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More Fallout From FCC VoIP Decision
EconomyGuy writes "While many of us have been celebrating the recent FCC decision to keep regulation off of VoIP, but there may be some undesirable results for those progressive geeks who believe government should do more than provide military defense. As VoIP takes off as a replacement for the traditional copper-wire network, local and state governments are going to lose more and more funding for important services like 911 and Universal Service."
.. but have netcraft confirmed it? Seriously, they'll just place a tax on a per megabyte basis.. Nothing to see here move along.. Simon.
If no taxes can be levvied on POTS anymore for funding emergency services and the like, there will surely be an alternative way of collecting those taxes.
A flat tax, for example - say $0.50/month per resident. That should cover 911-expenses.
I'm not American , but I see America going the wrong way and cutting funding for the wrong things (ok, it's not a socialist state) ... Education, Healthcare, Emergency services are things which have intangible returns on investment.
Imagine a police force based on capitalismQuidquid latine dictum sit, altum videtur
I'm sure that it will never become an issue. 911 is such an important, fundamental service, it will always be offered. Besides, as Big Brotherish as the government is these days, you could probably just call the free "terrorist hint line" and tell them Osama Bin Laden is trying to steal your car...
They can't let me have internet and VoIP without paying taxes on that too?
Saying Java is nice because it works on all OS's is like saying that anal sex is nice because it works on all genders.
No, 911 is NOT dying. It's an essential service, and a huge portion of the North Americain population has it ingrained to call that number in case of emergency. A fair number of people don't even know that the fire/ambulance/police departments even HAVE other phone numbers. Not all, or even a majority by any stretch, but enough to be highly significant. What I see as more likely is a sort of centralization of both the telecommunication and the 911 services. If VoIP is continent wide, then eventually 911 is going to have to be too. In the future, the first question won't be whether you need Police, Ambulance, or Fire, it will be "What state or province are you in?". Doing so will probably increase the lag time in recieving 911 services, unfortunatly, but it's a heck of a lot better than loosing the service altogether. Charging a fee per Mb won't really work. Sure, they'll get to massively boost their revenue (on a per call basis, make massively more. How much traffic in a given area's actually VoIP and not, say, MMORG or bitorrent?) Sure, they'll keep the funding for 911 and others, but if everyone's shifted to VoIP, then those services will need/have a budget a tiny fraction of the size they do now, since no-one's on copper lines anymore. Unless everyone's required to have a regular line for emergencies, or something.
Z
Seriously!!! After getting shot in my 91 CRX by two thugs high on LCD, PCP, and drunk, I called the cops from a store as soon as I fled the scene. It took 30 minutes. 30 fucking minutes before I got a call back from a COP in the area through his CB radio (patched in through 911)!
It's a long story. But basically, the only that human scum got cought was because the driver passed out at the wheel.
Life is not for the lazy.
I would argue that it's simply not the government's role to burden communications with taxes.
One argument in the article is "not taxing this is not fair, because regular phones are taxed". This is a true statement, but I would argue that the *existing* taxes are an arbitrary joke: Americans are forced to pay per minute rates on "long distance" (meaning, another state, even though the actual route to another state and the same one could end up using the exact same satellite). Why? Well, it's because the goverment *taxes* based on per minute usage. Stating that the only way to achieve equality is to apply the same flawed system equally is not good logic.
If the functionality of 911 is so important (I believe it is), then other ways can be brought about to pay for it. With the current market penetration of phones, it's not unreasonable to assume that almost everyone has access to 911, so an alternate method could be used, one that taxes everyone just as the current system does. It could even be rolled trivially into property taxes, it's can't be much because it's itemized on my monthly phone bill, and it is tiny.
Saying that the only way we'll have goverment phone services or local governments gaining relevant revenue is to allow regulation of VOIP is beyond silly. There may be a difficult time of transition, but it's clear that progress is on the side of the new technology.
But it's clear from the article what the *real* problem is:
"The City of Seattle in 2003 collected $30 million from telephone utility taxes, its fourth largest source of revenue after property, B&O, and sales taxes."
Here the argument becomes, "A technology to allow people to communicate was developed, and we allowed governments to tax it. Now that an alternative has come along, we need to allow governments to tax it or else the governments won't be getting as much of your money as they are used to."
This is the same logic that would shut down an invention that generates endless free energy (Look at that electricity tax / the private sector that exists to deliver energy!), that would shut down an invention that creates delicious food out of thin air (sales tax / destroying the livelihood of farmers), a great solution in medicine that allowed people to be free of their various prescription drug dependencies... the same idea would oppose all of these things.
Stepping out of utopia land, we can address the one thing we *can* replicate nearly for free, and realize that it is the same logic opposing free software.
It is not good logic.
local and state governments are going to lose more and more funding for important services like 911 and Universal Service
I would agree 911 is an important phone service and should be provided.
But all the other taxes?? I don't think so.
The universl service fund was established to provide phone to rural areas. The question I have is "aren't rural areas wired already?". About internet for schools -- I say let the people who go to those schools pay for their own internet like I do. Libraries? I pay through the teeth through property taxes (Utah) already for library facilities.
So much as the federal taxes go -- the federal tax was placed on the phone to pay for the war of 1812 -- isn't that war over and paid for yet? I know it has been used to pay for all the other wars since then, maybe I don't like to see war financed through my phone use.
I know this is an oversimplification, but this represents a deep resentment of the government as it stands today, and I'm not to sure if I care if it crashes and burns. I'm sure others feel the same way -- that Washington (and many local governments) have lost touch with reality, as have the voters who keep "liars" in office on the basis of "moral" grounds.
Yes I'm mad. Phone service can go away. I'll start to use carrier pigeon if necessary.
Take the cheese to sickbay, the doctor should see it as soon as possible - B'Elanna Torres, "Learning Curve"
and treat VoIP calls and pots calls the same?
Wouldn't somebody with a VoIP phone servuce provider like http://www.usbphone.com.au/ that has a call relay station that can call land lines not be considered to be Universally covered?
After all some places are too expensive to do last mile wiring for for pots, but you can justify using wireless links to cover that area for wireless internet.
In this case, the govt might be able to achieve 911 and universal service without spending a dime, and pushing the cost back onto the consumer... which is either a bad or a good thing depending if you're blue or red... but the services will not need to disappear.
(ps... is it just me or is it odd that "red" meant "communist" last century and "freemarketeer" today?)
How much traffic in a given area's actually VoIP and not, say, MMORG or bitorrent?
Great. More ways for people to claim that EverQuest and pirated movies cost lives.
local and state governments are going to lose more and more funding for important services like 911 and Universal Service.
Almost everybody agrees that 911 service is necessary, but it is far from obvious why this cannot be paid for by properly visible government spending, rather then trying to sneak it in like a backdoor tax on a specific service. Governments love to add little taxes here and there so as to make it opaque how much they are actually spending, leading a government with it's fingers everywhere hindering progress with useless regulation aimed only at preserving dying industries and the revenue government derives from them. Which is exactly what our "progressive" friend is saying should happen to VoIP.
As for Universal Service, give me a break. People who live in rural areas don't pay special taxes so that I can get clean air, silence, and nice natural surroundings in the middle of the city. Why the hell should they? After all I chose to live here, which it's upsides (like 8 megabit broadband to the apartment) and its downsides. The same goes for people who want to live in rural areas: they chose to live where they do, and that means taking the benefits as well as the consquences, instead of crying that others should have to pay for your luxuries.
Perhaps one day when I am older I will begin to understand how a human mind can work that calls itself progressive, and then attacks progress because it might get in the way large governments clectrocractic systems. I certainly don't now...
This is just another beat-up by the telcos who are afraid of VOIP. They should get into the data carriage business, and concentrate on delivering high speed data pipes to every home instead.
It's the wire going in the door that you levy, stupid, not the protocol going over the wire! And those wires are in local neighborhoods, subject to local taxes. Just like they've always been.
"While many of us have been celebrating the
recent FCC decision to keep regulation off of
VoIP, but there may be some undesirable results
for those progressive geeks who believe
government should do more than provide military
defense."
I cringe everytime when I read PC-speaks like the above - they just change EVERYTHING to suit their own narrow view !
For instance - they call themselves "progressive", while in reality, they are for BIG GOVERNMENT !
Please, keep your PC to yourself and don't pollute the geek scene !
Thank you.
Muchas Gracias, Señor Edward Snowden !
http://www.researchedge.com/uss/dev.html
DEVELOPMENT AND INSTITUTIONALIZING OF UNIVERSAL SERVICE
Historical Context:
The term "Universal Service" was introduced in 1907 by Theodore Vail, then President of AT&T. However, in the early twentieth century it had quite a different meaning in practice. Due to basic incompatibility or a lack of interconnection, competing local phone companies could often not connect their respective customers to each other. "Dual service" or subscribing to both services with the attendant duplicate wiring and equipment was common, especially for businesses. Thus, Universal Service at first meant compatibility and interconnectivity of competing phone services that we today take for granted. It was only later that the term "Universal Service" became associated with a social compact to connect those disadvantaged by geography, income or other factors.
The Mann-Elkins Act of 1910 gave regulatory jurisdiction for interstate telecommunications to the Interstate Commerce Commission (ICC), defining telephone companies as "common carriers" who were "to provide service on request at just and reasonable rates, without unjust discrimination or undue preference." The Communications Act of 1934, though not naming "Universal Service" specifically, lays out its basic tenets "so as to make available, so far as possible, to all people of the United States a rapid, efficient, nation-wide, and world-wide wire and radio communication service with adequate facilities at reasonable charges." Establishing the separate Federal Communications Commission, the act gave the commission new powers to regulate tariffs and services but expressly limited federal authority to interstate service. In 1994, the sixtieth anniversary of the Communications Act of 1934, President Bill Clinton said:
When President Franklin D. Roosevelt signed this historic legislation so many years ago, few realized the dramatic changes in communications that the future would hold. Yet that stroke of the pen ushered in the beginnings of the Information Age, an era in which vast amounts of knowledge flow freely across continents and circle the globe in a matter of seconds.
Today, as we celebrate the vision of the authors of the Communications Act, we are still defining the role that telecommunications technology will play in our society. With a universe of electronic information at our fingertips, we can better educate our people, promote democracy, save lives, and create jobs across America. As we work to enhance the partnership between the public and private sectors, we continue to draw inspiration from the original Communications Act, which has long served to benefit all of our citizens and to propel our nation into the future.
(Federal Communications Law Journal, Vol. 47, No. 2, December, 1994)
There subsequently developed a series of programs, structures and protocols to encourage and enforce the expectation that basic local and long distance telephone service be available to all. The major components insuring ubiquitous availability of plain old telephone service (POTS) and other consumer services such as "free" broadcasting have been as follows:
Universal Service Fund (USF):
The Federal Communications Commission (FCC), anticipating the breakup of the Bell System, established the National Exchange Carrier Association (NECA) in 1983 as a membership association of local telephone companies. NECA is a non-profit company directly regulated by the FCC to establish and administer interstate access revenues, access charge pooling and administer the Universal Service Fund (USF) to provide assistance to telephone companies in high-cost areas (primarily rural, but defined as those with costs in excess of 115 percent of the national average). The funds are collected from major long distance carriers and administered and dispensed by NECA. The funds are used to extend telephone service to previously unserved areas, help pay for system extensions and to keep basic rates low.
D
What? It's the 21st century. The Universal Service fee is bullshit. What part of the country is without telephone lines?
The Universal Service fee is a subsidy for the well to do. Developers subdivide former farmland and put nice big houses on them. The phone companies need to build phone lines out to them, putting up poles, stringing cable and what not. The Universal Service Fee is a way for them to recoup that loss.
It isn't about providing phones to poor underpriveledges children in Arkansas.
LK
"Hi. This is my friend, Jack Shit, and you don't know him." - Lord Kano
...how huge corporations can extol the virtues of the 'American way,' 'free trade,' 'competition,' and the like only until the moment that they realize that they've become completely obsolete? Then they fight like drowning rats using silly arguments like 'not giving us your money any more will be BAD for you... Pay no attention to the progress behind the curtain.' This sounds durprisingly similar to the arguement that Verizon threw up earlier this week to prevent municipal Wi-Fi. Whatever. I say good riddance to 'em and bring on the progress.
---As my daddy used to tell me: "You gotta be smart before you can be a smartass."
Universal service fee.
911 is state of locally funded. The cell phone 911 problem is mainly a result of people not knowing where thay are. Net thing you know, there will be a lobby group to requre funding for 911 cell phones for dogs and cats. Hell, they can't tell us where they are either but there is some remote possibility that you might wreck your car or fall off a mountain and your dog or cat could push the panic button for you.
There needs to be some sort of cost benefit analysis applied to this stuff. IMO, it's WRONG to 'tax' (fee) everyone in order to deal with people who are too stupid to know where they are. As for those situation where you may be able to push the panic button but not talk, there are commercial services available for those who desire this much coddling.
VOIP over 2.5G or 3G phones will not steal monies from this 'tax' structure. The fee is a pass through from your phone company. They will still have to pay it and they will, generally, continue to pass it through. Interestingly, the only phone company owner I know says that there is no real accounting of these fees, even though the companies are required to pass through no more than they charge.
I know that universaL access is charged on my IDSL line so no loss there if I go VOIP. Is it also charged to cable TV companies? If so, then VOIP is a red herring for more 'tax'.
Now I'm the grandest Tiger in the Jungle!
911 service, access for the disabled, etc. are all things that are important to society as a whole. For example, the indirect benefit I derive from having the disabled be able to access the phone system are unrelated to whether I own a telephone myself. So, they should be paid for by society as a whole--through regular taxes.
The likely reason these are surcharges on your telephone bill is because Congress was trying to hide taxes in "user fees" again, knowing full well that most people would end up paying for these anyway, not only as part of their own phone bill (which they could perhaps avoid) but also in higher prices for goods and services.
If these are federally mandated services, then the federal government should pay for it out of federal taxes. If they have to be raised in order to do that, that's OK: you were paying the taxes anyway already, and at least making it part of the regular tax system means that (1) you see who is responsible for the expense (the federal government), (2) a separate bureaucracy for administering those taxes can get eliminated, and (3) phone companies have a harder time hiding phoney "federal" charges among real ones on their bills when such charges don't exist anymore.
everyone should have a Cell / mobile so this is kind of moot
plus who
the local fire service gets its funding from where ? should they not fund the 911 call center ?
The USF is to pay for the infrastructure in rural areas. Plenty of rich people live in rural areas. So I agree, fuck republicans, dirt cheap phone and data service for liberals. I don't want to talk to anyone Wyoming anyway.
But you could learn a thing or two about economics. See no one wants to pay for infrastructure, but an infrastructure that's cheap for everyone to use generates a lot more commerce which inevitably enriches everyone. People like you, who don't advocate a cheap infrastructure, are really anti-trade, and pro Scrooge McDuck. And when the pendulem swings back, it always does, the consequences might make the reformations of Teddy and Freddy Rossevelt seem tame.
Between satellite internet and cell phones you don't need a wire running out to your house anymore.
We're in the process of building a house that will produce its own electricity and won't have a phone line or any other type of wire connection. If we didn't want to rely on satellite and cell phones there are still more options beyond those. I'll probably get an Amateur Radio license anyway. When everything else goes to crap it's one of the few comm channel that manages to stay working.
Dump the Universal Service and use the money for something productive. Cut the cord and move on.
That's our life, the big wheel of shit. - The Fat Man, Blue Tango Salvage
There's ~370 million people in US. Let's assume there are only 100 million phone lines. You pay almost 10$/month in bullshit taxes and fees for every phone line. That's like a billion per month.
This is allegedly for things like 'universal access'. WTF? For 12 billion per year for the past decade, we should all have fiber to the door with GB internet access.
Instead, we have a bunch of fat, rich telecom execs and public service government parasites doing something, 'something'? with all that money.
So if anyone is looking for a tear over any 'lost' tax revenue, you won't find any from me. May all of the money sucking government parasites dry up and die, so we all have a little more blood to live on.
Please point out where in the United States of America's Constitution that I am bound by contract to help those "less fortunate" than me, since we are talking in a discussion about a US Federal government. If you look at the document, it is basically an agreement amoung State Republics to establish free trade, a common currency, a postal system, and how to interact with other nations.
With regard to the main discussion: A point that does not seem to be brought up is the fact the FCC gave itself and only itself the power to regulate VoIP. This power to regulate was not given by an act of Congress, but by a decision the FCC itself made.
It's unfortunate, IMHO, that we are commenting and debating over the outcome of such rulings. The questions that need to be asked, debated, and answered are:
I would say no.
Taxes on phones, or any of the other basics, are highly regressive, and unless there is a good social reason to discourage use of that good (like with energy), it hurts the poor disproportionatly to tax them.
I see no reason why 911 and other services cannot be supported by a tiny portion of an income or wealth tax. Alternatively, part of an airplane tax+tariff (a CO2 tax or a airplace fuel tax+tariff) could be used to pay for it.
Well, they must be different from Arizona cowboys, then, because I grew up with cowboys out in the sticks who would fight you as soon as look at you.
The authentic ones are humble blue-collar laborers who care about the earth, animals, and people.
Right, they care about animals so much they brand them with red-hot irons and cut off their nuts without anesthesia. Not to mention rodeo.
Have your Lucchese crocodile-skin boots ever set foot on a working ranch, cowboy?
Folks who are receptive to progressive causes I might add.
Oh, of course. All the "cowboys" down on Sixth Street in Austin, you mean. The ones I know, the ones who have actually had cow shit on their boots, heartily detest all things Democratic and progressive.
-ccm
Too much Law; not enough Order.
All US local, state, and federal and I would assume foreign governements cry foul when their distributed tax schemes get consolidated. See we only charge you 1% here, and here, and here, and here, and here, and here, and here, and here....sure it adds up to 67% but this tax is only 1% see.
Now as far as universal service, several cities are trying to do that. Which would provide the poor with near free wireless ISP, cell, and phone service. Of course they are being sued left and right for it.
Bzzzt. It wasnt lack of regulation that led to the AT&T breakup - it was lack of competition, eg AT&T was a monopoly, becuase land-based copper is inherently a geographic monopoly, and AT&T just bought up all the small companies. And once a given area was wired, the barriers to entry were just too high (eg, no one could afford to build out their own copper plant) *And*, the breakup did nothing about that geographic monopoly (at least as far as local service was concernerd).. It *did* eventually lead to the current state of long distance, where there is tons of competition (You hear ads for a new 10-10xxx company every few months), rates are low, and consumers are king.
There is *already* healthy competition in the VOIP industry, and even if larger players buy smaller ones, there is no inherent geographic monopoly to serve as a barrier to entry for new entrants.
Concerned parties should be more worried about the current state of broadband access, where current telco's and goliath cableco's are forming up a duopoly - one choice for cable, one choice for DSL, and wireless tech has lots of hurdles to clear (literally, getting LOS in a hilly area for more than 100ft is almost impossible)
Universal Service? Ha! That's the biggest misnomer in the world. It doesn't go to Universal Service for anything but billion-dollar Chicago/New York/Los Angeles school districts to buy roomfulls of Cisco routers they will never use. The whole program shoudl be taken out and euthanized...and the tax abolished forever. It's do-gooders like this that have ruined this country by producing a nanny state that really doesn't do anything but line people's pockets.
911 is now becominig Enhanced 911 [E911] and if I am not mistaken, the FCC or state requires charges too customers for this service. This is definatly required for cell services and would make sense as well to be required for VoIP. Vonage is my current carrier and they charge A few extra bucks a month for maintainance in the 911 field. I do not think that it is much of a problem. Even if companies are not funding it, the company simply routes it to the nearest facility. This facility is usually your local police HQ which is run by your taxes, and therefore still in operation.
_
Free 27" Sony WEGA TV
More and more I am objecting to phrases like "progressive geeks who believe government should do more than provide military defense". Some of us believe more government than the minimum is oppressive and that greatly reducing the size of the government would be progressive (i.e., "progress").
> Why make it a "tax"?
> Blood money is a lousy way to pay for anything.
> If this is a a cause you think is "worthy", just make an extra
> payment into a "needy get the service free" fund.
Whether one emotionally doesn't believe in taxes and price regulation for essential services is irrelevant; it makes sense from an economic perspective, as well as from a social contract perspective.
As macroeconomics theory states, it makes sense to look towards a tax in several cases, one of which is when the marginal costs (MC; the incremental cost to add a single additional consumer to an existing service) is much less than the average cost (AC; the total cost for the service divided by the total number of users). In other words, the fixed costs for a particular service is very high compared to the marginal costs.
So let's say the fixed costs for providing the 911 service is $1000 (costs for infrastructure, monitoring, etc). Let's say that the marginal cost for providing the 911 service to a given subscriber is $10.
Assume that we have 10 rich people who are willing to pay $200 for the service. We have 90 poor people who are willing to pay $11 for the service.
We want to supply all 100 people with the service, so to do that, we have to charge a max of $11 for the service. The marginal price is $11, and the marginal cost is $10, so we're okay from an efficient price perspective.
The problem is that at this price, we're losing money: ($11 x 100) - ($1000 + $10 x 100) = -$900. So it makes sense to allow the 911 service to have a monopoly, but use regulation to set the price at a level that has MR > MC, but subsidize the fixed costs with taxes.
For this example, let say there's a $91 tax that only the rich people pay, and a $1 tax that the poor people pay. Pretend that the tax rate is progressive enough to cover this with the difference in income. So in taxes, we collect ($91 x 10) + ($1 x 100) = $1000. Okay, the fixed costs are covered. Now we charge $10 for each user that uses the service. For 100 users, we generate (100 x 10) = $1000 in revenue, which covers all of our costs. The 911 service is exactly breaking even.
Moreover, each group is paying equal to or less what they were willing to pay. The poor people are paying $10 for the service + $1 in "911 tax" = $11. The rich people are paying $10 for the service and $91 tax = $101 for the service, which is less than the $200 they were willing to pay for the service.
Is this more efficient? Macroeconomics theory says yes. If the rich people had been the only ones served, they would have have had to pay [$1000 + ($10 x 10 users)] / 10 users = $110 for the service to just break even. This price would be even higher if a private company had been running the service, since they would have to do more than break even; they'd have to turn a reasonable profit. So from the rich people's perspective, the regulated, taxed price of $101 is less than the case where they were the only ones served ($110) as well as being lower than the maximum price they're willing to pay ($200).
So in conclusion, in the regulated case, everyone gets service (social contract and altruism benefit), both the rich and poor people pay equal to or less than what they were willing to pay (maximize the served base), the marginal price is higher than the marginal cost (efficient price), and the 911 service is break even (so we're not charging too much). Everybody wins.
This example is a little simplified because the marginal costs are too close to the fixed costs (1% for this example). The fact is the marginal costs for providing 911 service is nearly $0, but the fixed costs are very high.
Of course, unnecessary taxes are outrageous, particularly when spent on pork spending bills. Yes, Dubya, I'm looking at you and your damn yacht.
Insert simplistic political, ideological, or personal proselytization here.
> Everybody wins.
Note that this example is even more telling. The rich and the poor people benefit from the regulation. The government is indifferent because the 911 service is revenue neutral. The only person who would be against this idea is someone who notices that the rich people are willing to pay up to $200 for the service. Let's call this guy Hank.
So if Hank were to set up a parallel service and charge $200 for it, his profit will be as follows: ($200 x 10 users) - ($1000 + $10 x 10 users) = $900. So instead of this being a break-even service where the rich pay $101 and the poor pay $11, Hank charges the rich $200 and doesn't serve the poor at all, and he makes $900. Obviously this goes against the best interest of the rich and the poor, so Hank handles this by railing indiscriminately against "regulation" and the like.
So when he gets his service set up, he uses the fear of taxation and this newly created hatred for "regulation" to make the rich and poor think they would pay more if the government stepped in, when actually, they would pay less.
Since the government is generally indifferent (it was a revenue neutral program), it doesn't matter if Hank does this. In fact, if Hank is a large contributor to party in power, they might even encourage it.
Insert simplistic political, ideological, or personal proselytization here.
this is like the gas tax in California. Since 1998 a 16% increase in miles traveled yet a 8% DECREASE in the taxes coming in from the tax applied to a gallon of gas. Why? because of better fuel economy, hybrids, and electric cars that all use the roads but pay less to do so. So the good in using less gas is going to cause the infastructure in CA to crumble for lack of funding....Always something on the otherside of the same coin.
This is a silly objection to not regulating VOIP. The costs of allowing regulation of such a technology are far beyond the amount of money paid in taxes (especially for people making free calls) and other sources of revenue can easily be substituted.
Society has deemed it important to have emergency response centers and 911 service (and I agree) and thus we need to tax people in order to pay for these services. The notion that this tax must be paid by telephone users is based on several misconceptions.
First we have the misconception that somehow the people who use the service should pay for the service. In many circumstances in private industry this is valid but there is no reason to believe this is true for emergency centers. If we really wanted to adopt this system we could simply charge people when the emergency services arrive after a 911 call. I think the fact most people would find this troublesome, as it discourages those without much money from using emergency services, shows that in this case we really DON'T believe emergency services should necesserily be payed for by those who use them. Rather it is a general societal good and should be paid for through general societal coffers (income tax, property tax).
Secondly, this rests on the misconception that a phone tax somehow charges the people using the resources appropriately. However, it is quite unlikely that those who have 2 phones are twice as likely to use 911 nor are those who make more calls more likely to use 911.
In short this issue is a chimera. 911 and other services can be paid for just as fairly using other revenue sources. The reasons to put it on the phone services in the first place was just to hide the tax from the public, they know about it now and we might as well fess up.
If you liked this thought maybe you would find my blog nice too:
> There's no reason you can't have multiple services with
> different qualities based on
You're describing tiered services using a price discrimination model. That works for some situations, such as for movie theaters (you spend more to see a movie during prime time than during a matinee). However, it won't work if you don't have an objective basis for the price discrimination. How do you determine the basis for price discrimination for a service? It's not like you can ask the person what their income is and charge them based on that.
So you'd be left with providing "tiered services": you pay a little for "economy service" and more for higher levels of service. The problem with that how it would even be possible to provide tiered services? It's not like emergency services are like cable television where you can have premium services (that have a low variable cost, but you can charge a lot for). Would the "economy version" only respond to every other call? Maybe they'd send someone out within 24 hours instead of immediately? No, I can't think of a way to make tiered services work for 911 services. And certainly not in a way that would be more optimal for the example I described.
A second concern is with the problem as I outlined it is that the fixed costs are much larger than the marginal costs. Therefore cost savings do not come from reduction in the marginal costs; they come from per unit reductions in the fixed costs; i.e., spreading the fixed costs across more users.
The solution I provided required a roughly equal tax with no need for price discrimination. Assume the poor person has income of around $11,400, and the rich person has income of $1,000,000 (obviously an extreme example, but unfortunately not unheard of in the U.S. today). That makes the $1 "911 tax" on the poor person of to be around 0.008% of their income. On the rich person the $91 "911 tax" would be of around 0.009% on their income.
You tax based on income, then you charge $10 for the service. So no price discrimination is necessary.
> Moreover, if the poor truly couldn't pay for even the lowest-
> priced service, the government could supply "911 vouchers"
How would you pay for that? It's easy to throw out a "solution" that fits a particular ideology, but working the numbers is when the rubber meets the road.
I described a revenue neutral 911 program that actually minimizes the price for 911 services for both rich and poor people (for my example). So for you to propose "vouchers", how would you make sure those 90 poor people were served without making the rich people pay more than $101 (or $110 for that matter) given the constraints of the problem? I don't think you can.
> There's absolutely no reason that the government needs to
> supply a monopoly service.
That sounds less like reasoning, and more like dogma. As my admittedly simple example illustrated, it's clear that any case where the average cost is significantly larger than the marginal cost is a candidate for regulation. To say otherwise is to rely less on rational thought and more on ideology.
Insert simplistic political, ideological, or personal proselytization here.