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Coalition urges light regulatory touch on VoIP

WASHINGTON-The National Taxpayers Union is leading a coalition urging the Federal Communications Commission to take a light regulatory touch on voice over Internet Protocol services.

“The lesson for the FCC should be clear: An explicit, firm and long-term policy of forbearance is the best and perhaps the only way to keep successive regulators from extending taxes and other regulations to VoIP,” reads a letter signed by 34 organizations. “We reiterate our request that the FCC establish an explicit policy of forbearance of taxation and regulation on Internet telephony. Such a clear policy will establish the regulatory certainty needed by capital markets and foster the speedy rollout of this incredibly promising new technology.”

The big concern is once taxes are imposed, they are almost impossible to repeal, John Berthound, president of the National Taxpayers Union, told reporters Wednesday.

“The problem with so many taxes is that they get started and then they never stop. The telecommunications excise tax is a classic example. It was started to fund the Spanish-American War, and it is still going. Our researchers have searched high and low, and we can find no bills that are still due from that war,” said Berthound.

The NTU letter comes on the heels of federal legislation introduced in recent days that would classify VoIP as an information service, releasing it from telecommunications regulation.

For the first 100 years of telephony, circuit-switched technology was used. Circuit-switched technology dedicates voice channels for conversations. Using Internet Protocol, VoIP chops the conversation into bits and bytes and sends it over the Internet and then reassembles it at the other end. There has been some quality concern about this process, but for more services at less cost, many consumers and businesses appear willing to risk it.

Wireless carriers employ IP technology for much of their networks. Increasingly, customers with VoIP phones are using them with laptops to connect wirelessly from anywhere.

Meanwhile, the FCC has asked the U.S. Court of Appeals for the 9th Circuit to stay its decision regarding the classification of cable-modem service while the commission seeks U.S. Supreme Court review.

The FCC first began classifying Internet telephony services such as those delivered by cable modems as information services in 2002 but this ruling is in peril after the 9th Circuit late last month refused to rehear the case. A 9th Circuit three-member panel had ruled with a lower court that cable-modem service should be subject to the same regulation as digital subscriber line service offered by traditional telephone companies.

On Feb. 12, the FCC said that peer-to-peer VoIP was an information service and began examining whether VoIP that touches the public switched telephone network was too. If it were an information service, then it would be exempt from telecommunications obligations such as law enforcement access and 911 emergency services.

Separately, the FCC is currently accepting comments from a law enforcement petition that would require VoIP providers to design their networks to make it easy for law enforcement wiretapping.

NTU said that if the FCC is not successful, that what happened with Internet access taxes will happen with VoIP. Legislation to permanently ban states and localities from imposing Internet access taxes is on indefinite hold in the U.S. Senate.

When the original Internet tax moratorium was put in place several years ago, some states were allowed to keep theirs, but when pro-Internet lawmakers tried to make the Internet tax ban permanent, the legislation they introduced also eliminated the exemption.

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