FCC Approves New Internet Phone Taxes

basotl writes to tell us CNet is reporting that the FCC has approved a new round of taxes for internet phone service. Some 4 million users could receive this nasty little surprise as early as their next monthly bill. From the article: "The VoIP industry wasn't alone in questioning the FCC's move. In a letter sent last week to commissioners, attorneys for the U.S. Small Business Administration urged the agency to postpone its action until it had done a thorough analysis of the economic effect on smaller providers."

Comments

Trust the FCC...

[Bruce McBruce]

To think up a way of taxing virtually-free phone calls.

Re:Trust the FCC...

[ZoneGray]

The rationale is that they're "protecting competition", by making the taxes equal.

In other words, the established phone companies out-lobbied the startups.

The very notion that a nation with a First Ammendment needs a "Federal Communications Commission" is absurd. It's one thing to manage RF bandwidth, which was the FCC's original mandate... in the 1920's or 1930's. But they've expanded their mission to micromanaging every electronic communcation in the country, which, nowadays, includes just about everything. It's such an impossible task that they continue to pass new rules because the old ones are "broken". Of course, the new rules will quickly be "broken" too. And then they'll pass more.

I say, set up an eBay store to auction bandwidth, and close down the rest of the FCC. We can continue to pay the employees, that's not expensive compared to the damage they do when they're working.

Re:Trust the FCC...

[fyngyrz]

Well, the FCC also regulates access to the medium. That doesn't create a First Ammendment conflict I think.

Where I live, there is one (1) AM station, and one (1) FM station. yet, I cannot get a license to transmit without paying huge fees, employing lawyers, installing ridiculous over-featured equipment (I'm a 1st class HAM operator and at one time held the 1st class FCC radiotelephone operator's license as well -- so I know what's required, in fact, I'm the very fellow you used to have to hire in order to ensure that your installation complied technically. You can broadcast a clean AM or FM signal for under a grand, easily.)

The fact is, the FCC has created a situation where exactly one (1) type of entity has access to the airwaves: The rich. Rich individuals or rich corporations, these are the only ones who can get on, and therefore, they 100% control what is said. Clearly, this is a 1st amendment issue.

so why didn't they tax the rest of the internet?

[Doppler00]

A VoIP call is just another internet connection between two individuals, sending data back and forth. What makes VoIP so special that it needs taxation? Are they going to tax internet video conferencing and Netmeeting next? Instant messaging? Just another example of old people in government not understanding the differences in new technology.

Oh also that fund that is supposed to "subsidize" rural areas is such a waste. My parents have lived in a rural area for years without DSL and it wasn't made available until a couple years ago. And then, it's 128kbps and it wasn't funded by this stupid fund, but by the local telephone co-op. I'd rather the tax go away.

DAMMIT!

[Cleon]

Would it kill the FCC to allow us to communicate WITHOUT paying protection money?

This outfit is getting entirely too powerful. This crap has to stop.

Civics?

[pete-classic]

Does the FCC have the authority to levy taxes? Isn't the FCC an executive agency? Have we stopped even pretending that we have a constitutional government?

-Peter

Re:Civics?

[Registered Coward v2]

Does the FCC have the authority to levy taxes? Isn't the FCC an executive agency? Have we stopped even pretending that we have a constitutional government?

It is not a tax - it is a fee - look at what your bill says. There is no real difference but the name does count becsue agencies can charge fees - and most do.

VOIP has been getting a free ride since they can connect with the landline but have avoided the fee - I'd like to see them junk the fee but that won't happen. It's a good thing that Repiblicans are for less government and working on important issues like banning gay marriage instead of worrying about what they've done to our economy. Where is Goldwater when the Republicans really need him.

From a personal perspective, VOIP is still cheaper since I have a phone in Eiurope and the US and all calls are local.

Re:Civics?

[maxpublic]

The poster is exactly right. The executive branch of every government (local, state, federal) levies taxes without consulting the legislature all the time, getting around little roadblocks like the Constitution by calling them 'fees'. Apparently if you call it a 'fee' rather than a tax then you can do whatever the fuck you want. This is especially true if you limit your fees to specific groups of the electorate who lack the power (or votes) to protest effectively against this sort of thing.

The sad thing is that most people are perfectly okay with this so long as they aren't the ones getting the shaft. And when their turn comes around their neighbors simply see it as payback for the fees THEY had to pay at some point for some government service that they used (or a commercial service the government decided to tax...er, levy 'fees' against). Basically it's a "I didn't hear you complaining when I had to pay fucking fee X for service Y, so don't expect me to speak up on your behalf now that you're the one being roughed by the government protection racket - asshole."

Good luck trying to change things. Governments are as addicted to their fees as smack whores are to heroin - and they've got the guns (metaphorically and literally) to make sure you can't do shit about it.

Max

DSL double dipping?

[nurb432]

Dont you already get charged Telecomm taxes if you have DSL, since its basically a phone line anyway?

( i dont have DSL, so no, i cant go look at my bill )

What really irritates me about this tax

[ScrewMaster]

is that I'm already paying communications taxes (of various sorts levied by various taxing bodies) on my Internet connection. Actually, in my case it's a significant chunk of my monthly bill. In any event, this is a discriminatory tax squarely aimed at smaller companies providing an Internet-based service that inconveniences the incumbent telephone companies. So far as I'm concerned it's double-taxation as well, if I happen to use a VoIP service. Way to go, FCC. Let's just open the door to taxing everything on the Internet ... if you can tax me because I happen to use packets formatted for this purpose, what stops the government from taxing packets formatted some other way. Ridiculous on the face of it.

This is a slippery slope.

[sbaker]

So what about audio chat inside online computer games? I can talk to other players in - how is that different from telephony?

If I'm taxed for talking to someone using VOIP but not when I happen to be playing a game at the time - then maybe VOIP providers should include a copy of PONG that you can play with the other person while you talk to them?

The idea that you can tax bytes that contain the human voice in realtime - but you don't tax bytes that contain pictures, or human voice that was recorded a few hours ago...of all the millions of uses for data sent over the Internet - why should realtime human voice be singled out as special. It's just silly.

We either need to tax ALL data transfers over shared communications links or NONE of them. Repeal the tax on telephony or tax broadband the same way you tax dialled telephony - there is no practical difference.

Hmmm - so if I use dialup to connect to the Internet - and then use VOIP - do I get taxed twice? I think that's probably illegal.

The lawyers will make a fortune arguing this one.

you can't enforce it.

[scenestar]

thanks alot FCC, I shall now make a fortune selling ssh stunnels to canada dedicated to "media traffic".

Re:so why didn't they tax the rest of the internet

[Anonymous Coward]

If they tax VOIP and not other data, then I want a refund for my YEARS of dialup, when my phone line was used for data and not voice.

Questionable conversion rate

[boldtbanan]

FTA:

By one VoIP industry estimate, customers could owe as much as $2.12 extra on a $30 monthly bill because of the changes, said Jim Kohlenberger, executive director of the VON Coalition, which represents the Internet phone industry. Traditional wireline users would pay $1.38 on a comparable bill, while wireless users pay an average of $1.21, he said.

The above is due (FTA) to the fact that the FCC assumes ~65% of VOIP calls are long distance, while less than 30% of wireline and wireless calls are long distance. That makes it sound (to me) like some underhanded lobbying was involved.

In fairness, VOIP that does not connect to the POTS system (e.g. p2p calls) should be excluded as it does not use the same infrastructure and thus should not face the same tax burden. In fact, services such as Skype are excluded from the taxes for this exact reason, so some calculation should be made to determine the percentage of VOIP calls that never touch the POTS system. Other than that, I don't see any reason that VOIP services that use the same resources as the POTS carriers should be granted special exemption from the taxes collected for consuming the same services/infrastructure.

On a side note, my first impression from the summary was that the FCC was levying new taxes specifically against VOIP providers. I got the impression that the FCC was creating new taxes (No taxation without representation!) and that really pissed me off. Upon reading the actual article, that was definitely the implication, however the facts make it obvious that these are existing taxes and VOIP services are only being reclassified so that they fall under the same category as other voice carriers Anyone who thinks they don't -- specifically for services that access the POTS system, not p2p like skype and vonage to vonage calls -- is either ignorant or in denial. Of course, the conversion rate seems extremely off and weighted toward the destruction of VOIP and there doesn't seem to be an allowance for VOIP to VOIP calls which should bypass the regulation. I'm pissed about the extremely questionable fairness of this proclamation, but please present the facts without insinuating that things are happening (FCC creating new tax laws) which are clearly not.

Thought experiment.

[Wellington Grey]

I wonder what they'd to if someone made this set up:

You speak into a microphone and a speach-to-text program IMs the words to your friend's computer which then reads them aloud. Is that voip? Taxable?

-Grey

Re:so why didn't they tax the rest of the internet

[affliction]

A VoIP call is just another internet connection between two individuals, sending data back and forth. What makes VoIP so special that it needs taxation? Are they going to tax internet video conferencing and Netmeeting next? Instant messaging? Just another example of old people in government not understanding the differences in new technology.

If you would have read TFA, you would have found out that they are only taxing calls made to the PSTN, not internet only calls. I don't have a problem with that. I do, however, have a problem with the rate discrepency between VoIP companies vs the Bells vs the cell companies. VoIP companies are paying double the amount the incumbents are paying based on an arbitrary percentage (a number not justified in any sort of way).

Oh also that fund that is supposed to "subsidize" rural areas is such a waste. My parents have lived in a rural area for years without DSL and it wasn't made available until a couple years ago. And then, it's 128kbps and it wasn't funded by this stupid fund, but by the local telephone co-op. I'd rather the tax go away.

The rural telephone co-ops in my area are heavily subsidized by Universal Service Funds. I am 99% certain that your DSL is funded by USF.

Re:I hate extraneous taxes...

[TheSHAD0W]

OTOH Vonage has some drawbacks... Here in El Paso, TX, retailers like Best Buy are selling Vonage's VoIP appliances on endcap displays and offering great rebate deals - and it's not until you bring the thing home, unpack it and try to sign up that you find out Vonage can't give you a phone # in El Paso's 915 area code.

Re:For the love of God!

[Dausha]

Bush the Elder didn't lie. He was out maneuvered by a Democrat-led Congress that sent a tax bill he had no chance of beating in a veto battle.

"Bush initially presented Congress a proposed budget containing steep spending cuts and no new taxes, but congressional Democrats dismissed this out of hand. . . . The alternative would have been to veto any budget bill that came out of Congress, risking a potential government shutdown and possibly triggering the automatic cuts of the Gramm-Rudman-Hollings Deficit Reduction Act. . . . [Eventually,] Bush agreed to a new resolution, and soon after the Omnibus Budget Reconciliation Act of 1990 was finally passed. This new proposal replaced some of the fuel taxes with a 10% surtax on the top income tax bracket (thus raising the top marginal tax rate to 31%) and also included new excise taxes on alcohol and tobacco products, automobiles and luxury yachts."[1]

It is worth mentioning that Bush (or any President) is not able to pass tax legislation. That's for Congress. He can make recomendations and he can veto (not that he has yet, AFAIK), but he can't enact legislation.

[1]: http://en.wikipedia.org/wiki/Read_my_lips:_No_new_ taxes