: FCC in a quandary over VoIP

[dave () farber net]

...... Forwarded Message .......
From: Daniel Berninger <dan () danielberninger com>
To: dave () farber net
Date: Sat, 22 May 2004 15:05:54 -0400
Subj: FCC in a quandary over VoIP

Dave,

For IP if of interest.  The article addresses the potential for VoIP to
bring communication services to the 5 million households presently unable to
afford telephone service (even given the so called Universal Service
Program).

Dan

202.250.3428
http://www.danielberninger.com

> > > > > > > > > > > > > > > >

FCC in a quandary over VoIP
Internet phone service is cheap, if it's not subject to access fees

By Jon Van
Tribune staff reporter
Published May 22, 2004

A former Ameritech executive believes he can deliver phone service through
the Internet to low-income people for $5 a month.

Dwayne Goldsmith, now chief of Detroit-based Inflexion Communications Corp.,
and his bargain-phone scheme embody the promise and peril of Internet
telephony. Most experts agree that the technology, called voice over
Internet protocol, is far cheaper and more feature rich than regular phone
service.

But the VoIP technology runs smack into a thicket of regulations, fees and
taxes that dominate traditional phone service. If Inflexion's $5 service
were subject to these regulations and fees, the cost structure wouldn't
work.

Many of those fees were established to promote universal phone service that
helps the poor--now they could prevent public housing residents from getting
phones, Goldsmith said.

"It doesn't make sense to collect all these dollars and then push them back
to the very phone companies that failed to provide truly universal service,"
he said.

Inflexion has asked the Federal Communications Commission to exempt its
service from the system of subsidized payments that characterizes
traditional phone service.

So-called access fees typically paid by long-distance companies like AT&T
Corp. to local phone companies like SBC Communications Inc. were instituted
decades ago to keep local phone service rates low.

But Inflexion's ultralow rates won't be possible if it is subject to access
fees, Goldsmith argues.

Goldsmith wants to supply high-speed Internet connections to densely
occupied housing projects in Detroit, offering phone service as a Web-based
application, much like e-mail. Residents who have computers could access the
Internet from Inflexion's system, but others without computers would be
supplied with phones to use Internet telephony.

Inflexion would avoid the expense of billing and metering the service by
selling communications in bulk to landlords who could add $5 a month to rent
to cover costs, he said.

FCC Chairman Michael Powell has called for "lightly regulated" Internet
telephony, and Congress recently approved extending a tax moratorium on
Internet services. But whether the FCC will grant Inflexion's plea to avoid
traditional phone fees is unknown.

Last month the FCC unanimously turned down a request from AT&T Corp. that
would exempt it from paying traditional access charges on calls that use
VoIP technology.

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