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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."
Does this state regulation mean the load of taxes thrown on it. The 911 tax I can't knock but all the others.
Evolution or ID?
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 they are going to regulate companies that develop VOIP applications it will be interesting to see what happens with OS projects.
At the moment its only going to be 'minor regulations', but when it takes off and the "potential tax losses" start getting serious will we see all these companies/ projects move offshore.
Certainly not much could stop it if people want to use it.
You can't expect to wield supreme executive power, just because some watery tart threw a sword at you
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
I thought Oregon or California tried this and they lost the case! Moreover, the FCC along with Congress wrote legislation to prevent them from being regulated and taxed, thus I'd think anything NY state does would automatically be void too! I see a supreme court case in the works here to settle it once and for all. Most of NY state is the old GTE (now Verizon) phone company and the company stands to lose alot of jobs, along with state revenue.
The lesson here, especially to investors, is: "Don't try to provide innovative service in a heavily regulated industry." All that will happen is you'll blow a lot of money to get your business off the ground, only to be slapped down by a regulatory environment that, intentionally (through corruption) or not (through the law of unforeseen consequences), effectively acts as a defender of the status quo: the behemoth government-protected monopolies who've already learned the lesson.
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The incumbent telecoms companies ought to be really worried by VoIP. Right now they can get a slice of the action providing someone is trying to make a call to a legacy phone, by if its VoIP to VoIP they dont stand a chance.
Imagine, free unlimited and unrestricted (open source, of course) telephone services worldwide. Just like email. It will happen and there's nothing they can do about it.
And cell phones will be replaced by WiFi phones, with the gentle propagation of free WiFi hot spots in Cafes etc who's going to need to pay for a cell phone?
80N
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.
They seem to think they are. Right on their webpage is their tagline "The broadband phone company". Sounds like an open and shut case.. if you want to call yourself a phone company then prepare to be regulated like one. I have no problems with that.
Personally I hope this does not signal an end to their business model. I have had Vonage service for 6 months and I could not be more pleased. Thier billing and reporting is awesome. I can actually log into their site to view all incoming and outgoing calls. I can download my voicemail to a wave file. Meaning I can check it anywhere there is a computer with internet access and a sound card. But here is the real shocker. I had a problem sending faxes through their system. Called them up. Had a short wait time ~30 Seconds. They had my problem fixed within 5 minutes. Not only that but they actually asked about what hardware and software I was using to add it to their knowledge base. I was floored. Try having that type of service from Southwestern HELL. Not to mention saving $30.00 a month and having way more features. And the voice quality is excellent.
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
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 means schools and libraries will now have a better shot at getting E-Rate funding from the Universal Service Fund Again. Millions and millions of dollars were spent getting schools VOIP and the FCC decided that VOIP wasn't real phone service so they lost funding for it, almost closing many schools, public and private. If you have no idea what I am talking about, go to www.sl.universalservice.org for more info. You might be interested to find out where your USF charge on your phone bills go. (BTW I am an E-Rate consultant for schools, stephenisu@yahoo.com)
Sigs? We don't need no stinking sigs!
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.
When was the last time a Government Agency applied "only minimal regulations" to anything?
Environmental protection, mental health care, the Microsoft antitrust case, food safety inspections, just about anything where megacorporations are involved...