Sen. John Sununu announced on Friday long-awaited Internet phone legislation that would effectively eliminate state and local authorities' ability to tax and regulate broadband phone calls.

The bill, which is expected to draw fire from state governments, says all authority over regulating VoIP (voice over Internet Protocol) services is "reserved solely to the federal government."

The measure, VoIP Regulatory Freedom Act, also imposes some curbs on the Federal Communications Commission's ability to extend to VoIP much of the thick quilt of rules and requirements that govern the traditional phone network. For instance, it bans imposing certain "access charge" taxes, but does require the FCC to levy VoIP universal service fees that will be redirected to provided discounted analog phone service to low-income and rural Americans.

VoIP "is at a critical stage in its development, but its potential to serve consumers, business, and society is enormous," Sununu, R-N.H., said Friday. "Unfortunately, some interests would like to impose an outdated and stifling regulatory framework on this service, rather than allow VoIP to continue to expand freely."

A backlash from states is expected, according to Mike Hurst, legislative director for Rep. Chip Pickering, R-Miss., who introduced similar legislation in the House of Representatives on Monday.

"Of course they are going to be pissed," Hurst said.

Two representatives of the National Association of Regulatory Utility Commissioners (NARUC) did not return calls for comment. NARUC has battled earlier attempts to limit state authority over the broadband phone industry.

The legislation is another attempt by federal policymakers to claim lone responsibility for regulating VoIP calls. The FCC wants a light hand to foster the young industry, while states and cities fear that as more calls make their way onto the unregulated Internet, they'll have less taxes to collect to support 911 and other public services.

Federal regulators began proceedings weeks ago to answer many of the same questions posed in the congressional legislation.

Sununu's proposal also addresses the controversial issue of VoIP wiretapping, saying that VoIP companies that provide links to the existing telephone network--a category that would include Vonage, for instance--must provide some "access to necessary information to law enforcement agencies." But the access requirement, a key concern of the FBI, would not apply to instant messaging applications or peer-to-peer services like Skype.

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