Sen. Allen (R-Va.) introduced legislation Mon. that would ban application of the federal excise tax (FET) to Internet access. He led Senate efforts last year to pass the temporary Internet tax moratorium, and reemphasized Mon. his commitment to keeping taxes off the Internet. Allen said he would push this session to make the Internet tax moratorium permanent. “It’s important to stake a flag in the ground,” said Allen: “This hill [the Internet] is going to stay tax free.”

Sen. Allen (R-Va.) introduced legislation Mon. that would ban application of the federal excise tax (FET) to Internet access. He led Senate efforts last year to pass the temporary Internet tax moratorium, and reemphasized Mon. his commitment to keeping taxes off the Internet. Allen said he would push this session to make the Internet tax moratorium permanent. “It’s important to stake a flag in the ground,” said Allen: “This hill [the Internet] is going to stay tax free.”

Qwest asked the Neb. PSC to reconsider a March decision requiring facilities-based VoIP providers to pay a state universal service fund contribution on the intrastate portion of their services. Qwest said the PSC order conflicts with federal and state law. It also challenged a PSC finding that Vonage isn’t a facilities- based VoIP provider while Qwest is one. Qwest said the FCC has preempted all state regulation of IP-enabled services like VoIP. Qwest (Case NUSF-40/PI-86) argued that VoIP is an information service, not telecom, and so entirely outside PSC jurisdiction. Qwest said the PSC followed a tortured line of logic in exempting Vonage-type VoIP providers as not facilities-based. The PSC in its order last month had said the FCC hasn’t specifically exempted VoIP from state universal service assessments and surcharges can be levied based on separate prices for the information and telecom components of VoIP service. The PSC said the intrastate portion of VoIP service can be based on actual call data or the FCC’s default safe-harbor allocation.

The Senate Commerce Committee listed witnesses for today’s (Mon.) hearing on Sen. Snowe’s (R-Me.) bill to exempt the Universal Service Fund from sections of the Anti-Deficiency Act. The hearing has been moved to Rm. 253 Russell Bldg. at 2 p.m. Witnesses include: Austin Schlick, FCC Wireline Bureau acting gen. counsel; Lisa Gelb, Wireline Bureau deputy bureau chief; Brian Talbott, Universal Service Administrative Co. chmn.; Patricia Dalton, Govt. Accountability Office managing dir.-physical infrastructure issues; Sheryl Abshire, Calcasieu Parish Public Schools district administrative coordinator- technology; Steve Hamlen, United Utilities CEO.

Bell companies and competitive carriers urged the FCC to deny an AT&T request for stay of the prepaid calling card order pending an appeal filed in U.S. Appeals Court, D.C. The stay would delay AT&T payment of past-due contributions to the universal service fund (USF)and bar phone companies from suing AT&T for unpaid access charges. AT&T has offered to post a letter of credit to secure more than $150 million in USF payments due this month if the stay is granted; opponents said that won’t stop immediate harm to the USF from AT&T’s nonpayment. The FCC’s order (CD Feb 24 p1) told AT&T to pay universal service contributions and access charges retroactively, though carriers would have to sue to get the access payments. AT&T withheld regulatory payments based on revenue from its prepaid calling card service, arguing that it is an exempt interstate information service.

SAN FRANCISCO -- Prominent state regulators with a deregulatory bent pushed at the NCTA convention here for “cooperative federalism,” in which Washington sets most of the few rules on communications services, and states play a strong role in enforcing them, especially consumer issues. Outnumbered on a panel Mon., an Ia. regulator said he agonized over the fates of his state’s many tiny incumbent carriers and their customers in a world with much less protection and subsidy.

The Senate Commerce Committee announced Mon. it would hold a hearing on S-241 -- a bill by Sen. Snowe (R-Me.) to exempt the Universal Service Fund from the Anti-Deficiency Act -- on Mon., April 11. Senate Commerce Committee Chmn. Stevens (R-Alaska) and ranking Democrat Inouye (D-Hawaii) back the measure. The full Committee hearing is set for 2 p.m. in Rm. 385 Russell Bldg.

NTCA’s Foundation for Rural Service (FRS) on Mon. unveiled an “educational paper” supporting the Universal Service Fund (USF). FRS presented the paper Mon. during a luncheon on Capitol Hill. Speakers emphasized USF’s importance and how changes to USF have bolstered the program’s scope and size. The paper, “One Nation Indivisible: The Case for Universal Service and Rural Connection in the Broadband Age,” explained USF to the audience of mostly young Hill staffers. The paper, and speakers, asked if the USF fund and the Telecom Act’s goals for competition were compatible. “Is true compatibility possible between universal service and competition in the rural areas served by community based telecom providers?” the paper asked. “Industry experience since the passage of the 1996 Telecommunications Act suggests that success in achieving these divergent policy objectives is illusory, at best. It remains essential that consideration be given to the economics of rural markets, where it is ‘costly’ for one network to serve but ‘doubly costly’ for two.” Speakers said changes in access charge regulations have caused a rise in the USF. The Interstate Common Line Support (ICLS) mechanism, which lets long-distance providers use USF to cover interstate common carrier line access charges, now accounts for nearly 40% of USF funding. Douglas Meredith, dir.- economics & policy for John Staurulakis, Inc., said the policy change has helped fuel USF growth, leading some on Capitol Hill to suggest slashing the program. House Commerce Committee Chmn. Barton (R-Tex.) recently questioned USF’s relevance in light of high telephone connection rates in the U.S.

Congress returns tomorrow (Tues.) after a 2-week recess, but communication issues seem destined to wait at least another week to be addressed. Despite talk of hearings by several committees, none are set for this week. Universal Service Fund, telecom mergers, and IP- enabled video are all topics sources said would likely be subjects of Hill hearings in coming weeks. Industry and Senate sources said the Senate Commerce Committee seemed ready to begin holding hearings on telecom issues. And new FCC Chmn. Martin could make his official Hill debut soon.

PBS and Comcast today (Mon.) will announce the launch of PBS Kids Sprout, a children’s channel and video-on- demand (VoD) service tying the PBS logo for the first time to a fully commercial venture. The move unsettles some public broadcasters because of its likely impact on federal funding, but PBS defended it as an example of the public-private partnerships lawmakers on Capitol Hill have been espousing.