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FCC Picks VOIP Experts

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News Analysis
Light Reading
11/25/2003
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Panelists have been selected and topics agreed upon for the Federal Communications Commission (FCC)'s first VOIP Forum meeting on December 1. But get there early, the Commission announced today, as seating is on a first-come, first-served basis (see FCC Sets Date for VOIP Inquiry).

The build-up to this event feels like the telecom equivalent of the California re-election. It's got its own set of industry celebrities taking part, and each has just six minutes to present.

It’s going to be a lively day, analysts reckon. “The people involved are choosing their words very carefully,” says Jon Arnold, program leader for VOIP equipment at Frost & Sullivan.

The most controversial session of the day will determine how the FCC might distinguish between VOIP and other IP-enabled applications that enable communication (such as email, instant messaging, videoconferencing, and interactive online gaming).

Industry luminaries who have been invited to present include: Charles Giancarlo, Cisco Systems Inc. (Nasdaq: CSCO) SVP and general manager; Jeff Pulver, president and CEO of Pulver.com; John Hodulik, managing director of the communications group at UBS AG; John Billock, COO of Time Warner Cable; James Crowe, CEO of Level 3 Communications Inc. (Nasdaq: LVLT); Tom Evslin, CEO of ITXC Corp. (Nasdaq: ITXC); and Jeffrey Citron, CEO of Vonage Holdings Corp.

At issue is what, if any, regulatory obligations should be placed upon VOIP providers -- and whether from legal or technical perspectives such obligations are feasible. To date, VOIP providers have been excused from paying many of the taxes associated with telephone services. However, many of the state public utilities fear huge losses in subsidies from telephony taxes if swarms of people start to migrate to tax-free VOIP services (see Qwest Jumps Into VOIP Hotbed).

Alternatively, one analyst noted that many of the smaller VOIP-only providers, such as 8x8 Inc. (Nasdaq: EGHT), Free World Dialup (FWD), Voiceglo, VoicePulse, and others across the U.S. could be squashed in a heartbeat if the FCC decides to heavily regulate the service.

“Taxes levied on traditional services could in theory be applied to VOIP in the future, but this might push some of the little guys who can’t afford these taxes out of business,” says Diane Myers, VOIP analyst at Stratecast Partners.

Myers thinks VOIP carriers will likely pay some sort of access charges and will have to make contributions to the Universal Service Fund, but that ultimately, the most formidable challenges to VOIP deployment will come from "non-common carrier obligations related to law enforcement and public security," Myers says.

Her words are echoed in an investor note published today by Simon Leopold, VP of equity research in the telecommunications equipment group at Merrill Lynch & Co. Inc.. "We see issues concerning variation in powering phones, support for 911 and 411, law enforcement taps, and security against network viruses and intrusion," he says in the note.

— Jo Maitland, Senior Editor, Boardwatch

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materialgirl
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materialgirl,
User Rank: Light Beer
12/4/2012 | 11:13:31 PM
re: FCC Picks VOIP Experts
Every world power comes and goes. Theories about how this happens abound. One is that a rich managerial class gets isolated from the "real world", and taxes the worker bees to death in order to support their overly expensive pet projects, which are usually run by their rich friends. The world power rots from the inside out, while up and comers use all new tools at their disposal to take the crown.

If the US slows down one minute in moving its telecom infrastructure to the more cost-effective VOIP format, we will just become less competitive and ship more jobs overseas. If we let fluff like 911 or 411 slow us down, we are doubly doomed. Not only are US workers too expensive for their education level, they will be impossible to reach.

Good governments watch out for the future, not tax workers to death to support their rich friends. These are all excuses. No one reached for 911 on 9/11. They went for their cell phones. As for 411, we can find each other just fine on the Net. As for PUC money, we can tax real estate, gas consumption, or something else. Focusing on these stupid details instead if the real and present danger just shows how lost our "leaders" are.
aswath
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aswath,
User Rank: Light Beer
12/4/2012 | 11:13:30 PM
re: FCC Picks VOIP Experts
911 may be fluff for some of us; but Vonage, Time Warner et al. seem to think 911 (however restricted) is "table stakes". IsnG«÷t it fair that such service providers share the related expenses? If these service providers also interconnect to PSTN, shouldnG«÷t they have a legal obligation to respect the rights of PSTN users? These regulations do not preclude end-users using VoIP technology to communicate among themselves.
Ringed?
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Ringed?,
User Rank: Light Beer
12/4/2012 | 11:13:27 PM
re: FCC Picks VOIP Experts
If the FCC is truly serious about bolstering VoIP initiatives and development they should consider making the RBOCS support E911 services specifically for VoIP users.

A VoIP IAD could have a standard POTS interface specifically for E911 use should the power go out. The VoIP user could choose to pay the same/similar fee/taxes for E911 access. This fee would have to be regulated as to not get back in to CLEC/ local loop debacle we all just went through : ( The benefit to us all is now the RBOCS have a vested intrest in offer VoIP services and providing E911 albeit maybe not as cheaply as Vonage. All VoIP service is not created equal. Just like Cellular some providers will have a tougher time offering the quality for reasons they don't yet control, ie the home town ISP network or the cable operator who struggle to provide basic cable let alone internet.

Better yet, VoIP services could be classified as Metro, Urban or Rual and let the consumer make the informed decisio if they want to pay for E911 backup or not.

HereG«÷s one for the analysts. How many Metro dwelling people who can spell VoIP donG«÷t have a cell phone already or will have used LNP to get rid of their home phone anyway? Opps there goes another loop :)

Chances are the initial VoIP takers are probably more tech savvy then Grandma and PaG«÷ who will neither own a cell nor go to Vonage. Assuming they are not in a G«£old folksG«• home, AT&T MCI, and Sprint will keep them busy/dizzy with calls to change their LD service.

Ringed?
aswath
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aswath,
User Rank: Light Beer
12/4/2012 | 11:13:26 PM
re: FCC Picks VOIP Experts
A VoIP IAD could have a standard POTS interface specifically for E911 use should the power go out.

CPEs with such a capability is already available in the market. Yahoo! Japan's VoIP service uses this specific capability. The question is whether VoIP service providers will be happy with this approach. Yahoo! Japan is solely based on DSL and the access to PSTN is builtin. Two of the basic selling points of Cable service providers and Vonage are that the IP access could be different than DSL and that you can cut the cord to RBOCs. Since the proposed scheme requires the customer to have a business relationship with RBOCs, I suspect that they will agree to it.

Aswath
sigesux
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sigesux,
User Rank: Light Beer
12/4/2012 | 11:13:26 PM
re: FCC Picks VOIP Experts
Materialgirl,
go-girl-go! both barrels for the Telecom copperheads!
Saddling VoIP with E911 is like requiring airplane pilots to carry buggy-whips.
For the last decade the US's principle export has been a progressive vision of the future, along with the equipment to implement this vision. It now appears that we are happy to let the vested interests of the RBOC's guide us straight back to 1950!

IMHO this E911 requirement is not targeted at Cable as much as it is at wireless over-builders. VoIP with 802.11x mesh and 802.16 backhaul can deliver a competitive local telecom solution for a fraction of the cost of the equivalent wired solution. Couple this with the inherent benefits of VoIP and you have a powerful value proposition. Now ask yourself one simple question.

Do you want Cisco or Huawei delivering this solution to the rest of the world?

optoslob
optical_man
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optical_man,
User Rank: Light Beer
12/4/2012 | 11:13:26 PM
re: FCC Picks VOIP Experts
"How many Metro dwelling people who can spell VoIP donG«÷t have a cell phone already or will have used LNP to get rid of their home phone anyway? Opps there goes another loop :)"

One simple question:
w/o local loop to your house, how do you get the home alarm/fire detector system to notify the Police/Fire Department if it goes off?
Leave it hooked up to an extra cell phone?
Think about it.
signmeup
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signmeup,
User Rank: Light Beer
12/4/2012 | 11:13:25 PM
re: FCC Picks VOIP Experts
A VoIP IAD could have a standard POTS interface specifically for E911 use should the power go out.

This is great! So let me see, not only are you going to ask the customer to pay for a new VoIP service and termination device, but you are also going to ask him to keep his POTS line for emergencies? I thought the purpose of VoIP as a service was to LOWER the costs, not pass those costs on to the consumer.

You know what, why don't you just keep your VoIP and POTS services; I'll just use cellular.
DarkWriting
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DarkWriting,
User Rank: Light Beer
12/4/2012 | 11:13:25 PM
re: FCC Picks VOIP Experts
This is starting to sound like the "old switcheroo" played on bank customers when banks wanted to convert to ATMs. First they needed them to lower labor costs by eliminating tellers. When that cow went dry, they decided to start charging fees. The only thing that stopped the pigs at the trough was government regulation or the threat of it. I will bet money this will happen for VoIP conversion. Businesses like change when it has the possibility to create confusion in the marketplace thereby letting them make larger profits for minimal investment.

DW
alchemy
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alchemy,
User Rank: Light Beer
12/4/2012 | 11:13:23 PM
re: FCC Picks VOIP Experts
My monthly phone bill is kept artificially high because:

a) I subsidize rural telephone service

b) I pay for 911 services (a $0.42 surcharge in my state)

c) I pay big federal and state taxes on my bill


These costs were placed on me by the federal and state government for the public good. Shouldn't there be a hefty tax on VoIP to subsidize rural internet access? To pay for the E911 tandem in my state? To fill the government tax coffers just like wireline and wireless services?

It's like arguing to the IRS that since I telecommute using the internet, I should be exempt from taxing the earned income. Long term, it ain't gonna fly.
materialgirl
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materialgirl,
User Rank: Light Beer
12/4/2012 | 11:13:19 PM
re: FCC Picks VOIP Experts
Yes, if we want common good we must pay for it. However, we need to de-couple technology from money flows. The need to go VoIP is ultimately, for a number of reasons, one of national competitiveness, which as we speak we are losing. If we need something else for E911, we can discuss its value separately, and pay for it separately. Perhaps we field more cops and use more cell phones with location info. Perhaps we do household security with WiFi. Put on your thinking cap. We do not need E911 per se.

As to other taxes, well, tax away. Governments got used to using the telco as a piggy bank. They can just as well use something else. In this debate we need to be careful not to mix our messages, and mix E911 with taxes or with competitive voice technology. If we all want to pay thousands of dollars a year for E911, great. Lets do it. Lets just be clear about what we are doing.
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