FCC taxes VoIP? C'mon!

In case you didn't hear, The FCC will likely force VoIP providers to contribute to the Universal Service Fund (USF), a program that helps subsidize telecommunications services in rural, "non-profitable" regions of the country, as well as in schools and libraries.

Specifically, FCC chairman Kevin Martin said "We need to move to collection for the Universal Service Fund that is technology-neutral," at a question-and-answer session hosted by Comptel, a group representing communications service providers.

Many VoIP companies are already contributing to the USF either directly through payment to the USF, or indirectly by payments to the telephone companies, which in turn contribute a portion of that revenue to the fund. Packet8 I know started collecting $1.50 "regulatory recovery fee" in anticipation of having to contribute to the USF. Some users were even a little peeved since they claimed at the time Packet8 was simply collecting the money and not giving it to the USF. Regulators are concerned that as VoIP gains popularity the fund could shrink since the providers aren't mandated to contribute.

Ok, maybe I'll buy that argument. But what about how VoIP came to the rescue in the aftermath of Hurricane Katrina? Rescurers, FEMA, and other agencies, and even businesses setup shop quickly using VoIP.

I recall a WSJ article where cell towers went down the day before Katrina made landfall and then the wireline went down after the storm made landfall. They then had issues with satellite phones since they only worked for a short time before batteries ran out and could not be recharged. Officials spent two days without any means of outside communication until they found they could use the Internet access within the makeshift command center in a hotel. They signed up for a Vonage account and were able to get eight lines and even receive a call from President Bush from his phone on Air Force One.

The time and money saved by VoIP and possibly lives saved cannot be calculated. This issue shouldn't just be about how much money we should tax and pour into the USF blackhole. We really need to consider the advantages that VoIP bring to all Americans and figure out if it makes sense to continue the legacy of charging a tax for any type of phone communications. I would argue that IP communications and specifically Voice over IP communications is much different than the legacy TDM network. If we are going to tax "voice over IP", why not tax "email over IP" or "video over IP" or even simply tax Americans on a per-byte basis? We'll call it the "Byte Me" Tax. There's one way to punish the heavy Internet users for downloading gigabytes of music and movies, right? We can take the "Byte Me" (per byte) Tax and give it to the Hollywood movie distributors and record studios to subsidize them as they continue to have declining revenue numbers. Although I jest, I wouldn't be surprised if this happens one day since the ISPs are working on tiered levels of Internet access.

Don't get me wrong, the USF is an important fund to ensure all Americans can inexpensively have telecom services, I just don't think taxing VoIP is right way to fund the USF. Sure, VoIP is typically cheaper than landline phones, but many people won't switch from legacy landlines and switch to VoIP unless there is considerable cost savings. Most people hate switching providers, no matter whether it's their cell phone provider, cable/satellite provider, etc. So by adding a tax this could cause VoIP penetration to slow and lag behind other countries.

In fact, the American government should be enticing people to switch to VoIP, not discourging it with a tax. For one thing, VoIP by its inherent "IP" nature is more fault tolerant than landlines which will aid FEMA and other government agencies, as well as ordinary American citizens to quickly regain communications. Who wouldn't want that? For instance, any home or business that gets its landline knocked out cannot easily migrate that current phone number to another location, but if you use VoIP, you can be up and running with the same phone number just as soon as you find a replacement ATA or VoIP gateway and an Internet connection. Businesses lose revenue each day customers cannot call them at their known published number and the government loses an resultant tax revenue. So wouldn't it make sense that the U.S. government would want to have a regional economy hit hard by some disaster to be up and running quickly? Finally, let me just point out that the Internet was originally designed to help make the government's IP communications "nuclear proof", why shouldn't that same level of communication be granted to all American citizens?