[House Report 106-615]
[From the U.S. Government Publishing Office]
106th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 106-615
======================================================================
INTERNET ACCESS CHARGE PROHIBITION ACT OF 2000
_______
May 12, 2000.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Bliley, from the Committee on Commerce, submitted the following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany H.R. 1291]
[Including cost estimate of the Congressional Budget Office]
The Committee on Commerce, to whom was referred the bill
(H.R. 1291) to prohibit the imposition of access charges on
Internet service providers, and for other purposes, having
considered the same, report favorably thereon with an amendment
and recommend that the bill as amended do pass.
CONTENTS
Page
Amendment........................................................ 2
Purpose and Summary.............................................. 2
Background and Need for Legislation.............................. 2
Hearings......................................................... 3
Committee Consideration.......................................... 4
Committee Votes.................................................. 4
Committee Oversight Findings..................................... 6
Committee on Government Reform Oversight Findings................ 6
New Budget Authority, Entitlement Authority, and Tax Expenditures 6
Committee Cost Estimate.......................................... 6
Congressional Budget Office Estimate............................. 6
Federal Mandates Statement....................................... 7
Advisory Committee Statement..................................... 8
Constitutional Authority Statement............................... 8
Applicability to Legislative Branch.............................. 8
Section-by-Section Analysis of the Legislation................... 8
Changes in Existing Law Made by the Bill, as Reported............ 8
Additional Views................................................. 10
Amendment
The amendment is as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Internet Access Charge Prohibition Act
of 2000''.
SEC. 2. PROHIBITION OF CHARGES ON PROVIDERS OF INTERNET ACCESS SERVICE.
Section 254 of the Communications Act of 1934 (47 U.S.C. 254) is
amended by adding at the end the following new subsection:
``(l) Prohibition of Charges on Internet Service Providers.--
``(1) In general.--Notwithstanding subsection (b)(4) or (d)
or any other provision of this title, the Commission shall not
impose on any provider of Internet access service (as such term
is defined in section 231(e)) any contribution for the support
of universal service that is based on a measure of the time
that telecommunications services are used in the provision of
such Internet access service.
``(2) Rule of construction.--Nothing in this subsection shall
preclude the Commission from imposing access charges on the
providers of Internet telephone services, irrespective of the
type of customer premises equipment used in connection with
such services.''.
Purpose and Summary
H.R. 1291, the Internet Access Charge Prohibition Act of
2000, will preclude the Federal Communications Commission (FCC)
from imposing on providers of Internet access service per-
minute charges that are intended to support universal service.
Background and Need for Legislation
The FCC's interstate access charge regime was established
in 1983 to require long distance carriers (e.g., AT&T,
Worldcom) to compensate local exchange carriers (e.g., Bell
Atlantic, SBC, GTE) for the cost of originating and terminating
long distance telephone calls, as well as to provide support
for universal telephone service in high-cost and rural areas.
Thus, when a consumer makes a long distance telephone call, a
long distance carrier pays a per-minute usage fee (in addition
to other per-line fees) to the local exchange carrier that
originates and terminates the long distance call. These per-
minute and per-line fees are more commonly known as ``access
charges.'' Under current FCC rules governing per-minute access
charges, long distance carriers, and ultimately their
consumers, pay local exchange carriers roughly 2.4 cents for
each minute of long distance service.
At the same time it established its access charge regime in
1983, the FCC specifically exempted information service
providers from having to pay interstate access charges. The
term ``information service provider'' (which the FCC
historically referred to as ``enhanced service providers'')
covers a broad range of non-telecommunications service
providers, including Internet service providers (ISPs) like
America Online and Mindspring. Accordingly, when a consumer
logs on to the Internet via a local call to an ISP, the ISP and
its subscribers do not pay the per-minute access charges that a
consumer of long distance services would have to pay,
irrespective of whether the consumer surfs Web sites in distant
locations. The FCC based its decision on the fact that the
information services industry was in its infancy as of 1983.
Moreover, the FCC was concerned that, if required to pay per-
minute access charges, ISPs would inflict ``rate shock'' on
their subscribers; consumers tend to stay on-line an average of
45 minutes, whereas the average telephone call lasts roughly
five minutes.
In recent years, however, the FCC's exemption for
information service providers has been the subject of much
debate and litigation. Some in the local exchange carrier (LEC)
industry have argued that the rationale for the FCC's exemption
no longer makes sense, given that many ISPs are larger in terms
of market capitalization than many telecommunications service
providers that still must pay per-minute access charges. In
addition, some LECs argue that many information service
providers (and ISPs, in particular) place a substantial burden
on the public telephone network, and as such, these ISPs and
their consumers should be required to contribute to the
network's maintenance.
The information services industry counters that it
contributes to the growth and modernization of the telephone
network by virtue of the growing residential and business
demand for additional telephone lines that are dedicated for
access to the Internet. Moreover, the industry insists that its
members directly contribute to the maintenance of the network
by paying the same charges as similarly situated end-users
(e.g., the subscriber line charge (SLC), the business line
tariff, andwhere, applicable, a private-line interconnection
charge). The industry notes that a portion of these payments flow
through the local exchange carrier to the Universal Service Fund. The
industry also points out that the current exemption enables ISPs to
continue charging consumers flat-rate monthly fees for access to the
Internet (compared to long distance service, which is based on minutes
of use).
The ongoing debate about the extent to which information
service providers should be required to support universal
service, in addition to the extent to which they should pay for
the cost of accessing the public switched telephone network,
raises a number of complex issues that the Committee has yet to
explore and develop a more complete record. Therefore, at this
point in time, the Committee seeks to codify the FCC's access
charge exemption, to the extent per-minute access charges are
assessed for the purpose of supporting universal service.
Moreover, the codified exemption applies only to providers of
Internet access service, as that term is defined in section
231(e)(4) of the Communications Act of 1934 (47 U.S.C.
Sec. 231(e)(4)).
Hearings
The Subcommittee on Telecommunications, Trade, and Consumer
Protection held two hearings that relate to H.R. 1291. On April
6, 2000, the Subcommittee held an oversight hearing to receive
a summary of the report of the Advisory Commission on
Electronic Commerce. The Subcommittee received testimony from
the Honorable James Gilmore, the Governor of the Commonwealth
of Virginia, and Chairman of the Advisory Commission on
Electronic Commerce.
On Wednesday, May 3, 2000, the Subcommittee also held a
legislative hearing on H.R. 1291, as well as H.R. 4202, the
Internet Services Promotion (ISP) Act of 2000. The Subcommittee
heard testimony from two panels of witnesses. Panel I consisted
of only Congressman Fred Upton (R-MI), the sponsor of H.R.
1291. Panel II included: Mr. Peter Lowy, co-President,
Westfield-America, Inc. (on behalf of the e-Fairness
Coalition); Mr. Harris N. Miller, President, Information
Technology Association of America (ITAA); Mr. Grover Norquist,
President, Americans for Tax Reform (ATR); and Mr. Leroy Grey,
RAVEN-Villages Internet.
Committee Consideration
On May 10, 2000, the Subcommittee on Telecommunications,
Trade, and Consumer Protection was discharged from the further
consideration of H.R. 1291 by unanimous consent. The Committee
ordered H.R. 1291 reported, with an amendment, by a voice vote.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House requires
the Committee to list the record votes on the motion to report
legislation and amendments thereto. A motion by Mr. Bliley to
order H.R. 1291 reported to the House, with an amendment, was
agreed to by a voice vote. A motion to table the bill by Mr.
Deutsch was not agreed to by a voice vote.
The following amendment was agreed to by voice vote:
An amendment in the nature of a substitute by Mr.
Upton, #1, precluding the FCC from imposing on
providers of Internet access service any per-minute
charges intended for universal service support.
The following amendment was withdrawn by unanimous consent:
An amendment to the amendment in the nature of a
substitute by Mr. Stearns, #1a, establishing an
Advisory Commission to examine state and local taxation
of telecommunications services.
The Committee took a record vote on the following
amendment. The names of Members voting for and against follow:
An amendment to the amendment in the nature of a
substitute by Mr. Markey, #1b, clarifying that the FCC
is precluded from imposing per-minute charges on
Internet telephony services.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee held legislative and
oversight hearing and made findings that are reflected in this
report.
Committee on Government Reform Oversight Findings
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, no oversight findings have been
submitted to the Committee by the Committee on Government
Reform.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee finds that H.R.
1291, The Internet Access Charge Prohibition Act of 2000, would
result in no new or increased budget authority, entitlement
authority, or tax expenditures or revenues.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, May 11, 2000.
Hon. Tom Bliley,
Chairman, Committee on Commerce,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1291, the Internet
Access Charge Prohibitions Act of 2000.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Mark Hadley.
Sincerely,
Barry B. Anderson.
(For Dan L. Crippen, Director).
H.R. 1291--Internet Access Charge Prohibition Act of 2000
Summary: H.R. 1291 would prohibit the Federal
Communications Commission (FCC) from collecting fees from
Internet service providers to finance the Universal Service
Fund that are based on the length of time that the Internet
access service is provided. Currently, the FCC does not charge
any such fees and has no plans to do so. Internet service
providers carry data transmissions of their customers, and such
data may be used to provide telephone services. H.R. 1291 would
allow the FCC to charge Internet service providers for the
Universal Service Fund only when they provide telephone
services.
Certain charges imposed on telecommunications services
either by states or the federal government under the
Telecommunications Act of 1996 to support universal service are
recorded in the federal budget. (Universal service is a program
intended to promote the availability of telecommunications
services at affordable rates.) Because H.R. 1291 could affect
direct spending and receipts, pay-as-you-go procedures would
apply, but CBO estimates that any such effects would be
negligible. H.R. 1291 contains no private-sector or
intergovernmental mandates as defined in the Unfunded Mandates
Reform Act (UMRA) and would impose no costs on state, local, or
tribal governments.
Estimated cost to the Federal Government: Under the
Universal Service Fund established by the Telecommunications
Act of 1996, the FCC seeks to provide universal access to
telecommunications services through various charges to some
telephone companies and payments to others. The 1996 act also
permits states to establish additional collections and payments
to preserve and advance universal service, so long as these
mechanisms are not inconsistent with federal law.
The Universal Service Fund records these transactions in
the federal budget as governmental receipts and direct
spending. To the extent that the FCC or states would choose to
support universal service through charges on Internet service
providers based on the time such services are used, H.R. 1291
could result in forgoing revenues and direct spending. The FCC
does not charge any such fees and has no plans to do so. H.R.
1291 would allow the FCC to charge Internet service providers
when customers' data transmissions are used to support
telephone services; therefore, CBO estimates that any change in
revenues and direct spending as a result of this legislation
would be negligible.
The costs of this legislation fall within budget function
370 (commerce and housing credit).
Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act sets up pay-as-you-go procedures
for legislation affecting direct spending and receipts. As
noted above, H.R. 1291 could affect direct spending and
receipts, but CBO estimates that any such effects would be
negligible.
Intergovernmental and private-sector impact: H.R. 1291
contains no private-sector or intergovernmental mandates as
defined in UMRA and would impose no costs on state, local, or
tribal governments.
Estimate prepared by: Federal costs: Mark Hadley; revenues:
Hester Grippando; impact on State, local, and tribal
governments: Shelley Finlayson; impact on the private sector:
Jean Wooster.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
Constitutional authority for this legislation is provided in
Article I, section 8, clause 3, which grants Congress the power
to regulate commerce with foreign nations, among the several
States, and with the Indian tribes.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Section-by-Section Analysis of the Legislation
Section 1. Short title.
Section 1 of H.R. 1291 provides the bill's short title, the
``Internet Access Charge Prohibition Act of 2000.''
Section 2. Prohibition of charges on providers of Internet access
service
Section 2 of the bill amends section 254 of the
Communications Act of 1934 (47 U.S.C. Sec. 254) to preclude the
FCC from imposing on any provider of Internet access service
(as such term is defined in section 231(e)(4) of the Act) any
contribution for the support of universal service that is based
on a measure of the time that telecommunications services are
used in the provision of such Internet access service. Section
2 also contains a savings clause that makes clear that nothing
in H.R. 1291 precludes the FCC from imposing access charges on
the providers of Internet telephone services, irrespective of
the type of customer premises equipment used in connection with
such services.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (new matter is
printed in italic and existing law in which no change is
proposed is shown in roman):
SECTION 254 OF THE COMMUNICATIONS ACT OF 1934
SEC. 254. UNIVERSAL SERVICE.
(a) * * *
* * * * * * *
(l) Prohibition of Charges on Internet Service Providers.--
(1) In general.--Notwithstanding subsection (b)(4) or
(d) or any other provision of this title, the
Commission shall not impose on any provider of Internet
access service (as such term is defined in section
231(e)) any contribution for the support of universal
service that is based on a measure of the time that
telecommunications services are used in the provision
of such Internet access service.
(2) Rule of construction.--Nothing in this subsection
shall preclude the Commission from imposing access
charges on the providers of Internet telephone
services, irrespective of the type of customer premises
equipment used in connection with such services.
ADDITIONAL VIEWS
This legislation, H.R. 1291, is intended to make sure that
when an individual logs on to the Internet, he or she will not
be charged by the minute for the privilege of doing so. That is
a worthy goal, and I support it.
I am sure that few Congressional offices have escaped an
insidious e-mail campaign over the past year decrying
fictitious legislation that would purport to accomplish
precisely the opposite result of the bill we report today. I
only hope that passage of H.R. 1291 will finally extinguish
this ``cyber-myth'' once and for all.
I am not convinced, however, that mounting a massive
legislative counter-attack on a fictitious bill, introduced by
a make-believe Congressman, is the best use of this Committee's
time, or that of the House. Particularly when the substance of
this bogus bill--if it were actually introduced--is so contrary
to the public interest that it would have zero chance of
success in this Committee.
My puzzlement extends further to the speed with which the
Republican leadership wants this bill to go to the floor. They
apparently believe this bill is so important that we were asked
to dispense with regular order and bypass Subcommittee
consideration. I find it amazing that a phantom Congressman has
more success jump-starting the legislative process than those
of us elected by the people.
Certainly our constituents should know that Congress has no
intent of installing a meter on their use of the Internet, and
this legislation will alleviate their concern in that regard.
However, I am disappointed that the majority refuses to seize
the opportunity presented here to address a greater and more
genuine threat to consumer pocketbooks. That is, the real
possibility that burgeoning new Internet services, such as
Internet telephony, paging, web-based wireless services, and
countless others on the horizon may evade the responsibility of
contributing to support the Universal Service Fund--a fund
which ensures that all Americans have access to affordable
telephone service.
These services will continue to migrate from traditional
networks to the Internet and, unless we act, the Universal
Service Fund will be left to wither on the vine. Traditional
network service providers will be forced to raise prices
wherever they can, and that can only spell trouble when it
comes to local phone rates for all consumers, but particularly
those who live in rural areas and the working poor. Of course,
these are the same Americans who are stuck on the wrong side of
the ``digital divide'' and are least able to take advantage of
high-tech alternatives.
This Committee's approach to telecommunications policy has
always been consistent and straightforward: like services
should be treated in a like manner. We had the opportunity to
apply that philosophy here, and it would have been entirely
proper that we do so.
Unfortunately, in our haste to get legislation to the floor
that solves an imaginary problem, we squandered the opportunity
to address one that is all too real: the prices Americans will
pay for telecommunications services if today's disparate
regulatory treatment is permitted to continue. Whether a
service is offered via the Internet or through a traditional
network, the obligations attendant to it should be the same.
John D. Dingell.