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Dear Reader:

We wanted to let you know that, after nearly three years of operation on the World Wide Web, National Journal's Insider Update: The Telecom Act ceased publication as of January 1, 2008.

We took this step at a time when the National Journal Group is moving to increase technology coverage -- including reporting on telecommunications and broadcasting issues -- in several of its other publications. In particular, National Journal's CongressDaily -- our twice daily publication for Capitol Hill insiders -- will be adding staff in the coming weeks for this purpose.

CongressDaily will feature the kind of detailed coverage of telecom issues, both on Capitol Hill and at the Federal Communications Commission, that you are accustomed to seeing in Insider Update -- plus a lot more.

If you are interested in a trial subscription to CongressDaily, please call 800-424-2921 or e-mail us at memberships@nationaljournal.com. Thank you for your readership and support of Insider Update, and please don't hesitate to write to me at lpeck@nationaljournal.com if you have any questions or concerns.

With best regards,
Lou Peck Editor In Chief

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House Votes To Extend Internet Tax Ban

By David Hatch

(Tuesday, October 16) The U.S. House easily passed legislation to extend the federal moratorium on Internet access taxes by four years. The vote was 405-2.

The measure, H.R. 3678, would bar states and localities from imposing such fees until Nov. 1, 2011. The dissenting votes were cast by Democratic Rep. Anna Eshoo of California, who authored a bill, H.R. 743, for a permanent ban, and Republican Rep. Michael Turner of Ohio – who later said he had voted “no” in error, and had meant to support the bill.

The chamber acted as the Nov. 1 expiration of the ban fast approaches. The bill was passed despite grumbling by members who back a permanent fix that Democratic leaders limited debate and barred amendments.

House Speaker Nancy Pelosi, D-Calif., hailed the vote, saying in a statement that it would "promote innovation, affordable Internet access, and broadband services for American consumers and businesses." She urged the Senate to pass the measure by Nov. 1.

But on the House floor, Eshoo was highly critical. "I'm very disappointed with what the Judiciary Committee came out with," she said, emphasizing that few bills garner as much support as hers, which has 238 co-sponsors.

North Carolina Democratic Rep. Mel Watt, who backs a four-year extension, said the Senate has warned that a permanent ban is dead on arrival. "The last time I checked, the definition of politics was the art of compromise," he said. "We are doing what is necessary to move a bill."

A temporary continuation would let Congress revisit the ban and make necessary changes, he said. "Every time we think we know the outer limits of the Internet," someone comes along with a new technology, he added.

Virginia Republican Rep. Bob Goodlatte, who co-chairs the Congressional Internet Caucus and supports a permanent fix, accused Democrats of "suppressing" the will of Congress. "Party politics have trumped good policy in bringing this legislation to the floor,” he declared.

Telecommunications companies and online retailers officially support a durable solution but have endorsed the House bill to secure relief before the prohibition expires. The Business Software Alliance, National Association of Counties and National Cable and Telecommunications Association all sent letters to Congress backing a four-year moratorium.

Industry and congressional sources expect the Senate to consider a temporary extension as well, though some companies are urging the upper chamber to surpass the House-adopted timeframe. "This makes it even harder to get a permanent ban," said David Kaut, a telecom analyst at the investment firm Stifel Nicolaus, adding that four-to-six years is now more likely.

Sources said Senate Majority Leader Harry Reid, D-Nev., might broker a deal to move the House-passed bill, possibly in a revised form, directly to the floor. A vote before the Senate Commerce Committee on related legislation is considered less likely, especially since the panel recently canceled a debate over a six-year ban.

The wireless association CTIA, Don't Tax Our Web coalition, Telecommunication Industry Association and U.S. Telecom Association were pleased by the House vote.

But Nevada Republican Sen. John Ensign expressed disappointment. "Americans should know that a majority of Congress, including Democrats and Republicans, are fighting to make this permanent," he said in a statement.

At a press briefing, Republican senators accused Democrats of seeking to stifle debate on a permanent exemption. "All we want is an opportunity to debate and vote on the issue," said Republican Sen. John Sununu of New Hampshire.


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