Replies to VoIP, taxes, and FCC's Michael Copps

[Declan McCullagh <declan () well com>]

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From: Randy May <rmay () pff org>
To: "'Declan McCullagh'" <declan () well com>
Subject: RE: [Politech] FCC's Michael Copps suggests levying taxes on Voic
        e over IP
Date: Wed, 3 Dec 2003 14:00:28 -0500

Declan--For a different perspective than that of Michael Copps on the
regulatory treatment of VoIP, see the recent postings on the PFF blog at
http://www.pff.org/weblog/

It might be a good way to introduce some of your readers to our site, which
contains a wealth of useful information on communications policy and
Internet issues, as well as intellectual property matters.

Randy

Randolph J. May
Senior Fellow and Director of Communications Policy Studies
The Progress & Freedom Foundation
1401 H Street, NW
Suite 1075
Washington, DC 20005

Tel       202-289-8928
Fax      202-289-6079
E-mail  rmay () pff org
Web    www.pff.org

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Date: Wed, 3 Dec 2003 17:19:32 -0800 (PST)
From: Karl Auerbach <karl () cavebear com>
Reply-To: Karl Auerbach <karl () cavebear com>
To: Declan McCullagh <declan () well com>
Subject: Re: [Politech] FCC's Michael Copps suggests levying taxes on Voice
 over IP


On Wed, 3 Dec 2003, Declan McCullagh wrote:
> http://news.com.com/2100-7352_3-5112424.html?tag=nefd_top
>
> FCC Commissioner Michael Copps, a former Democratic Senate aide, said that
> the federal government should not ignore its "important statutory
> obligations" to provide "universal service, ...

In the early days of automobiles, a flagman had to be sent ahead to warn
those with horses that a gasoline powered device was coming along.  The
need for that sort of thing eventually went away as technology improved.

The same is true for VOIP - because VOIP phones are IP (Internet Protocol,
not intellectual property) devices and are generally connected to
the net as long as they have power, there is a whole world of improved
alternatives to things like 911.

For example, a VOIP phone could be designed to notice the 911 number and
instead of building a VOIP call, it could instead, launch an instant
message or other notification - such a notification could easily get
through to the appropriate dispatcher much more quickly than the operator
assisted systems of today.

I find that between phone and fax spammers that my wired phones have
little, if any, more actual availability for outgoing 911 than the VOIP
phones in my home.

The regulators have a point - but they should not let lack of imagination
and mindless adherence to past practices lead them to impose old
requirements onto new equipment when that new equipment could fill the
same need in a new, and often better, way.

                --karl--

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To: Declan McCullagh <declan () well com>
Cc: politech () politechbot com
Subject: Re: [Politech] VoIP, Semiconductors, and cash cows
References: <6.0.0.22.2.20031201212333.02fdb860 () mail well com>
From: Chris Shenton <chris () Shenton Org>
Date: Wed, 03 Dec 2003 15:14:21 -0500

[for Politech, if you care]

Two unrelated stories I read on Politic today echoed the same theme:
someone's doing something better, let's get the government to stop
them. The first was on telecom, the second on semiconductors:

> FCC Commissioner Michael Copps, a former Democratic Senate aide, said
> that the federal government should not ignore its "important statutory
> obligations" to provide "universal service, homeland security, 911
> service, accessibility (for) people with disabilities." Imposing such
> obligations on VoIP providers may be necessary to "bring equity and
> effectiveness to rules and regulations that protect the public
> interest," Copps said.

> Micron claims that Hynix is competing unfairly by--I am not making
> this up--selling its dynamic random access memory (DRAM) chips at a
> lower price than U.S. companies do. Micron CEO Steve Appleton insists
> that this is unlawful and that American consumers should be forced to
> pay higher prices when shopping for computer gear.

They both remind me of a joke that I was told was Russian in origin.
Googling the punch-line found this:

  When given a single wish, the peasant tells the genie, "My neighbor
  Janov just got a new cow. It gives enough milk for his entire family,
  and he is finally prospering."  "So you would like a cow like that? or
  a couple?" the genie asks.  "No, I want you to kill his cow."

Yes, let's definitely kill the (cash) cow. Why innovate when you can litigate?

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Subject: PRI ePolicy: VOIP in danger
Date: Wed, 3 Dec 2003 18:04:46 -0800
From: "Sonia Arrison" <SArrison () pacificresearch org>
To: declan () well com


ePolicy from Pacific Research Institute's Technology Studies Dept.
------------------------------------------------------------------

Fighting Regulators for Cheap Internet Phone Calls
By Sonia Arrison

New technology allows low-cost calls over the Internet, which is great news 
for those who dislike big phone bills. The bad news is that regulators are 
targeting this innovative service in a way that will harm its future and 
cheat consumers.

Companies such as Vonage and Net2Phone offer Internet phone calls using a 
technology called "voice over Internet Protocol" (VOIP).  It works by 
taking sound and converting it into packets of computer data that are sent 
across the Internet and reassembled into sound at the destination.  And 
although the technology uses the Net to provide the service, adaptors allow 
it to be used with a regular phone, so consumers of VOIP don't need to be 
computer savvy.

By using the Internet's infrastructure, VOIP makes calls much cheaper than 
traditional phone companies can provide.  This is great news for consumers 
and bad news for traditional phone companies.  But many regulators don't 
welcome it either.

Public Utility Commissions (PUCs) in a number of states including 
California, Wisconsin, and Minnesota are working to strangle VOIP with 
mammoth regulations that were crafted for the outdated infrastructure of 
the old phone companies.  In one of those states, Minnesota, the issue 
recently went before a federal court.

Fortunately for consumers, Judge Michael Davis of the district of Minnesota 
ruled that VOIP cannot legally be regulated like the old telecom dinosaurs 
because VOIP is a data-based information service not a telephone service, 
and thus not subject to the same telecommunications rules.  This ruling is 
a win for innovation, but unfortunately the battle is not over.  For 
instance, California's PUC maintains that VOIP providers must submit to 
state regulation or face disciplinary action.

That pioneers of this revolutionary technology are forced to defend 
themselves against public servants who are supposed to have the consumer's 
interest in mind is disturbing. This is one more reason why the entire 
convoluted telecommunications regulatory machine should be dismantled.
The 1996 Telecommunications Act was enacted to create a "pro-competitive, 
deregulatory national policy framework," but instead the last seven years 
have been filled with regulatory wrangling and burdensome lawsuits.

Through regulations stemming from the 1996 Act, government forces phone 
companies like the Bells to share their infrastructure with rivals at 
prices set by regulators.  This scheme created a false "competition" that 
hampers and distorts investment.  Now that disruptive technologies make old 
services obsolete, the recognition that old regulations are obsolete should 
follow.  Frustratingly, not everyone sees it that way.

Penn State University telecommunications professor Rob Frieden recently 
said that "at some point, fundamental fairness requires a level playing 
field."  That's like saying there should be a fair playing field between 
the horse and buggy and the automobile.  Not only would it be absurd to try 
to create "parity," but it would also be costly, directing resources away 
from innovation.

What is going on in telecommunications is nothing short of revolutionary 
and regulators should be barred from trying to hold it back.  There is no 
need to address the level of "fairness" between old and new 
technologies.  Indeed, it would be unfair to consumers and future 
generations to attempt to slow down new technologies that bring cost 
savings and new efficiencies.

And while regulators force VOIP firms to spend resources fighting battles 
of the past, newer technologies, such as one produced by the creators of 
the infamous file swapping software Kazza, threaten the business models of 
VOIP firms.  Just as Kazza allows music and movie files to be swapped for 
free, Skype allows free Internet phone calls.

Currently, Skype's service can only be used on the Internet (not with a 
standard phone), so Vonage and others may have time to figure out how to 
compete.  But the point is that the telecommunications market has moved 
breathtakingly far away from the old, monopolistic, phone companies that 
current regulations were meant to address.

Regulators should take their hands off new communications services.  If 
they don't do it on their own, legislators should mandate a hands-off 
policy.  Telecom has morphed into a hi-tech industry that plays by 
different rules, including extreme competition and innovation. For the sake 
of consumers, it should be allowed to flourish.

Sonia Arrison is director of Technology Studies at the California-based 
Pacific Research Institute.


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