Taxation of Internet

Theodore H Mann thmann at juno.com
Tue Mar 30 19:09:18 EST 1999


There has recently been some discussion about government efforts to
require fees or charges from internet users.  I received the following
comments from Congressman Don Young, and thought they might be of general
interest to members of the B-Greek and Corpus-Paul lists.

Dr. Theodore "Ted" Mann
Orchard Lake, Michigan
thmann at juno.com


On Tue, 30 Mar 1999 17:06:51 -0500 "Young, Don (Public Opinion)"
<Don.Young at mail.house.gov> writes:
>Thank you for contacting my office to express your opposition to any 
>new
>fees or charges on consumer access to Internet Service Providers 
>(ISPs).  I
>appreciate hearing from you.
>
>Let me clarify what is actually taking place at the Federal 
>Communications
>Commission (FCC) and within the U.S. House of Representatives with 
>regard to
>Internet fees and charges.  First of all there is no legislation in 
>the
>House of Representatives to assess usage charges on the Internet.  
>Secondly,
>the FCC has no intention of assessing per-minute charges on Internet 
>traffic
>or of making any changes in the way consumers obtain and pay for 
>access to
>the Internet.  However, a dispute has arisen in the telephone industry 
>over
>whether local calls to Internet Service Providers (ISP) are subject 
>to
>reciprocal compensation, and this is an issue the FCC is considering. 
>
>
>Some background information may be helpful to you.  The FCC had a 
>proceeding
>before it regarding carrier-to-carrier payments called "reciprocal
>compensation" and whether or not dial-up calls to the Internet are
>interstate calls and subject to federal jurisdiction.  Reciprocal 
>payments
>compensate a local telephone company for completing a local call that 
>is
>placed by one of its competitors customers.  For example, if a 
>customer of
>Phone Company A makes a local call to a phone customer of Phone 
>Company B,
>Phone Company A must compensate Phone Company B for handling the last 
>leg of
>the call.  The payment is based upon negotiations between the two 
>companies
>or on a decision of the state regulatory authority.  Thus the issue 
>is
>payment from one company to another, not between the company and the
>customer.  Using the same example for Internet traffic, if the 
>consumer
>dials up the Internet over the phone lines of Company A, and the ISP 
>is
>served by Company B, the question is whether A must compensate B for
>completing the local portion of the call.
>
>Recently, the FCC determined that since a substantial portion of 
>Internet
>traffic is interstate it is therefore subject to federal jurisdiction 
>but
>preserved the rule exempting the Internet from interstate access 
>charges,
>fees long distance carriers pay to the local carriers to complete 
>calls.
>The FCC also stated that the jurisdictional decision does not 
>determine
>whether calls to ISPs are subject to reciprocal compensation.  It has 
>noted
>that telephone companies may have existing contracts or agreements
>indicating that ISP-bound traffic should be subject to reciprocal
>compensation.  Further, a state commission, exercising its authority, 
>may
>have imposed reciprocal compensations for this traffic.  In either 
>case,
>telephone companies are bound to their existing interconnection 
>contracts as
>interpreted by state commission.
>
>However, petitions for court review have been filed in response to the 
>FCC
>decision determining that Internet traffic is interstate.  Local 
>phone
>companies want the FCC to overturn reciprocal compensation rulings by 
>the
>state regulatory agencies.  They contend that if Internet traffic is 
>indeed
>under federal jurisdiction then state regulatory commissions should 
>not be
>able to require reciprocal compensation, which is a state issue.  This 
>will
>be another issued to be resolved in the future.
>
>Consumers are concerned that regardless of any decision or judgment, 
>their
>local telephone rates will still increase as a result of reciprocal
>compensation for Internet traffic.  It is assumed that increased 
>business
>costs will naturally be passed on to the consumer.  You will be 
>interested
>to know that only the state regulatory commission can allow an 
>increase in
>the local rate.  The telephone companies cannot raise rates without 
>approval
>from state regulators.
>
>Again, I appreciate hearing from you.  If you have any further 
>questions or
>comments about this or any other matter, please feel free to let me 
>know.
>Your thoughts and views are always welcome.
>
>
>Sincerely,
>
>DON YOUNG
>Congressman for all Alaska

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