FCC Picks VOIP Experts

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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recession2002 12/4/2012 | 11:13:05 PM
re: FCC Picks VOIP Experts The taxing tool is ready for years. Just wait for the green light from the government. Need money to support the defense and the trade deficit. At the same time, internet buying without tax is hurting the state. It should be taxed period because we are living in a double or triple tax country why give exemption to internet. Tax it.
PO 12/4/2012 | 11:13:11 PM
re: FCC Picks VOIP Experts A couple comments come to mind: I have nothing against Giancarlo, but for the FCC to turn to Cisco as its main vendor rep is very telling. After all, Cisco have never built a phone network, and have only recently begun to be cited as viable for carrier voice. For the naive to be the expert suggests the FCC may already want a particular outcome: for VoIP to progress.

The realities of life are harsher than anyone wants to admit. Someone has to pay for the availability of emergency services. User-pay is considered unfair. So we tax phone lines, apply property taxes; we're starting to tax cellphones. Soon we may tax *all* internet bandwidth, or perhaps VoIP. Maybe we should only tax MSN meetings? Or maybe one 'sponsor' should be taxed and everyone else gets it for free?

The reality is that Internet services have rarely paid their full freight in society. And like any teenager growing up and starting to pay taxes, it isn't happy about having to pay, and live by the rules and restrictions of society at large. As a group, young folks pay less taxes--and whine more about it--than more mature adults.

The only question is whether we consider this as in its infancy, or maturity.
optical_man 12/4/2012 | 11:13:15 PM
re: FCC Picks VOIP Experts aswath,
technicalities aside, this is $$$ for the Government. Ours and all others.
Does anybody here REALLY think that the U.S. Government is going to say "it's a brand new day in communications, let them talk FREE!".

Give it 1 1/2 years before the Pigs in Washington tax this just like standard Circuit-Curcuit calls.

Remember the ban on Internet Taxes? That just sunsetted, meaning the Government is now free to tax not just purchases made on the internet, but things like "access" (each time you log on), "bandwidth" (tax on how much you download/upload similar to using Toll Roads), etc, etc.
This is not a rhetorical statement. Log on to some Senators websites, their actually proposing things like this.
The only way to stop the insanity that's about to hit us (and drive vendor box sales to a crawl) is to get the internet tax ban re-enacted.
Can it be done? Maybe, but remember, you are fighting the money pigs in Washington, so good luck to us all on this issue.

Again, the Internet Tax ban has EXPIRED with no action by our Congress.
Be wary of what's to come.
aswath 12/4/2012 | 11:13:15 PM
re: FCC Picks VOIP Experts We shouldn't be so quick to conclude that VoIP is an information service, at least for legal purposes if not for regulatory purposes. Let me elaborate by giving parallel example. If you record an event using a silent video, then you have the ownership rights; instead you record the voice as well then at least in some states, the participants have ownership.

In a similar fashion, what rules will apply towards a VoIP user. If you are a Vonage user say, you use a normal telephone to initiate a "session"; supposing the other end user records the conversation without your knowledge? Remember Ms. Tripp from yesteryear and her difficulties. Do you have legal recourse? This is just one aspect. There are a variety of other issues that need to be addressed as well. VoIP proponents in particular must be careful in clearly identifying the roles and responsibilities; otherwise it may face negative PR when it hits the mainstream. That is why it is better to hear from all sides whether they are "experts" or not.

lastmile 12/4/2012 | 11:13:16 PM
re: FCC Picks VOIP Experts VOIP is information service and right from day one it was never supposed to be regulated.
If there is a PSTN/POTS connection with VOIP services, then there is regulation and let it remain.
VOIP needs no experts. Experts are required only to disable VOIP so that PSTN/POTS is left with no competition.
change_is_good 12/4/2012 | 11:13:18 PM
re: FCC Picks VOIP Experts fw23: all your base are belong to juniper.
fw23 12/4/2012 | 11:13:18 PM
re: FCC Picks VOIP Experts >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

All wrong. Don't trust ANYTHING on your phone
bill being true. The line-items listed for
taxes often do not represent taxes you are
paying or the actual amount that the company
is paying to the government.

The reason those "tax" items appear on your
phone bill is that the companies want you
to blame regulation and the government for
the cost of service.

What they don't tell you is:

- Your paying far more to subsidize their service
buildout and M&A expenses than you are for
rural telephone service.

- The biggest subsidies in phone service are
centred on keeping the most "basic rate" for
hardwire service low.

- The last thing they want to do is cut rates
for residential service. If they had their
freedom from regulation, those rates would
double. And they would start listing social
security for employees as "taxes" on bills.

materialgirl 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.
alchemy 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.
signmeup 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.
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