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New York State Classifies Vonage As Phone Company
securitas writes "CNet's Evan Hansen reports that on Wednesday, the New York State Public Service Commission 'ruled that Vonage Holdings is a telephone company and thus subject to state regulation.' The decision is seen as a blow against the emerging voice over Internet protocol (VoIP) company and the industry in general."
So, I use Vonage (and love it, btw) in New York State. And I have never known New York State to not charge a tax on something that it could. So, what kinds of extra taxes will I have to pay now?
If the taxes are large, then it is starting to look like I should just go back to having a cell phone again.
It does have to connect to a real telephone exchange SOMEWHERE... If it was internet to internet telephony only, then I would be against this, but considering that it has to be able to send/recieve calls to other telcos, it should be considered a Telco itself, and taxed/regulated accordingly... Certainly vonage users should have to pay the 911 taxes. This is one of the few taxes in our society that actually pays for a service that is used directly.
I hate taxes (in general) as much as the next telephone user, I'm not saying they're fair-- but as long as they are there, customers should be taxed equally.
If it looks like a duck
Walks like a duck
and quacks like a duck
It must be a duck.
Seriously, did you think vonage WASN'T a phone company?
I'd imagine the taxes will be quite large; the state isn't going to let Vonage come in and undersell the market. If this caught on tax-free, they'd be expected to get a significant portion of the market...now who knows
Hell hath no fury like government that thinks it's not getting it's "cut".
This is an attitude of our government that frankly, you and I shouldn't put up with, this thinking that government is entitled to tax EVERYTHING.
Corporatism != Free Market
Is Vonage a phone company? First, lets look up the meaning of telephone. Telephone: Noun, An instrument that converts voice and other sound signals into a form that can be transmitted to remote locations and that receives and reconverts waves into sound signals. (Dictionary.com) So, by this definition the service that Vonage was offering was a telephone service. However, like practically all else, this is open to debate. So go debate.
HAH! I just wasted a second of your life making you read this, but I wasted a minute of mine thinking it up. DAMN.
This may be the deathknell for most small startups in the VoIP sector. Only the megaconglomerates (AT&T, Sprint, Verizon, SBC) will be able to compete in this kind of arena.
Very unfortunate. I had hoped to jump onboard the VoIP bandwagon in the near future (once my area code is available), but the cost benefit could be going out the window.
Eric Sarjeant
eric[@]sarjeant.com
New York State Public Service Commission said, "...saying that it nevertheless hoped to apply "only minimal regulations to ensure that it does not interfere with the rapid, widespread deployment of new technologies."
When was the last time a Government Agency applied "only minimal regulations" to anything? The tendency of bureaucracy, once involved in something, is to strengthen their involvement in that thing.
Okay, so most of us agree that this is a bad thing- it places more regulation on the Internet and protocals (taxes are just one step, wiretapping, etc. are of course going to follow and be required in all VOIP protocals (yes we know the reality is something else, nonetheless this is what I fear will happen).
But this does bring up an interesting point. Phone companies are regulated in what they are and aren't allowed to do with the phone conversations. They can't, for example, monitor your calls for marketing ala Gmail "Oh, you asked your wife to bring home some milk- well there's a deal at the local Megamart".
So can we as consumers now require that if VOIP providers are telephone companies, that ISPs be regulated in how they can and can't monitor us, and stop practices like purposefully slowing down connections from rivals? (Time Warner Cable vs Disney.com, etc.)
I would rather none of this existed, but maybe we can force the legal arm to swing in our favor as consumers.
It's also a government sponsored monopoly - not a multi-vendor competitive market. You can't pick your water company.
Price controls are warranted on government-created monopolies - not in the free market.
Given the differences in technology between Vonage, and the traditional telco, and some of the items in the article, it seems that there's going to be different standards applied to the VoIP company, which is a good thing.
As the traditional telcos move from the traditional circut switched networks of current phone systems to a more packet switched network, there needs to be a way for the regulatory agencies to keep up with the changes, and ensure that necessary services (e.g. 911) and quality are maintainted.
In the long run, this will probably be seen as a good move, since they're actually trying to keep up with changes in technology, rather than waiting to get run over by it.
Consitering that Time Warner just launched it's VoIP service in the past month. I have to wonder if they are pulling the strings in order to wipe out it's only signifigant competition in this area. TW's prices are ( of course ) much higher and provide fewer services than Vongae does.
The internet is just a medium to exchange information, and now a certain kind of information (calls) is being taxed.
Just leave the internet alone, it doesn't need government interference.
And, said regulated industry has high-priced, professional lobbyists who are constantly making sure that a) their monopoly (if they have one) is protected; b) new entrants who try to offer a different, but competing service are barred from entry by regulation, taxes, etc , and c) that "shared" resources are priced high enough that startups have problems using them.
Look at the battle going on between the satellite companies and cable cos. Most cable cos are regulated locally, and have significant taxes. Satellite companies have been able (for the most part) to avoid this because of their model (only downlink located in most localities, and that downlink is privately owned).
I'm not surprised by this classification - every level of government believes that it has a $DEITY-given right to tax and regulate everything. Heck, hosting a home poker game in my state can get you a year in jail! I'm not opposed to all regulation by any stretch of the imagination, but regulation stifles creativity and needs to be applied only in very clear, very limited ways.
sure ... now i want to see webex, microsofts meeting service, and others charge the same taxes as vonage is forced to.
members are seeing something, your seeing an ad
If it looks like a duck
Walks like a duck
and quacks like a duck
It must be a duck.
Seriously, did you think vonage WASN'T a phone company?
Vonage may or may not be a duck... I mean phone comapany, but what about less dedicated companies? What about an ISP that includes VoIP? What about a company that outsources their network management to a company that sets up VoIP for them internally to their company? What if some friends and I set up our own system, say about fifty of us? What if we've created a new animal that can quack when it wants to and bark the rest of the time?
The only clear cut off point is when we start connecting to the existing phone network. But I could set that up from my home network with a bit of fiddling. Would they come down on me?
If you don't use the connection to the existing phone network then do they want to monitor all internet traffic? Do they want to access encrypted traffic? Because that's the only way they can regulate VoIP.
And if they do use the connection to the existing phone network as their definition, then what happens 5-10 years down the line when VoIP dwarfs the old network. Do we just disconnect and saev ourselves a lot of money?
Aide-toi, le Ciel t'aidera - Jeanne D'Arc.
It is the whole world's Internet.
Not just the U.S. Government's.
Please go home now and leave us in peace.
Thanks,
Matthew C. Williams
and a cast of thousands
--TheOrangeSquid Is it any wonder things seem so awry? We swim in a sea of confusion and don't have to think to survive
Yes,
Free speech means you cannot be prohibited from speaking, not that you cannot be charged(monetarily or criminally) for your speech.
Food not Bombs is a nice platitude but it breaks down when you notice that the Bombees are usually well fed
Then it must be a telephone!
Who cares what technology it uses? If I can pick up the handset, dial a number, and expect a recipient on the other end to answer, then the state has every right (and obligation) to deal with it like any other telephone service.
If this were not the case, then cellular telephones would also be exempt from taxes.
This could be a staging ground to compare email to snailmail and attempts to apply applicable taxes will surely follow.
Not that I'm wholly opposed to a digital postage stamp as it would help deter spam, but we are surely in poor shape if the argument comes up in the state of New York. They don't seem to recognize that it's not the same market and if the tax on an email were more then a mere few cents, it will become painfully obvious that we're being gouged for replacing postal workers.
VoIP pays for it's use of carriers, but the users are not taxed. It transmits the signal into the local area via the internet and places the call from there. The use of taxes and fees has applied to the carriers internet connections from the very beginning, just not the end users.
However, switching to a "phone service" will supposedly keep local calls free for the forseeable future instead of giving telco's ammunition to charge per minute on local calls as they do in much of Europe.
If you're half as beautiful naked, you'd be 4 times as beautiful with twice as many clothes on.
This is pure nonsense. Weren't cellular telephones at one time considered an innovative service in a heavily regulated industry? Didn't the cellular phone industry manage to survive dispite regulation?
VoIP will survive as long as it provides a useful service that is in some way advantageous over existing land-based and/or cellular systems.
I wholeheartedly disagree.
Vonage provides an internet phone service over your internet connection (which, btw, is not subject to the same stringent standards that your PSTN service is subject to).
Phone companes need to be regulated because they are a natural monopoly, as in they own and maintain the lines that provide these basic and nessecary services to your home.
The PSC shouldn't be used as a crutch for people who are too lazy to practice consumerism. If you don't like the service Vonage provides, don't use them! Your local Verizon service is subject to the rules your PSC puts out becuase Verizon is using public land and providing a type of service no one else can becuase they are given special rights to do this by the government.
This is just simply a ploy by the government to suck more money out of people that does not belong to them (save for 911 service which should be paid for).
VOIP companies appear to be selling digital PBX services. Isn't that still being a phone company?
They're just replacing some of the POTS lines and phone switches with ethernet, routers, etc.
The difference is that those Computer-to-Computer meeting services don't offer phone servicce. That is to say, they don't offer the ability to call a PSTN number...
When people start using applications to talk over the Internet, that's when you will have your Internet connection taxed. If the government can't micromanage the Internet as taxable revenue, why not just tax everyone's connection and be done with it? The only question I have, is when will it happen and not if.
Life is not for the lazy.
It seems to me that a pure VOIP company (even if perhaps the device you speak into looks like a telephone) where there is no POTS based phone number attached nor does it traverse any of the POTS networks, should have no fees incurred.
If there is no interconnection with the PSTN then no charges are incurred. The problem is that most voip companies are routing voip traffic over the public internet and then interconnecting to the PSTN for the last-mile.
It makes it easier to embrace if its just a fancy phone.
The problem is that voip is going to be used by everyone - not just techies. The average person is not going to see the difference between POTS and voip. They will expect voip service to behave the same as POTS. However, becasue it is not regulated, voip service does not currently need to provdie 911 service, full battery backup or meet any other quality of service standards.
Many people who will purchase voip services in order to save a buck will not understand that these standards are not there. So when one of these consumers tries to call 911 from their voip phone and the 911 operator thinks they are in NYC when they are really in Albany - there will be excessive bitching from the general public - and with good reason.
The same will be true in situations where the power goes out and these people can't use their phones. The regulators are just trying to stay "ahead of the curve"...
YES! Incoming. Outgoing. It's a phone, dammit. The primary difference is they use a physical adapter to encapsulate an analog phone signal into IP packets. The device establishes a connection with Vonage proxies, which make the decision about how/where to route the packet, based on the destination phone number. If that number isn't a Vonage number, it ends up going out through a peering point (usually pretty damn close to the termination point of the phone call) and through the last mile copper to the destination. People keep talking about the 'internet' as if it's somehow completely distinct from the 'POTS' system. The vast majority of 'POTS' calls run over the same pipes as your internet data does. Major carriers aggregate circuit switched calls and push them into packet switched networks, because packet switched networks have much greater bandwidth. The thing is, I *already* pay taxes on my broadband connection. I also pay surcharges to Vonage. Why should there be an *additional* tax just because it's providing the same service as the incumbent telcos? Why the hell does the state gov have to be involved? Most of the work being done here is already paid for in other ways. Vonage is a Good Idea(TM) Company, and had the vision and agility to get to market early. They don't NEED regulation. They *lowered* their prices! The only reason phone companies are so heavily regulated is because they are typically lying, cheating, slamming scumbags. They NEED the government to watchdog them. Better yet, they need to be slapped down by the consumer. How? By consumers switching to things like Vonage. Pretty simple. Let the incumbent telcos end up as infrastructure managers. Keep them out of the consumer's pockets/homes.
[I]t creates a horrific precedent. Basically any translation from the web to the "real world" can be considered under this, ..
Yeah; what I'm wondering is: Suppose I use the builtin microphone and speakers in my Mac Powerbook, or the plugin mike and speakers in my linux box, and write software to connect these to a program on another machine on the Net?
Am I now a phone company? Do I have to file the appropiate papers, pay taxes, and so on?
It gets more interesting when you consider that both I and my wife have PDAs with WiFi access. There are a number of these on the market now, such as the Palm Tungsten and the Blackberry RIM handhelds, and they mostly have a builtin mike and speaker. Also, voice-recognition software is available for all of these machines. Combine these with the Internet, and using them to remotely access sound files looks a lot like "phone" service.
So if I write a browser plugin that lets me talk into my PDA, which connects to my home machine and retrieves some files, am I now running a phone company? How about if I connect to a friend's home machine and do the same?
And some of us are working on voice-based interfaces for the benefit of the visually impaired. Is this all now to be considered a "phone" service, to be regulated and taxed as such?
Maybe it's time to just declare the Internet to be a phone system?
Those who do study history are doomed to stand helplessly by while everyone else repeats it.
Welcome to NY where if we cant tax and regulate it we dont want it..
So our kids in poor schools wont be able to read but at leats they will be able to speetk 1337? I never touched a computer until University (1996) and did nothing to inhibit getting an EE degree with CSE minor..
The problem is that voip is going to be used by everyone - not just techies...The same will be true in situations where the power goes out and these people can't use their phones. The regulators are just trying to stay "ahead of the curve"...
I find this line of thinking extremely distasteful.
First, Vonage goes out of its way to make it very clear to new customers that it may not be as realiable as POTS, does not work for 911, et cetera. The warning is huge, and to imply that only techies would get it is disingenuous--its not in fine print, it's in huge lettering.
I'm somewhat sympathetic to the ideat that the public utilities commission could regulate VOIP for the purpose of being an arbitrator when things go bad (though that's what the Attorney General's office is for.) However I see no reason to protect customer's from something, and dramatically increase their cost, when it's spelled out pretty clearly and anyone can understand it.
And I am find it rather funny that someone who HAS internet acces should complain.
You think only people without internet access are able to say whether they need it or not?
And don't try and rebuttle this with the old "Well we didn't need the internet when I was in school" bit either. Thats because you didn't need to be computer literate back in the day. You can't get an office McJob these days without basic understanding of email and the internet.
What part of school requires internet access? Math? Science? History? Do you think schools should be preparing students for McJobs? What email client should schools teach?
Sorry if English isn't your native language, but your entire post shows a horrible lack of education. Your abuse of grammar further convinces me that public schools should concentrate on education and leave job training to trade schools. As soon as the American educational system quits churning out illiterate lazy children maybe they should look into expanding the topics taught.
Regardless of how well you know your web browser, your post makes you look like an uneducated fast food "lifer."
Libertarians always think that private industry can do things more cheaply, but when you factor in corruption, kickbacks, and nepotism, it gets very expensive very quickly.
Yes. Thankfully there's none of that stuff in the government agencies.