep. Ed Markey of Massachusetts, has introduced similar amendments in the past. It's expected that if Cox's amendment fails to become law, either of them could reintroduce such an amendment in future debates.

With less than three weeks left in this Congress, the overall bill awaits a vote in the full House Commerce Committee. However, the debate and votes last night suggested a serious division among Republicans as to whether it's wise to move forward with a bill so close to the elections that some say could raise Internet rates.

Christina Gungoll, a spokeswoman for Rep. Tom Bliley, R-Va., the committee chairman, said it wasn't clear when he would schedule a vote.

Tauzin has said he'd be happy to attach his bill to another piece of legislation, such as a mandatory spending bill.