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Will FCC Regulate Internet Phone Calls?

Posted by timothy on from the unctuous-rulemakers dept.

Ridgelift writes "The FCC will begin hearings on Monday December 1st to see if they will get involved in regulating calls placed over the internet. Since a federal court in Minnesota ruled a month ago that calls delivered over the Internet are not subject to state regulation, Qwest, Verizon and SBC have all announced their intention to deliver more calls over their data networks. "The stakes in the debate are huge. Federal and state governments could lose billions of dollars in revenue from regulatory fees if calls moved onto the Internet are no longer subject to the charges.""

26 of 261 comments (clear)

  1. What will they do? by ryanr · · Score: 5, Interesting

    Well, let's see... the Federal Government is in charge of deciding whether to regulate it... and the Federal Government stands to lose billions in revenue if they don't regulate it...

    Well, I'm sure they will do the right thing.

    1. Re:What will they do? by silentbozo · · Score: 5, Interesting

      This is an area where the big telephone companies stand to gain, one way or another. Right now, Qwest and other Baby Bells are pushing to go to VOIP, not because they want to, but because if they don't they're going to get their lunch eaten (much as they were forced to offer DSL to try and kill off their competition.) After all, by offering VOIP, they're cannabalizing local phone service, on which they make TONS of money.

      So why the big push? Well, if the Feds do nothing, they'll need to have a foot in this new market to compete, AND they can save all that money in connection costs for long distance. If the Feds regulate, then the Baby Bells are no worse off than they are now, but all the new VOIP startups get hobbled, big time.

      Several commentators have basically noted that the established teleco's are playing chicken with the Feds - either regulate and put us back on top of the game, or else we'll take all our local service (and your freebie tax revenues) and put it in this new area.

    2. Re:What will they do? by Zocalo · · Score: 5, Insightful
      I'd have to agree about the "what". That governments are going to try and "regulate" (AKA "tax") IP telephony is pretty much a forgone conclusion I think. What is more interesting to me is the question "how will they do it?"; do you tax the customer, the telco, or both?

      Taxing some telco that decides to shunt calls over its private data network, or even the Internet, is one thing, but how do you begin with taxing a IP telephony call made directly between two PCs? What if only one PC is in the US, and will it matter which one initiated the call? How do you even *start* with something like Skype?

      You could try to tax the telco and not the individual, but that is surely going to lead to a plethora of loopholes and tax dodges as the telcos shift costs onto their customers. You could try a flat rate "Internet tax", but that's going to create a firestorm in the voting classes, never a good idea if you care about re-election.

      Well, I'm sure they will not do the right thing.

      --
      UNIX? They're not even circumcised! Savages!
    3. Re:What will they do? by buffer-overflowed · · Score: 5, Interesting

      Umm, long distance is way cheaper than local from a distance versus distance standpoint. Access minutes are basically to suplement the increased costs of providing and maintaining the local loop So pushing traffic off the long-distance networks and onto the local networks (through pushing VOIP and DSL) will cause the ILECs to charge more (we've already gradually seen this happen, as local phone service increases in cost, while long distance decreases in cost [over say, a decade ago]). The ILECs are in a unique position to capitalize on this, but it's not going to get over the problem of the local loop. Some people say wireless will, but I doubt that.

      --
      The key to the enjoyment of pop music is to replace any instance of "love" with "C.H.U.D."
  2. FCC Trends by Metallic+Matty · · Score: 4, Insightful

    I would go out on a limb to say that the FCC would continue to try and not dabble in the internet's affairs.

    Besides which, this medium should be free from government regulation, revenue loss or not.

    1. Re:FCC Trends by kjs-esq · · Score: 5, Insightful

      I am inclined to agree with you that the FCC will decide to regulate it simply to insure that the individual states do not. If VoIP is considered a telecommunications service, it is subject to regulation by the individual state public utility commissions (PUCs). If, instead, the FCC reaffirms that it should be considered an informational service, it will remain as something the FCC will not dabble in and that the PUCs are expressly forbidden from dabbling in.

      This is one of those rare occasions where the decision by the FCC to get involved may actually be a good thing, because 50 sets of rules, with 50 sets of franchise fees, 50 PUCs providing oversight and 50 sets of state legislatures (or worse yet, individual municipalities like cable regulation) using the fees in place of tax increases would do *wonders* to innovation. Just look at the Minn. decision and the conniption they had about the number portability and the issue of customers from out of state having Minn. area codes. How long do you think number portability would last if each state tried to tax out-of-state users based upon in-state area codes?

      An express preemption by the FCC is the best chance VoIP has of surviving and thriving outside the grip of the incumbent telecommunication giants...

      Disclaimer: While I may be an attorney, this does not qualify as legal advice. I mean, what type of dope would you have to be to take legal advice off the Internet?

  3. Detecting internet phone calls by Karamchand · · Score: 5, Insightful

    How could one possibly even detect phone calls? It's not as simple as in the "old, analog" world where it's like there's a phone line, that means there're phone calls.
    An internet connection is used for many other tasks (be it web browsing or email or whatever) and one can certainly encrypt and/or hide phone calls so they aren't "visible" as phone calls anymore but just look like usual internet traffic.

    1. Re:Detecting internet phone calls by nodwick · · Score: 4, Informative
      How could one possibly even detect phone calls?
      They're not talking about PC-to-PC voip calls a la Skype, they're talking about regular phone calls carried over voip such as Vonage. The Detroit News has a good layman's summary of the regulation involved now. The highlight:
      Vonage typically pays the Bells or Bell rivals sharply reduced fees to carry data traffic at the other end of a call. Some of its calls are handed to long-distance companies, which pay traditional access fees. Similarly, AT&T has started carrying some long-distance calls over Internetlike VOIP networks and paying cut-rate fees to connect at the other end. In this case, the customer has no idea VOIP is involved.
      Although this approach lets them dodge many of the regulatory fees due to the internet being untaxed at the moment, they still have to hook into POTS for the local loop. If legislation goes through on taxing voip calls, it'll be relatively easy to meter the incoming calls at the POTS interface and tax accordingly.

      That still leaves open the possibility of pure voip to voip calls being undetectable (e.g. between different Vonage customers), but in the near term those sorts of calls are likely to still be in the minority.

    2. Re:Detecting internet phone calls by Jason+Pollock · · Score: 4, Informative

      If you want to talk to anyone other than your immediate friends, you will need to go through a directory service, and possibly some gateways. Once it crosses a network, it can be detected.

      Even better, there are a lot of police-driven requirements, such as call identification, tracing and intercept. Those WILL NOT be going away during the transition to VoIP. At the end of the day, if the government can't find any other way to do it, they'll force ISPs to put in VoIP proxies and regulate all of the VoIP carriers to route through them. Instant detection and billing. Heck, I wrote one for my last employer!

      ISPs already implement charging by destination (mine does) and HTTP port proxies. It isn't hard to go from there to per-port billing.

      Even better, SIP (unlike) H.323 tends to play nicer with proxies...

      Someone also mentioned routing through Canada. I seem to remember that a US carrier is already in trouble for doing just that, so I think that people will be on the lookout for that one. :)

      Regards,
      Jason Pollock

      On the flip side, has anyone considered what VoIP telemarketing spam would be like? Would the "do not call" list still apply? It would be very interesting to see a spammer initiate several thousand calls and only handle the ones that answer... No longer limited by the number of outgoing trunks...

  4. Google News Partner Link by NOT-2-QUICK · · Score: 4, Informative
    No registration required...

    --
    Beer is proof that God loves us and wants us to be happy. -- Benjamin Franklin
  5. Enforcement? by Dyolf+Knip · · Score: 4, Interesting

    And just how would they enforce any such regulation? VoIP is basically just a program running over existing networks. Cell phones not withstanding, you can no more require charges to be paid than you could charge for email or instant messaging. It's just a communications protocol!

    --
    Dyolf Knip
  6. Completely Switching to VoIP by Davak · · Score: 4, Interesting


    Thanks to some great suggestions by people previously on slashdot I have completely switched to VoIP for my phone service. It rocks.

    Previously I had not switched because I was scared of losing 911 service. However, if you have wire running into your house, you can still pick up and dial 911--even without service!

    So we have our emergency land-line phone--for free. Now we are using VoIP for everything else.

    However, if VoIP starts getting taxes to death, then people like me will switch to something else... and then something else...

    Can't the government just stay off these new industries long enough for them to get started?

  7. Internet as a Utility? by dmurawsky · · Score: 4, Insightful

    Well, as telephones started becoming more and more a part of daily life, the systems that they ran on became taxed by the government. I see no reason why the government won't do the same with the Internet. Let's just hope that they do it intelligently (wishful thinking, I know).

    --
    Learn from other people's mistakes, you don't have time to make them all on your own.
  8. How? by pdaoust007 · · Score: 5, Informative

    This is all nice and all but how the hell are they going to regulate this exactly? Sure it might be easy to target companies like Vonage but what do you do with all the free services out there like Skype or Free World Dialup?

  9. Re:Does anyone actually do this? by brianosaurus · · Score: 4, Interesting

    Maybe you don't, but your carrier might. Qwest (or whoever) could take your analog call and digitize it at the CO, route it over IP to the destination CO, then pump it back out analog. Its cheaper for them.

    There are also companies like Vonage, who provide phone service over your broadband connection. Some of my friends recently dropped their landline and now use Vonage over their cablemodem. They pay a flat fee ($40 i think) for all calls, including long distance.

    --
    blog
  10. A question.. by KD7JZ · · Score: 5, Interesting

    Do you consider universal affordable phone service to be a social good worth paying for?

    That goal of universal phone service is possible only because of the current system of regulation. Regulation is an unfortunate term. It is really a system whereby telephone subscribers in populus areas subsidize subcribers in more rural areas. Regulation allows phone providers a consistent rate of return on their capital investment while keeping rates down for everyone.

  11. Are they allowed to read my mail? by t0qer · · Score: 4, Insightful

    I don't know the specifics of the law, but from what I know about the FCC it was founded to regulate wide area transmissions right? Anything to do with radio that passes over public land.

    Most of the internet now is not publically owned. AOL/Time Warner has some of the nicest backbones in existance (I don't think I need to remind avid /. readers of how many times we gave those servers beatings for matrix and LOTR trailers) Either they use magic, or their network has more bandwidth than a bittorrent.

    Which causes me to say, what gives the goverment the right to go after a company like AOL if they started providing phone services to it's subscription base. As long as AOL allowed other IP telephony providers to route calls into their networks, which was the community based resource sharing it's creators invisioned, then in essence it is a wide area transmission. If a node goes out, it reroutes.

    It's a paradox. We can't have our cake and eat it too and unfortunately for most of John Q Public in the US, the goverment wants to be able to have evidence collecting power. We want privacy and we want a goverment that can defend us from scumbag corporations at the same time.

    I think the FCC is a lone tomato rotting in the sun, skin blistering with flys buzzing about it, who's smell of decomposition just barely singes your nose. Regulation did not bring the consumer choice, which is why when deregulation came about the choice in phone service providers skyrocketed.

    It's proof that less goverment involvement in phone providers results in better consumer choice. I for one am totally for letting any company do this.

    This news is sort of old hat though, since many companies i've worked for over the years had IP based telephony for connecting calls between offices. I know a lot of the insanely big (like AOL/Time warner) have to use IP traffic for their voice data. Cisco does for sure.

  12. Sadly, by Hal+The+Computer · · Score: 4, Insightful

    Nothing is black or white. If there is something they can tax, they will.., as long as they don't get their heads handed to them. Many U.S. states have no sales tax whatsoever. That dosen't fit your nice little theory. Certainly not all consumer goods are taxed. Every road you drive on isn't a toll road.
    If you haven't fallen asleep yet, you might want to read an article on taxation. Accuracy not guarenteed, but hey, it's free and it's mostly accurate.

    --

    int main(void){int x=01232;while(malloc(x));return x;}
    1. Re:Sadly, by orthancstone · · Score: 5, Informative

      Only 5 states are without a sales tax rate. Yeah, that may be 10 percent but that still isn't many.

  13. What do current taxes do? by stienman · · Score: 4, Insightful

    IIRC, phone taxes historically were created two support the poor (as phones were eventually determined to be a basic service that should be available to all) and later to support the 911 emergency location service.

    I would be willing to support the frugal application of these two taxes to internet phone usage, except a little more broadly: 911 service given to anyone with an internet connection, and additional phone taxes to cover the cost of providing basic internet connections to the poor.

    There may be additional taxes required to regulate the industry (support the FCC a tiny bit, etc) so companies don't completely fleece consumers.

    But in the end, the reality is that phone service is so cheap, and internet service so cheap, that to complain about an additional $1/month or less in taxes is being petty.

    What? It's $7.00 per month? Well then, fight to the death for your $82/year!

    Of course the real issue is that the internet allows anyone to become a phone company overnight, even offshore, so collecting such taxes is going to be practically impossible. Best to go to the local ISPs, turn them into basic phone service providers put a small tax on the internet (flat rate per line/connection regardless of usage or bandwidth) and get rid of the concept of a 'phone company' or 'cable company'. You have connection providers and content providers. Levy the 911 and subsistance tax on the connection. Cellular providers will simply become ISPs, each cell phone a computer, the 'line' between counting as one internet connection. Each person will typically have 2-5 lines (cell, office, home, etc) Since content providers must have a connection, then they too will be taxed. Anyone can become a content provider.

    3) Profit!

    -Adam

  14. What I want to know by mcc · · Score: 4, Interesting

    How will they track this, and how will they be able to determine if people are cheating?

    OK, so they decide to regulate and tax Voice routed over IP. What about Voice routed over IP routed over some other sort of IP protocol disguised to not look like voice? What about Voice over IP routed through relays in Canada? What if two people are doing VoIP but then claiming "what, this isn't a phone conversation, we're just streaming each others talk radio streaming mp3 stations to each other."

    This could become fascinating. We would wind up with this sort of caste structure being created among internet protocols, where this stream of bytes is okay and anonymous but THIS stream of bytes, the government needs to know about it and it needs to be taxed.. just because the latter set of bytes happens to contain audio data of a certain sort. So far the internet has avoided anything of that sort; certain classes of *content* have been differentiated from one another in a regulatory fashion, but never before a class of *data*.

    Soon we may wind up with something where the proverbial "Joe Sixpack" pays relatively high fees on his Skype phone he bought at Wal-mart and plugged into the wall, while all the "techies" pay nothing to use their "alternative" VoIP setups. Meanwhile a bizarre cat and mouse game goes on, as the authorities complain about "speech piracy" and attempt to find ways to sniff out VoIP data or prevent "pirate" VoIP programs from connecting to the larger VoIP network, and the tech community comes up with increasingly elaborate ways to keep the authorities to notice what sort of data exactly it is that they're sending.

    In the meanwhile, the ongoing effort by router companies to make "smart" routers capable of identifying things like streaming media packets and handling them in a slightly more intelligent manner is scuttled-- because 80% of all streaming audio data no longer looks like streaming audio data.

    Anyone have a link to the RAT_PENIS.TXT story?

    --
    Irritable, left-wing and possibly humorous bumper stickers and t-shirts
  15. Re:Does anyone actually do this? by AKnightCowboy · · Score: 4, Informative
    Qwest (or whoever) could take your analog call and digitize it at the CO, route it over IP to the destination CO, then pump it back out analog. Its cheaper for them.

    How do you think they do it right now? Lily Tomlin is sitting in your CO in front of a huge switchboard plugging in wires? The telephone network is already packet switched. Putting it over IP doesn't necessarily make it any cheaper. If anything it'll make it less reliable. You'd be going from a protocol that's specially designed from a QOS perspective to a best effort protocol.

  16. Re:Goverment Wont Loose Tax Dollars by Lumpy · · Score: 4, Insightful

    Impossible for them to completely tax or control.

    Well for a COMPANY trying to sell a service out of VoIP? yeah they can. but the biggest users are the private telcos like me. I have about 10 people on my private VoIP telco right now. I'll be adding another 4 this christmas when they recieve their Creative VoIP blaster alike clones I get from south america and a preconfigured cd with fobbit-phone on it ready for the lumpy's family and friends network.

    we save hundreds of dollars a year in long distance, rarely have outages, and only uncle Phil in colorado that has Dial-up has crappy sound quality. Even my travelling Muse Brother uses his in europe from his laptop or internet cafe's.

    they cant tax or control me as I use a non-standard protocol and port's. Plus I know of many MANY more people doing the same with other voip hardware. (Note to nay-sayers.. I get direct dial quality and only have latency problems during heavy internet outages... it sounds as good as your overpriced Cisco Voip stuff)

    voip is as uncontrollable as http traffic. Even ISP's that claim they block personal webservers can't block a determined users from putting one up.

    --
    Do not look at laser with remaining good eye.
  17. I said this before and I'll say it again by melted · · Score: 4, Insightful

    They either should remove taxes from my DSL bill OR from phone bill, because right now I pay two sets of taxes. They're trying to eat with two spoons, and this is not the prettiest way to eat, especially if someone feeds you. The fella giving you money may decide you're too greedy and cut off your food supply for good.

  18. This is so not right by Anonymous Coward · · Score: 5, Insightful

    http://www.washingtonpost.com/wp-dyn/articles/A200 32-2003Nov28.html

    This is insane. Telecommunications carriers routing phone calls over the internet. This article doesn't even touch upon several issues.

    1) Local companies can deliver long distance service (by passing Federal Regulation).
    2) Quality of service.
    3) Higher rates
    4) More profits for the Telco's and higher rates for users.

    Let me illustrate. The fees on your bill pay for the telecommunications infrastructure, in part by flat fee on your bill, taxes and some gets taken from each phone call. Now based on this premise, all companies will be routing over the internet. The possible/probable affects will be:
    1) distortion on phone calls because traffic is high on the internet.
    2) broken speech on calls
    3) try calling 911 and have your speech broken up so that the other side cant hear you.
    4) higher rates for everyone. Guess what, we all have to pay for the telecommunications network. Now the gov will not be making as much money for supporting the network. To maintain it their will be a raise in rates. Guess who's rates are going to be raised? Flat rate, taxes and per call usage. But what about all the money that the Telco's are making from this cost savings maneuver? That cannot be touched because it was not made on the regulated side of the house.

    Now the telecommunications companies will not be governed by the FCC on phone calls. The FCC is the guardian that keeps the Telco's in check. Now there will be no check. Great, unregulated telecommunications companies.

  19. One practical problem ... by jc42 · · Score: 4, Insightful

    VoIP is just a TCP connection, right? So in general is it even feasible to regulate (i.e., tax) VoIP separately?

    If so, this brings up the interesting question of regulating other kinds of TCP traffic. Given things like VPN and SSH, it can be exceedingly difficult to even discover what sort of traffic is carried on a TCP connection. If my employer requires that I set up a VPN link to work, and I happen to have a phone plugged into my computer that uses the VPN to make work calls, how do the regulators measure my use of VoIP. It's just some portion of those encrypted packets going over the VPN connection, but that packets also include my vi sessions, rsyncs, ftps, and all the other things that I do as part of my job. Does this proposal mean that I'll be paying voice-line rates for my all-day VPN connection to work?

    You might think that a wireless VoIP phone would be an exception that's easy to regulate. But my current cellphone is also a Palm Pilot, and I can and do use it for web access. Currently, voice and http on this phone use different low-level protocols, so they can measure them separately. But with VoIP, the voice and http connections are just TCP. I also work with databases, and much of that work is voice-like in that it has bursts of data alternating in both directions. Will this have the characteristics of VoIP, and thus be regulated/taxed as phone usage?

    One possibility is that we'll suddenly find that all TCP connections are considered "voice" and charged extra. But we can probably all imagine the outrage this would produce - especially from people running commercial web sites.

    Anyway, it'd be interesting to hear how they're going to sort out the voice sessions from the data sessions, when they're all just TCP connections.

    --
    Those who do study history are doomed to stand helplessly by while everyone else repeats it.