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Lawmakers push to classify VoIP as 'info' service

WASHINGTON-Legislation has been introduced that would classify voice over Internet Protocol as an information service, releasing it from telecommunications regulation.

“VoIP-technology that enables efficient, cost-effective delivery of voice communications over Internet broadband networks-is at a critical stage in its development, but its potential to serve consumers, business and society is enormous. Unfortunately, some interests would like to impose an outdated and stifling regulatory framework on this service, rather than allow VoIP to continue to expand freely,” said Sen. John Sununu (R-N.H.), the Senate sponsor of the bill.

Rep. Chip Pickering (R-Miss.) told RCR Wireless News he is sponsoring the House version because “some states could look at VoIP and think that since it is voice it comes under the old voice regime, and we want to treat it similar to information services and not have the old regulatory framework apply. You will begin a free regulatory space for those applications.”

For the first 100 years of telephony, circuit-switched technology was used. Circuit-switched technology dedicates voice channels for conversations. Using IP, VoIP chops the conversation into bits and bytes and sends it over the Internet and then reassembles it at the other end. While there are quality concerns about this process, many consumers and businesses appear willing to take the risk for more services at a reduced cost.

Wireless carriers employ IP for much of their networks. Increasingly, customers with VoIP phones are using them with laptops to connect wirelessly from anywhere. But, the Sununu/Pickering bill appears aimed at the conventional use of an Internet handset to connect via landline IP-technology (digital subscriber lines or cable modems) to someone using a traditional handset, whether wireline or wireless.

The Sununu bill also would strongly suggest to the Federal Communications Commission that it finance the universal-service fund by basing carrier contributions on the number of telephone numbers they control. Wireless carriers have been against this concept since it would likely raise their contribution amounts.

Sununu told RCR Wireless News that he is “looking for a system for establishing revenues that is fair and equitable.”

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

Separately, today is the deadline for comments at the FCC regarding a law enforcement petition that would require VoIP providers to design their networks to make it easy for law enforcement wiretapping.

Meanwhile, the National Taxpayers Union is leading a coalition urging the FCC to take a light regulatory touch on VoIP.

“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 last week.

“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.

NTU fears that VoIP taxes will follow the same route as Internet access taxes. Legislation to permanently ban states and localities from imposing Internet access taxes is on indefinite hold in the 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.

Finally, 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 Supreme Court review.

The FCC first began classifying Internet telephony services such as those delivered by cable modems as information services in 2002, but the 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 DSL service offered by traditional telephone companies.

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