Will FCC Regulate Internet Phone Calls?

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.""

Comments

What will they do?

[ryanr]

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.

Re:What will they do?

[silentbozo]

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.

Re:What will they do?

[Zocalo]

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.

Re:What will they do?

[buffer-overflowed]

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.

Detecting internet phone calls

[Karamchand]

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.

How?

[pdaoust007]

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?

A question..

[KD7JZ]

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.

Re:FCC Trends

[kjs-esq]

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?

Re:Sadly,

[orthancstone]

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

This is so not right

[Anonymous Coward]

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.