By Alex Horvath
The thought of having to pay a tax or any kind of a increased charge for use of the Internet has a lot of people up in arms. If you listen closely, you can almost hear the angry sounds of a billion cranky computer techies throwing their PCs over the cliff! The situation is serious--and if you don't want increased Internet usage costs, it is wise to stay vigilant and to heed the warnings of the following real life situation.
In California, a case is actually being arbitrated by the state Public Utilities Commission that would allow Pacific Bell to charge private telecom companies for the calls made by the end-user (that would be you), through the telecom provider to the Internet Service Providers (ISP) equipment. That charge would then be passed by the ISP right back to the consumer (again, that would be you).
Frankly speaking, the generous folks at PacBell are asking the public utility commissioners to swallow the idea that when a person in Dogtown, California (for example), logs onto a Web site for news from Belgrade, Yugoslovia, that they are actually dialing into the beleaguered eastern European country. Think of it. Virtually any time you jump on the Internet, you could be paying trumped-up surcharges based on the location of the Web site you are visiting. This poses a very expensive potential for anyone using the Internet, and could increase the costs of conducting the business of e-commerce.
There is good news in the aforementioned case involving Pac-West Telecomm, Inc., a telecommunications provider based in Stockton, CA, and Pacific Bell. In an initial ruling (October 1998) the PUC said that calls to ISPs are not to be deemed long-distance calls, no matter where the origin of the Web site the end user visits, and therefore should not be charged the increased rates. There is also bad newsóPacific Bell appealed the ruling, and the case is slated to go before the PUC again. Meanwhile, says Pac-West CFO Rick Bryson, PacBell is withholding over $58 million in account receivables that is due to Pac-West, a company with 169 employees, until the case is finally arbitrated.
PacBell's efforts may put to test the newly enacted Internet Tax Freedom Act (ITFA), which was signed into law back in October. That law, which was designed largely to be a protector of the burgeoning e-commerce industry, signaled the start of a three-year moratorium on taxes or tariffs being imposed on Internet commerce. Presently, only 35 of the states are exempt from having extra Internet access charges because the ITFA also carried a grandfather clause for states who were already collecting tax revenue. (Politics - ugh!) But a spokesman from the office of Rep. Christopher Cox (R-California), the congressman who cosponsored the bill, said that it would be "highly unlikely" for any new laws contrary to the ITFA to pass óespecially "given the mood of congress after having just passed the ITFA."
"If we lose, and this happens, it won't be a jump of only fifty-cents per user," Bryson said. "It will be more like $3 to $4 additionally per user a month." Attorneys in the case place the dollar amount higher, with five hours a week on the Internet jumping to around $39. The complicated issue centers on telecom-industry agreements for payments to each other, terminal completion charges, and the question of where it is that a call actually originates and terminates. For further information about this case, contact the California Public Utilities Commission at (415) 703-2782. For information about the Internet Tax Freedom Act, you can contact the office of Representative Christopher Cox at (202) 225-5611, or by e-mail: christopher.cox@mail.house.gov.
