August 23, 2005 2:46 PM PDT

New taxes could slam Net phone users

A new proposal to federal regulators has once again raised the possibility of new taxes being levied on Internet phone users.

Buried in a 27-page public notice (click for PDF) released last week by the Federal Communications Commission's federal-state joint board on universal service is a call to force more companies to pay taxes into the Universal Service Fund.

"It is imperative that...all carriers that utilize the public switched telephone network are required to contribute to the USF as soon as possible," Robert Nelson, a now-retired Michigan Public Service commissioner, wrote in his proposal. "The dramatic decrease in traditional long-distance wireline traffic and the increase in the use of VoIP and the deployment of IP networks has changed the dynamics of USF so irrevocably that immediate attention to the issue is required."

That would effectively mean new taxes on customers of Net telephone companies that don't currently pay into the USF. Companies that already pay into the fund indirectly may have to raise their rates because their contribution would likely have to increase, Nelson said in a phone interview Tuesday.

Internet-based chat programs and utilities that do not link up with the public telephone network--such as voice-enabled instant-messaging programs--would continue to be exempt from USF taxes, according to his proposal.

The USF, which is used to subsidize services in rural and high-cost areas, is currently funded by a fixed percentage of revenues from long-distance, wireless, pay phone and telephone services. The companies generally pass on those costs to their customers, often in the form of extra charges stuck onto the end of phone bills.

FCC Chairman Kevin Martin has said that any new regulations should require anyone with a phone number to pay into the fund at the same rate, regardless of whether their phone service comes from a cable provider, VoIP provider, or a wireless or wireline provider.

"We should place all broadband providers on equal footing so that they can fairly compete in the marketplace," he said in statement (click for PDF) before a late-July meeting of the National Association of Regulatory Utility Commissioners.

Some VoIP customers already see charges linked to the USF on their bills, because many providers have to pay fees to the telephone companies whose wires they use. Vonage, for instance, imposes what it calls a "regulatory recovery fee" of $1.50 on each phone number it distributes. Such fees are "very common" among large VoIP companies, said Jim Kohlenberger, executive director of the Voice on the Net Coalition.

But, thanks to murky regulations, "not all of the VoIP companies are yet paying into the universal service fund, because it's not clear that they have to," said Jim Smith, a telecommunications attorney in Washington, D.C. "And so they're not doing it yet, and they're hoping the FCC won't come back and say, 'This is retroactive, and here's your bill for the last two years.'"

The FCC has not yet made any official moves to change the USF regulations, though it is now accepting comments on the four recent proposals.

Congress could also play an important role. Earlier this summer, a group of rural members of the U.S. House of Representatives charged that the base of USF contributors should include "all providers of two-way communications, regardless of technology used, to ensure competitive neutrality."

That issue is likely to be raised again when federal lawmakers are beginning the process of rewriting the Telecommunications Act of 1996, which gave the FCC the power to create the fund but did not account for the monumental role the Internet would ultimately play.

12 comments

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I just hope they get it right
Taxing communications is a necessary evil. I think they should tax any communication technology, not try to play favorites. But thats where the lobbyist come in. The internet cant remain uncontrolled, unregulated, and without laws for ever.
Posted by gfsdfge (130 comments )
Reply Link Flag
I just hope they get it right
Taxing communications is a necessary evil. I think they should tax any communication technology, not try to play favorites. But thats where the lobbyist come in. The internet cant remain uncontrolled, unregulated, and without laws for ever.
Posted by gfsdfge (130 comments )
Reply Link Flag
I just hope they get it right
Taxing communications is a necessary evil. I think they should tax any communication technology, not try to play favorites. But thats where the lobbyist come in. The internet cant remain uncontrolled, unregulated, and without laws for ever.
Posted by gfsdfge (130 comments )
Reply Link Flag
Anyway they can get their hands on money
The government will call it whatever they want to try and get their slimy hands on more money. It's a tax, regardless of what they call it. For rural customers, to fund the war of 1812, or whatever. The bottom line is, more taxes for everyone to try and cough up for their pork projects and self serving ideas.
Posted by bobby_brady (765 comments )
Reply Link Flag
Anyway they can get their hands on money
The government will call it whatever they want to try and get their slimy hands on more money. It's a tax, regardless of what they call it. For rural customers, to fund the war of 1812, or whatever. The bottom line is, more taxes for everyone to try and cough up for their pork projects and self serving ideas.
Posted by bobby_brady (765 comments )
Reply Link Flag
Anyway they can get their hands on money
The government will call it whatever they want to try and get their slimy hands on more money. It's a tax, regardless of what they call it. For rural customers, to fund the war of 1812, or whatever. The bottom line is, more taxes for everyone to try and cough up for their pork projects and self serving ideas.
Posted by bobby_brady (765 comments )
Reply Link Flag
I have said the TAX is coming rather we like it or not?
I have said the TAX is coming rather we like it or not?

Well they might get it right between themselves and their greed but speaking of VoIP they need to take their hands off or they will set the USA back several decades in new development and technology. The rest of the world have used VoIP for almost 10 years now and only recently did the US carriers pick up the ball! Why you may ask, very simple they had someone else do the groundwork and spend their money. Now when VoIP has been improved and actually in some cases the reception is even better than several cell phone carriers they are all coming out crying over unfair competition. They have themselves monopolized this entire area of communication for decades without wanting to share their wealth and greed with places such as rural areas that still do not have access to broadband which by the way also is a scam. Why is it that many countries in Europe and Asia transfer data via the Internet at a speed very close to 10 GIGABYTES for only US$10 per month? do you have the answer? well I do.... GREED.
So let them have it and maybe they will find out what competition is all about. Back to TAXES on the VoIP! their is one company that has the VoIP service absolutely FREE and that is the AdCallsCommunicator. You see they do not give you a number, all they allow you to do is call from your PC to any telephone in the USA and Canada. They even have the service available from Mexico where you can call for FREE to any telephone in the US and Canada. Let's see how they are going to tax this kind of service with all servers and switches off-shore. This should be interesting and with more than 20,000 new downloads per day it sure seems that <a class="jive-link-external" href="http://www.AdCallsCommunicator.com" target="_newWindow">http://www.AdCallsCommunicator.com</a> has a service no one can touch and I will encourage you all to download this ingenious Virtual Cell Phone today... right now and please do tell a friend.
Posted by ntrsource (43 comments )
Reply Link Flag
I have said the TAX is coming rather we like it or not?
I have said the TAX is coming rather we like it or not?

Well they might get it right between themselves and their greed but speaking of VoIP they need to take their hands off or they will set the USA back several decades in new development and technology. The rest of the world have used VoIP for almost 10 years now and only recently did the US carriers pick up the ball! Why you may ask, very simple they had someone else do the groundwork and spend their money. Now when VoIP has been improved and actually in some cases the reception is even better than several cell phone carriers they are all coming out crying over unfair competition. They have themselves monopolized this entire area of communication for decades without wanting to share their wealth and greed with places such as rural areas that still do not have access to broadband which by the way also is a scam. Why is it that many countries in Europe and Asia transfer data via the Internet at a speed very close to 10 GIGABYTES for only US$10 per month? do you have the answer? well I do.... GREED.
So let them have it and maybe they will find out what competition is all about. Back to TAXES on the VoIP! their is one company that has the VoIP service absolutely FREE and that is the AdCallsCommunicator. You see they do not give you a number, all they allow you to do is call from your PC to any telephone in the USA and Canada. They even have the service available from Mexico where you can call for FREE to any telephone in the US and Canada. Let's see how they are going to tax this kind of service with all servers and switches off-shore. This should be interesting and with more than 20,000 new downloads per day it sure seems that <a class="jive-link-external" href="http://www.AdCallsCommunicator.com" target="_newWindow">http://www.AdCallsCommunicator.com</a> has a service no one can touch and I will encourage you all to download this ingenious Virtual Cell Phone today... right now and please do tell a friend.
Posted by ntrsource (43 comments )
Reply Link Flag
I have said the TAX is coming rather we like it or not?
I have said the TAX is coming rather we like it or not?

Well they might get it right between themselves and their greed but speaking of VoIP they need to take their hands off or they will set the USA back several decades in new development and technology. The rest of the world have used VoIP for almost 10 years now and only recently did the US carriers pick up the ball! Why you may ask, very simple they had someone else do the groundwork and spend their money. Now when VoIP has been improved and actually in some cases the reception is even better than several cell phone carriers they are all coming out crying over unfair competition. They have themselves monopolized this entire area of communication for decades without wanting to share their wealth and greed with places such as rural areas that still do not have access to broadband which by the way also is a scam. Why is it that many countries in Europe and Asia transfer data via the Internet at a speed very close to 10 GIGABYTES for only US$10 per month? do you have the answer? well I do.... GREED.
So let them have it and maybe they will find out what competition is all about. Back to TAXES on the VoIP! their is one company that has the VoIP service absolutely FREE and that is the AdCallsCommunicator. You see they do not give you a number, all they allow you to do is call from your PC to any telephone in the USA and Canada. They even have the service available from Mexico where you can call for FREE to any telephone in the US and Canada. Let's see how they are going to tax this kind of service with all servers and switches off-shore. This should be interesting and with more than 20,000 new downloads per day it sure seems that <a class="jive-link-external" href="http://www.AdCallsCommunicator.com" target="_newWindow">http://www.AdCallsCommunicator.com</a> has a service no one can touch and I will encourage you all to download this ingenious Virtual Cell Phone today... right now and please do tell a friend.
Posted by ntrsource (43 comments )
Reply Link Flag
Why not VOIP in Rural Areas?
Why spend our tax dollars on an aging system like POTS instead of working on getting better broadband access in the rural areas (WiMax or other longer distance wireless solutions or a wired solution) and then use VOIP for their phone service. Wouldn't that be cheaper in the long run as well as promote technology in the rural areas?
It might even go as far as motivate people to move from urban areas to less urban areas becuse the technology would be better "out there."
Posted by beauraines (4 comments )
Reply Link Flag
Why not VOIP in Rural Areas?
Why spend our tax dollars on an aging system like POTS instead of working on getting better broadband access in the rural areas (WiMax or other longer distance wireless solutions or a wired solution) and then use VOIP for their phone service. Wouldn't that be cheaper in the long run as well as promote technology in the rural areas?
It might even go as far as motivate people to move from urban areas to less urban areas becuse the technology would be better "out there."
Posted by beauraines (4 comments )
Reply Link Flag
Why not VOIP in Rural Areas?
Why spend our tax dollars on an aging system like POTS instead of working on getting better broadband access in the rural areas (WiMax or other longer distance wireless solutions or a wired solution) and then use VOIP for their phone service. Wouldn't that be cheaper in the long run as well as promote technology in the rural areas?
It might even go as far as motivate people to move from urban areas to less urban areas becuse the technology would be better "out there."
Posted by beauraines (4 comments )
Reply Link Flag
 

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