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

Only TERRORISTS would make free phone calls!

[Anonymous Coward]

If you don't pay for your phone call then you _MUST_ be an anti-capitalist American-hating commie terrorist!

Direct From The Source!

[1_interest_1]

FCC News Release (PDF, 110K)

Michael Powell's Statements (PDF, 75.6K)

ET?

[bluewee]

ET Phone Home: 127.0.0.1 (just in case you forgot the number) and if you prefer :::1 if you are on IP6 there et buddy...

A double-edged sword

[CMcQueeny]

Whilst this will allow VoIP to continue its growth, etc., it also establishes precedent for federal control of the networks. Although it is true that some industries that are now relatively free began as heavily regulated monopolies, this strikes me as a step in the wrong direction.

Re:A double-edged sword

[CMcQueeny]

Whether or not it is possible to circumvent is irrelevant... one should not be forced to break the law in order to exercise liberties.

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

[AuMatar]

And you think the lowest levels are better? I have news for you buddy- the corruption on my local city council rivals that of large cities. And I've never seen more useless beauracracy and petty bickering than in school council meetings.

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.

3 cheers for sanity

[PitaBred]

I'm all for this. It'll be meaningful competition finally. Though regulations exist for the leasing of infrastructure to smaller companies at reasonable rates, those are still abused. Once voice is just packets, it's a totally level playing field.

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.

Re:Fair taxation?

[ValuJet]

Here is why.

It unfairly taxes a specific kind of internet traffic. It is just data flowing over lines no differently than webbrowsing. Allowing states to set a precidence where they are allowed to tax a specific kind of internet traffic is not good for anyone. Also imagine being a VoIP company where you have to process all the rules for VoIP for cities/counties/states. It would be a logistical nightmare.

This is very good for VoIP and the internet in general imo.

Re:Fair taxation?

[dgatwood]

You have this upside down. This is one step towards removing states' ability to tax things that they never should have had the authority to tax to begin with.

The states give the excuse that the tax is needed to pay for emergency services. The fact is that those emergency services would still be necessary even if no one had a telephone and all we had were a bunch of pay phones, and moreover, can be used completely gratis by people who have no phone service and only use pay phones. Thus, allowing the states and communities to tax even POTS was creating a tax on the technologically savvy to pay for service that was used by the less technologically competent. Preventing taxes on VoIP just means that the folks in the middle get screwed (which is pretty much the norm, sadly). It's not right, but it's a step in the right direction.

As far as I'm concerned, if I as a phone customer have to pay an E911 tax on my phone bill, then E911 service should only be available to people who pay that tax. Pay phones should not have E911 service, nor should any cell phones outside their home city. And no, I don't think that's a good idea. I think the current system is broken and needs to be rethought.

The -right- fix for the problem is to pay for this out of property tax and hotel tax revenues. This is a much more fair means of covering the costs of those services, as it applies regardless of whether someone has an out-of-state cell phone as his/her primary line, an in-state cell phone, a wired phone, a VoIP line, or no telephone at all. Those who own rental property pass the cost on to renters, and now everyone is roughly burdened equally, which makes sense, since everyone has about the same chances of needing the service (age and health issues notwithstanding).

Bottom line: if everyone needs the service, -everyone- should pay for it, not just those with a phone line, thus taxation for any reason other than upkeep of the telephone poles (and wires/switching if the community owns the hardware) is wrong.

Bad wording

[ad0gg]

"One step closer to free phone calls, or one step closer to state regulation or taxation of IP networks?" "

Voip calls aren't free, someone has to pay for the networks thats running the IP traffic. Then there's a cost for your internet connection.

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

my experience

[theMerovingian]

One step closer to free phone calls, or one step closer to state regulation or taxation of IP networks?

All I know is that I used to pay $65 a month for SBC service with unlimited long distance, caller ID, and voicemail. After I switched to Vonage (same deal for $24.99/mo), SBC started calling me three times a day to get me to switch back for $24.99.

I won't switch back, even though VoIP is a little annoying (doesn't work when the power is out, have to occasionally restart the cable modem, etc). Thank goodness that a cheaper alternative came along to break the back of the local phone monopoly.

Re:Wrong Moderation

[FCAdcock]

Because they CAN be.

Maybe I'm subconsiously a commie, but shouldn't everything that CAN be free, be free?

Knoledge, parking, beer, and communication are all things that should be free.

Actually Free is very Capitalistic

[Charcharodon]

Most people are confused with what Capitalism and Communism are. Capitalism is not about making money, that just happens to be a by product of what it's real intent is, an "efficient" distribution of scarce resources. Communism on the other hand was supposed to be the "fair" distribution of scarce resources, which for all practial purposes is impossible. There is no such thing in life that is ever truly fair nor can it be, beyond age five when mom would measure out exactly the same ammount of ice cream to shut you and your whiny sibling up about who got more, which is why Communism failed.

The problem today is many things have become so easy to reproduce or to provide that they are essentially free, of course the companies involved don't like that and try to create artificial scarceness of resources in order to preserve old business models. Most electronic communications and digital media are perfect examples.

I find this to be funny since it is exactly this intentional lack of innovation that has landed every communist nation in the economic toilet.

Companies and individuals can still easily make money with commodities that are free or nearly so, it's all a question of coming up with a different business model to repackage it in a new way or to simply include it within another product and no longer use it as a primary product.

Of course we are talking about people here and true Capitalism is just as harsh as Natural Selection so you are going to see many in government and industry resist technological change for the disruption of lives, jobs, and income that it inevitably causes. They forget though it's not a zero sum game and in the end there will be more to go around for everyone.

Free is the ultimate expression of innovation and innovation in turn is central to what makes Capitalism so effective.