Slashdot Mirror
Modem Tax - Urban Legend Come True?
Phluck writes "It seems that the modem tax myth might come true, the FCC is trying to decide whether ISPs should pay a fee for using the telephone network. Naturally this tax would probably be passed on to customers.
Check out the whole story here on ZDNet. " Scary - I can remember when these chain mails went around.
Another thing to keep in mind is that most of the RBOC also offer internet access themselves. This is just one more way for them to force the local ISP's out of business.
Rural areas generally don't have cable service because the density doesn't pay off well enough for cable companies to put in the wire. Current DSL hardware has a limit of approximately 3 miles from the central office, which also rules it out for most rural customers.
However, you are wrong about poor neighborhoods getting lousy access, at least where I live. I live on the 'wrong side of the tracks' -- the poor east side of the town (of approx 300,000 population) I live in. I had my choice of either DSL or cable modem (I chose DSL, because I run server processes and the cable company basically makes that impossible through use of NAT for anyone who isn't paying big bucks for their 'business grade' service). I also had no troubles using a 56k modem.
On the other hand, most of the people I work with live in the ritzy western suburbs, and all of the new development areas generally are on digital multiplexers, which means that DSL is just plain unavailable, and also means that they generally have trouble connecting at 56k (some report that they can't get higher than 26.6 even in a new house and with a good modem like a USR Courier). Many of those on the west side who are not on digital multiplexers are too far from their central office to get DSL. Being in an old neighborhood around here means it is much more likely you have a nice copper wire all the way back to the central office and more likely you are close enough to the central office to get DSL. Furthermore, large parts of the western suburbs don't even have digital cable service yet (which is a prerequisite for cable modem access). The reason for this is that the cable company is having trouble installing the infrastructure to get service out to all of the new development on the west side.
So the reality is that it is not necessarily true that poor neighborhoods will get lousy access.
Its not that big business probably wouldn't like to ignore the poorer areas... In this case the realities of infrastructure availability just happen to favor the poorer areas.
66-75% of the Phone Company's cost of providing local service is the provision and maintenance of the wires between the subscriber and the central office. This is not usage sensitive.
The sizing of the usage sensitive components of the telephone network is based on providing an acceptable level of service during the peak calling hour of the day, which is usually during business hours. Off-peak usage of these components essentially costs nothing since the capacity is going to be there whether or not it is used.
Think of it as a highway/motorway, that is made of some miracle material that can't be damaged by traffic. The highway is designed to be large enough to carry rush-hour traffic at a reasonable speed. You can drive your car around the highway for 16 hours a day without costing the highway owners any money, as long as you stay off the road during rush-hour.
The telephone companies had made a ton of money from the installation of second phone lines for Internet access, far in excess of what little money has been spent on reengineering central offices with congestion problems.
Guess how many phone company executives in the USA have an engineering degree? One. That should tell you something about the business.
The cost of providing service has been declining for years due to advancements in technology and layoffs of skilled labor. The phone companies have invested their monopoly profits in cellular systems, cable systems and foreign ventures, just about everything except their core business. Service quality levels have been declining and the phone companies show little or no interest in providing new services or upgrading their infrastructure.
The Bells should be broken up and forced to compete in the real world.
As a part-owner/network administrator for a regional ISP, I can say that this is never going to happen. ISPs already pay the Bells exorbitant amounts of money for access lines (in the form of PRIs or CT1s...prices range from $400 to $1000+ for 23 digital phone lines).
You can even make the point that ISPs help subsidize the increased amount of traffic, as we have to pay the Bells around $400/mo per T1 (for local loop charges).
Will they take away reciprocal compensation? (if ISPs are CLECs, they are technically supposed to get paid X cents per minute that a customer is connected...this is how the free ISPs of the UK are funded) Yes. Will they do a complete 180 and start charging a tax for internet consumption? No. The only reason it is being 're-examined' is to keep the Bells happy.
The government isn't about to screw with the economic juggernaut that is the Internet. The Internet is almost singlehandedly responsible for our current state of economic bliss. We aren't going to tax it. Ten years from now, when it is common to everyone, you will probably see a sales tax on ecommerce, but that's the extent of any Internet taxes you'll ever see.
The problem with your arguement is that you are basing it on technology that is not predominant anymore and is becoming less so every day.
Consider calls from me to my ISP:
1. Every house in my neighborhood has it's own dedicated pair of wires reguardless of how many are actually in use. These wires don't cost more just because they are in use.
2. On the other side of my local switch is a fiber optic cable that leads all the way to town. The incremental cost of an additional call going through that cable is miniscule.
3. My ISP does NOT lease hundreds of individual incomming lines but instead has a small number of high capacity lines (essentially a couple of T1s) and the "switching" happens on his own equipment. These high capacity lines run in parallel with his local switch and as a result the number of calls coming into the ISP does NOT impact the number of other calls that can go through that same switch.
4. My ISP pays thousands/month for these lines and pays again for the data going back out to the rest of the internet.
It seems to me that the only significant additional cost here is at my local switch and that the telco. is more than making up for that with the fees they charge my ISP.
Seriously, the problem is the FCC method. If it's a per minute rate, that's insane - we're not making long distance calls in the "true" sense.
...
But, a flat rate charge? Well, since it's for access for rural areas, kids in school, and seniors on low incomes - Yes. Why should we be exempt?
Face it, we're turning into a three-tier society.
Tier 1: Internet Elite - the rich and technologically enabled, with SDSL, T1/T3, and equivalent - we don't care about these charges.
Tier 2: Internet Enabled - the urban upper and middle class and the suburban upper class, with low-grade DSL or Cable Modems, or at least 56K. They know they get a pretty good deal and that it can't continue much longer.
Tier 3: Internet Handicapped - the urban poor and the suburban/rural middle and lower classes. They have to go to the library to get decent modem access, or pay large chunks of their disposable incomes to do so. They continue in their downward spiral in this uberelite society.
So, yes, put farmers and homeless kids on the Net. Although I think we should require old folks get a NetNanny filter on their ISP access, so they can't send spam to the rest of us or access any voters sites - make them truck down to the library for that, to keep them out of our hair
Will in Seattle
The prices on POT lines are based on the way they work without ISPs: occasional short uses, not long-term continual connections. You are on a time-share system, and you are insisting on your right to use it 100% of the time.
The phone system is not built to support half of the population being continually connected across town. With the rate internet use is growing, this could easily happen in a few years.
If you are connecting 24/7/365, you should be paying for a line from you to the other end of the connection, because that is what you are using (aside from all the unnecessary switching hardware in between that you are also taking up). If that means paying ten times a normal second-line fee, so be it (after all, 24/7 is considerably more than ten times the normal usage). It's either the people creating the drain on the system who pay for it, or everybody else. Constant internet connections using telephone lines are a horrible abuse of a system meant for other things.
Direct connections may be more expensive right now, but only for the end user. When you consider all resources consumed, you realize that direct connections can be much cheaper, because they are designed for this purpose. When prices fairly reflect the resources used, the system will change to use the minimum resources. Everyone will start using cable or DSL, or some other dedicated service, the price will drop to or under that of a dedicated POT line, connections will be much faster and more reliable, and the situation will be better for everyone.
Up with the modem tax!
My God -- you'd think the last place you'd find this kind of "journalism" would be Slashdot. The "modem tax" is as much a myth as it always has been, and I'm honestly disappointed that this site has seen fit to breathe any new life whatsoever into it.
All the article says is that the long distance companies are lobbying for the current exemption to access fees that is given to ISPs to be lifted. They've been doing this for years, and every time the FCC sees through their twists of logic and denies it. The FCC has also stated, very clearly, that they have *no* intention of lifting the exemption. That doesn't stop the telcos from complaining about it, but the proposal isn't any nearer to happening than it was the first time I saw a "modem tax" chain letter.
The FCC *knows* modem calls are *not* long-distance calls. The telcos might have a leg to stand on if all of the switching equipment (i.e., routers) on the 'net were theirs, but it's not. It doesn't make sense to allow them to charge for the use of equipment that doesn't belong to them. Fortunately, the FCC realizes that, and will probably deny them again and again until they give up asking.
Relax... as usual, the "modem tax" ain't gonna happen.
---
Consult, v. t. To seek another's approval of a course already decided on.
I know I'm getting a pretty good deal with my cable access, but I see no reason why it can't continue much longer. Bandwidth and cable modems are going down in price, and the cable was already there anyway. It's a good deal for the huge improvement in performance, but not too cheap to pay for itself.
I think cable is going to keep growing, become profitable, and eventually lower in price. It'll also go in waves of slowing down and speeding up as more people join and the system is expanded (it really scales quite nicely, if not trivially; if usage increases to the point where it is a problem, the funding is there to do some rewiring to solve it).
Here in Canada, we have $50/month cable connections. The price is high enough still that they don't have to charge for installation. Everyone who has it raves about it, and people are signing up like mad. I wouldn't be surprised if it was already turning a healthy profit. I'm sure they'd love to compete with the POTS services, and I bet they'll offer limited bandwidth connections for $20 soon.
I think ISDN behaves pretty much like a normal phone line. A virtual circuit is established to make a call and it's torn down when the call ends. As far as metered rates, it depends on your phone company. Some do, some don't. When I had ISDN it was a flat rate (very nice).
With DSL, though, I think everything is built for 24/7 connectivity, and even your voice calls are handled with data packets. I'm not 100% sure about this, though. Maybe somebody else has a better idea. If this is the case, though, DSL might not be taxed as a normal phone line via your ISP (like cable modems)...
I've seen several people mentioning paying metered rates for DSL and other fixed connections... I just thought I'd point out is that for *DSL/ISDN/Frame/T[1-3] you're already paying for the line yourself, leasing it from the teleco in most cases.
If you read the article carefully, you'll see that the telecos are complaining about dialup customers tying up the local exchanges with long duration calls to the ISP's...
Remember, local telecos aren't desgined to handle a 'full' load, they work on the principle that not everyone will be using their phones at the same time. Basically dialup users are putting extra load on the voice lines, whereas the people who are paying for leased lines are already paying for their connectivity, and aren't potentially clogging up regular voice lines. That's about the long and short of it.
----
Dave
"I love chess! It is like ballet only with more explosions!"
- Dave
I'm an American and I think he had quite a valid point.
So now are you going to find some way to insult me and my country in order to make your point?
So you're saying the phone companies are guilty of not subsidizing ISDN so they can charge by the minute for local calls? Of course, though, they can't charge by the minute for local calls, and they will never get approval to do so. Any serious talk of a modem tax is referring to special charges for modem users, either directly or indirectly.
ISDN was probably poorly handled, but it was never that great a technology to begin with. It is complex and therefore costly to install (misconfigurations galore), requires that special lines be laid and special equipment installed, and not really that much better than POTS.
ISDN was never really viable as a standard feature in everyone's home. If the prices were high, it was because the telcos knew they would only make money this way. It had to be profitable on the few customers who would pay a premium for a modest performance increase. They aren't stupid; if they saw potential for installing these lines in most homes, they would have lowered the prices and made a fortune on volume.
Now that better technologies are emerging, and internet connections are quickly approaching a household standard, some phone companies are starting to do exactly what you describe, except with DSL.
Of course the phone companies are greedy. Any for-profit public corporation is required by law to seek maximum profit for its shareholders. That doesn't mean that they are acting maliciously.
You have been conditioned by the telco to think this way. Really, why should you have to "choose" a dialing plan at all? Why doesn't the telco just initially charge you by the minute on the low-monthly-fee plan, then if you go over x minutes, your plan automatically switches to the flat-rate plan for this month? Go over x minutes on LD and you're auto-switched over to the Whatever-LD-Nickel plan. The only reason to offer "plans" is to deliberately take advantage of and to cash in on people who choose the wrong plan for themselves. It's really quite evil when you think about it this way.
ISDN could have been the RBOC's solution to this years ago. The setup/connect time for ISDN is only a second or two so there is no need to stay connected unless you are continuously sending or receiving data. Keep in mind that an ISDN channel uses the same amount of bandwidth as a regular phone line (although it's common to bond two channels together.)
Instead of fostering this technology, the RBOC's have kept the prices prohibitive. In most areas of the US the user is charged per minute per channel or an exhorbitant flat rate (more expensive than a T1 when I lived in NJ.) To make matters worse you have to pay for a full minute even if that e-mail only took 5 seconds to transfer. The average home user would tie up the network a lot less if their connection only came up long enough to load a web page then closed down again--almost definately less than a voice call rather than more!
So the RBOC's force people to tie up their network and then complain that they need more money because of it. Do you think that they didn't realize this would happen?
Think about the services RBOCs supply to home users... The bare minimum are affordable because RBOCs are local monopolies that don't benefit at all by giving more than the bare minimum--they basically charge as much as they are allowed for extra services. Over the last couple years more competition has entered the picture, and only now are we seeing reasonably priced data services showing up from the RBOCs.
So, why wouldn't they make prices more reasonable for ISDN if it will lessen the load on their network? Because they don't have to! Why give it away if they can charge 2-4 cents a minute for local calls? Why give away call waiting if they can charge $2.50 a month for it? (You don't think that it costs them any extra to provide you with call waiting do you?)
Greed.
All I can say is thank * for my cablemodem. As far as I'm concerned the RBOC's can go fsck themselves.
numb
?syntax error
Although, we are moving onto Cable and DSL right?
Well, no, people in rural areas or where it's not cost-effective to install DSL or Cable Modems don't have these services. Which means poor neighborhoods get redlined and get lousy access.
Which is what the access charge is for.
Will in Seattle
The problem with this tax is that it only harms the small isp's who can't simply absorb such a tax, and thus need to increase their rates significantly.
AOL and other large isp's can absorb the tax much more easily, and, depending on the details of the tax, could probably leave their rates steady, or at least be able to undercut the smaller isp's.
It would also be interesting to see the tax's influence on the recent trend of free internet access bundled with computers/free computers bundled with internet access.
drudd
Venn ist das nurnstuck git und Slotermeyer? Ya! Beigerhund das oder die Flipperwaldt gersput!
Last time I checked ISPs had to pay for extra lines in the first place. As I recall it's no ones business how you use those lines, if I want to stick an autodialer on my phone and call my second line 24/7/365 that's my own business. I just don't see the logic behind the telco's complaint. Of course, perhaps it's not logic based and they just want to cash in on the thousands of ISPs all over the country...
Kintanon
Check out JoshJitsu.info for Brazilian Ji
I think that the article is a little vague on which lines they're talking about. However, my impression is that the tax would apply to local calls from a user to an ISP. This is nuts. Local calls are either universally flat, or metered but at a very low rate (which was my experience with Bell Atlantic). Either way, the RBOCs can expect people to generally tie up lines for long periods of time and don't consider it a problem.
;) AOL, Virginia's premier pyramid scam, probably used to have this problem. People would sign up, see the first bill and run away. Flat fees may increase the load on the networks and computers, but in the current growing environment that would be best, IMHO.
I am a bit more sympathetic when discussing the connection between the net as a whole and the ISP, but not this sympathetic. While the current pricing model is being taken advantage of, this strikes me as just another example of telcos not wanting to adapt to new technologies. Way back when, they were practically handed the Internet, packet-switching, the whole nine yards, and dismissed it as worthless. Seems to me they're still thinking in terms of circuit-switched voice networks and not as telecommunications as a whole. (a charge for overall transmission - both send and recieve - would be more logical)
Of course, tolls would kill internet usage, which has been prospering largely because people don't mind wasting time on it. If the phone company charges you when you browse through amazon most people are going to stop using it. (/. is an exception. It's so addictive it could be a Controlled Web Site
-- This and all my posts are in the public domain. I am a lawyer. I am not your lawyer, and this is not legal advice.
From what I've heard, AT&T (formerly TCI) started forcing non-business-rate cable modem customers towards NAT just recently, prior to that they were doing DHCP with real IPs for most users, and the IP's were fairly close to static. From what I've heard they are billing a move towards agressively changing IPs even for DHCP users as a 'security feature' as is how they are billing the move towards NAT. It is my understanding that the only way you will be able to get a true static IP from them in the future will be to pay for their business grade service.
As for DSL service, part of your quality and speed experience may depend on which ISP you use (since with DSL you have a choice and with cable you don't). US Worst seems to get the most dings in that area, and there are rumors that they may be moving towards forcing NAT on people also. I am using one of the other providers, and I have seen what I would consider good speed. I am paying for the 256kb connection and I generally see better than 400kb (50KB) download speed even from busy sites like netscape.com, and that is going through my underpowered (P75, 48M) squid proxy server and using Netscape as an FTP client (which isn't the most efficient). Upline speed is generally only slightly slower than the downline speed. I've also seen aggregate downline bandwidth usage of around 512kb when doing multiple transfers at once.
It will be interesting to see how well AT&T does in building up their infrastructure (like splitting cable modem network segments to reduce shared bandwidth congestion) as they add more customers. One other advantage to living on the poor side of town is that much fewer of my neighbors probably have cable modems than in the more afluent western suburbs.
As for distance, you must really be right on the edge of your service area. I am about 2.5 or so miles from the central office and while they wouldn't give me 512kb service here, I've had no troubles with 256kb service.
I ended up rewiring my house with all new Cat5 wiring, only to find out that the damned water company had some goofy automated meter reader sitting on the old wiring that was messing up the signal. Of course I also noticed an improvement in the sound quality in my voice line after rewiring, so I am not unhappy with the situation there.
One of my reasons for going with DSL is I was able to keep my existing (Linux friendly) ISP. I like the fact that myst ISP knows, and doesn't mind if I am running server processes. Another reason was because I was never happy with TCI as a cable vendor (I bought a DSS dish to get rid of them).
As for the cost issue, I expect that eventually US Worst will be forced reduce their pricing to be more competitive with AT&T. I don't really expect that to happen until both of them get the ability to wire every household in their market areas though.
In the long run you are right about needing fiber to the house, but I won't hold my breath waiting.
I don't know how the US goverment handles stuff like that but over here in Europe they can be darn slippery from time to time.
Then there's nothing to worry about. That never happens here in the U.S.
Damn. The lightning was really close that time.
---
Consult, v. t. To seek another's approval of a course already decided on.
Seems like those who write laws want to create revenue from any viable source they can muster. If it has value, tax it.
I use my ass everyday. Why don't they tax it? Imagine, they could get a reasonable percentage of everything that goes through it.
Once upon a time, taxes were levied for roads, schools, and implimenting basic utilities. That was great. Now, the Biggest Business in the Country wants a cut of our own profits. Why, because it can get away with it. Make it law. If I refuse, I go to jail. So I pay.