FCC Rules States Can't Regulate VoIP

NardofDoom writes "Ars Technica is reporting that the FCC has 'placed a regulatory shield around VoIP,' declaring it immune to state regulation, even if calls terminate on publicly switched networks (POTS). A previous ruling declared that Internet-Internet calls (i.e. Skype) can't be regulated, but the ruling opens the door for Verizon, AT&T and other local carriers to offer VoIP to customers without paying state taxes. One step closer to free phone calls, or one step closer to state regulation or taxation of IP networks?"

Comments

What I hate

[Anonymous Coward]

I hate it that government departments like the FCC can decide whether or not to raise my taxes simply by fiat rather than having the tax go to a vote either in Congress or in a referendum. They are answerable to no one (save their big media financiers), and do not represent us, the drooling public.

Frankly, the FCC should have no say one way or the other whether the states can tax anything. It is none of their business. Their mandate is far too wide in the first place and it should be pared back, in my opinion.

In this situation they seem to have ruled in our favor, but so too did Mussolini get the trains to run on time. Assad was able to build up Lebanon. Even the despised Hitler was able to bring Germany out of the dust of WWI and build it into a strong industrial machine. Just because your government sometimes does the right thing does not mean that it needs to have as much power as we give it. The power of government should reside at the lowest levels, i.e. the community and city levels. It should be taken away from the highest levels lest they decide to misuse it, e.g. DMCA, Patriot Act.

Re:What I hate

[Twanfox]

Here is an excellent question, and a notion of my own taxation philosophy.

Taxation should be necessary, relevent, and funds garnered from it reused in related affairs. Take, for instance, gasoline tax. This is (should) used to build and maintain roads, an act directly related to the consumption of gasoline. It even makes sense. The more gasoline you buy, the more you are driving, and the more wear you put on the road. Similarly, the more you wear the road down, so too should you aid more in repairing same.

Now, the question about taxing phone service and VoIP. Is this a necessary taxation? Is there some reason why it may be necessary for the government to seek money out of this business? Under what general principle is this money to be used? Are they attempting to compare sales tax (property acquisition) to service sales, something that does not seem to be taxed? (ie: IIRC, my cable internet bill is not taxed, and I don't recall any other cases where 'service' with no product is taxed) Seems to be to be a rather vague and specious reason to tax VoIP "just because" phone service was taxed. VoIP is a completely different breed of service, and by itself does not even require a service provider to function (direct IP to IP calls).

Screw the government if it thinks it needs to tax things just out of principle. This is how taxes should be driven, out of a need by the government to fund a related community-at-large project. I honestly don't see phone taxes as doing anything of the sort. If they can't come up with a good reason why VoIP needs to be taxed, and what that money is going to be used for, then they do not need to tax it.

Re:What I hate

[whoever57]

Taxation should be necessary, relevent, and funds garnered from it reused in related affairs. Take, for instance, gasoline tax. This is (should) used to build and maintain roads, an act directly related to the consumption of gasoline. It even makes sense. The more gasoline you buy, the more you are driving, and the more wear you put on the road. Similarly, the more you wear the road down, so too should you aid more in repairing same.

You are ignoring the other purpose of taxation: to discourage behaviours that society feels are harmful or should be limited. For example, many countries have vastly higher gasolene taxes, to discourage the use of private motor vehicles (and indirectly encourage the use of mass transportation).

In this case, however, it is very hard to see how a tax on VoIP would accomplish either goal. It's hard to see why VoIP should be discouraged and it is hard to see why VoIP is related to any local services - after all, I can take my VoIP phone to another country and keep the same number -- am I using local services if I am abroad (and my billing address is a PO box)?

In my view, one should be taxed (if at all) on the local connection: be that fiber, copper, coax, wireless or whatever. The taxes on that local connection should be put towards the local services. One should then be free to put whatever type of protocol one wants onto that local connection without different taxation for different protocols.

Re:What I hate

[ratamacue]

The rationale for decentralized government is simple. The more power government has at its disposal, the higher the level of abuse, and the bigger the problems government will cause. Government can only cause so much trouble with limited power and revenue. For example, the US federal government caused relatively few problems around the world before the federal income tax (which, incidentally, was supposed to be temporary). Today, the US federal government has troops stationed in over 150 countries around the world, and has been at war with some country, somewhere in the world, for every single year over the past century. Why? Because they can. Power will be abused, and absolute power will be abused absolutely.

Naturally, a centralized government has many times more potential for abuse than decentralized government. That's not to say that local and state governments can't be abused, just that there is an upper limit on abuse.

Federal taxes instead of state taxes?

[Anonymous Coward]

Will federal taxes be levied instead of state taxes?

Fair taxation?

[bstarrfield]

I know that this will be unpopular with the ./ crowd, but this strikes me as a pretty unfair subsidy of the technologically savvy at the expense of the less technologically competent.

VOIP requires that you have a high speed line - either DSL or cable - an expense that many people can't afford. Additionally, many people live in locations that do not have access to high speed internet. If you can't afford, or can't receive high speed access, you're left with conventional phone or cellular phones - both of which can be regulated and taxed by the states.

Though I understand the FCC's motivation to promote development of the VOIP industry, why should those with high speed access find a loophole out of local telephony costs? The administration is all in favor of reduced taxation, but this ruling actually works out be a non-legislative regressive tax.

IMO, We need to try to equalize the costs and benefits of new technologies, and not allow technologies to be used to escape financial responsibilities.

I'm in favor of the taxation

[Anonymous Coward]

I would like to see the phone lines to my house go away in favor of fiber and VOIP. However I would not particularly mind if my current telephone related taxes got shifted over to cover that new service instead. As long as they remained about the same cost and covered particular emergency service guarantees then that would be reasonable.

Michael

IP networks SHOULD be taxed - JUST ONCE

[stagmeister]

Ideally, we shouldn't be paying per-month fees for our access to IP networks. (Let's not even call it the "internet" anymore, please. It's just a network for sending and receiving IP packets) We should be paying for bandwith. Just like we have an electric bill where we pay per kilowatt, and a water bill where we pay per gallon, we should pay per megabit sent and received over the IP networks. That way all this traffic - is already taxed. We could have one tax on IP traffic fees, and after that it's fair game to do whatever you want with that IP traffic. So VOIP calls wouldn't be "free", they would cost a certain amount depending on the bitrate you send and receive at. And they would be taxed based on how much bandwith you use for it.
Jason

Question

[forand]

And in your system how do we pay for things like law enforcement, military, science, etc. i.e. things that we don't directly use but expect our government to provide?

Re:Question

[damiangerous]

You obviously haven't spent much of your life where food, shelter, and clothing represented a significant fraction of your expenditures.

Let's see. I was laid off at the end of 2003 (from a 30k/yr job). My wife left her job (also about 30k) on disability in Jan 2004. My unemployment ran out in August. Our current household income is solely her disability (and what I can sell of my stuff on eBay), which is about what a high school kid could make at Wal-Mart. I've defaulted on every payment I had save for rent, car payment/insurance and broadband (though the latter two are behind and threatening). The broadband connection is our single "luxury" item and it's not really a luxury considering a phone line plus ISP (necessary for job searching and eBay) would cost about the same as broadband plus Lingo VoIP.

Once my car is repaired ($1200) I'll be able to take the first shitty retail job I can find simply to have money coming in.

You were saying?

Re:Question

[mrchaotica]

So what's so bad about a regressive sales tax? The key difference is that it is a tax on consumption. If somebody feels like their taxes are too high, there's an easy solution: BUY LESS STUFF!

Have you noticed how Americans have been getting farther and farther into debt in the last few decades? How more and more people are planning to rely on Social Security, when it'll probably be bankrupt by the time they retire? If so, then you should agree with me that our own spending habits are the worst problem we have.

Imagine the usual situation when you're trying to get a new car (or some other large purchase): Since the Man is taking a quarter of your paycheck, you feel like it will take forever to save up the money to get it. On the other hand, this shiny plastic card right here can get you the thing Right Now, and you can pay it off little by little with the pittance the Government allows you to keep.

With a sales tax instead, the alternative becomes this: You suddenly have a bunch more money since none of it is being taken any more, so now you can afford to put enough of it away to save enough for the car quickly. Besides, the more you save the more you keep and the less the Government gets. So why give it to them now? Why not let it work for you, and only give it up when you have to?

Sure, this is entirely a psychological effect, but I think it would be a useful one -- a National Placebo, if you will.

Then we start getting into the more standard regressive tax arguments: With the Income Tax, if you get a raise, not only does the amount you're taxed increase, the proportion of it increases too. In the past I have decided to work less specifically to keep myself out of the next higher tax bracket. I imagine that's a big consideration for others too: imagine the proverbial single parent, struglling to make ends meet. How much would it suck to realize "Oh, crap! My raise was just enough to raise my taxes, but not enough to compensate for it! Now I can't afford to pay the bills -- I'm worse off than before!"

I would much rather people be rewarded for seeking higher pay, instead of punished. I want people to think "yay, I got a raise -- now I can afford to save more money for my retirement|a house|college for my kids!" I want poor people to be offered a carrot on a stick, instead of just being thrown table scraps.

But I guess that just makes me a heartless bastard since it's not "Progressive," huh?

This isn't all good

[CallMeNipple]

I work for a small independant telephone company. Although I'm glad that VoIP isn't regulated, it puts my company in a very awkward position. Namely an inability to compete. If we have to charge our customers for 911, USF, federal and state taxes so should a VoIP provider if any their calls terminate on the POTS network. I would be equally okay with the deregulation of the POTS network instead.

People sometimes suggest we start providing VoIP service (and we are), but this is also a problem in certain areas. ILEC's can't really put this service in and charge less for it unless every customer can get it and the state PSC doesn't think its a waste of money (this is somewhat untrue, but the regulatory environment imposed on an ILEC is freakishly complicated). In our CLEC territory we are going to roll this out but can't offer it in our ILEC because we can't legally compete with ourselves. At this point we will have two different systems providing the same service. Not a problem until Farmer Joe calls the ILEC and demands to know why his friend 10 miles away gets his phone for 15 bucks less a month from (what appears to him) to be the same company. Suggesting he send his comments to the PSC to try and help change the situation just makes him more mad. People don't want to hear laywerish sounding crap about regulation. It really isn't our fault but thats why people hate the telephone company. I think 85% of the time there's some legal mumbo jumbo telling us we can't do something or making it prohibitivly expensive(I'll attribute the rest to human error and actual screw ups).

We like competition, it helps us serve our customers better and lets us know where we're messing up but only if everyone is on the same playing field. We like VoIP its going to save us quite a bit of money in the long haul. We don't like screwing half our customers because we legally can't implement VoIP for them.

In summery: Regulate VoIP for deregulat POTS.

How long...

[ebob9]

How long until this is reversed?

If this ruling applies to the large Telcos as well, You can bet this will not stay long.

If I was an AT&T, or a Verizon, I'd begin immediate plans to migrate my telephone network from Circuit switched/Frame Relay/ATM to IP. Whats to stop them from running a private IP network, and saving regulatory fees?

(I'm currently RTFA, but I'm slow and impatient)

How big must the network be?

[bill_mcgonigle]

The FCC had ruled previously that "pure VoIP" was free from regulation because calls originated and terminated over the Internet, but regulation of VoIP calls that terminate on publicly switched networks had yet to be addressed. These calls and services will now be treated in the same way.

So does this just apply to the big corps or to everybody?

If I hook up my old-school phones in the house with VOIP TA's and terminate them at an Asterisk PBX, onto my POTS line (which I'm about to do anyway), do I get to forgo the state taxes on those lines?

Commerce

[Sai Babu]

States can't tax the interstate aspects of POTs calls. The loophole, if a state does want to tax, is at the POTs interface. But hey, they alread tax this for in state calls. Do we want them taxing twice? Now I can see an argument for taxing intrastate VOIP calls becausethey are effectively the same thing from the callers perspective. I don't see how they might discriminate inter/intra though. I can also see an argument against taxing VOIP. States don't tax two way radio calls. Perhaps if the states really want the tax revenue, they might be able to force the sales and use tax aspect of the business. Wy do they want to tax? What service would a state VOIP tax pay for? The state PSC doesn't have any regulatory expenses assocoated with VOIP.