Interconnect, Taxes and Innovation

Interconnect, Taxes and Innovation

Today at IT Expo, we had a Service Provider round table. It was interesting to listen to others in this space, some with a focus on enterprises and others consumer markets. While we at Broadvox often discuss issues facing our industry, I learned to appreciate a few other things today. The question driving the best discussion of the day was "What would you do if you were to be the head of the FCC?"

First, change the way we demand carriers to interconnect with the ILECS. It is inefficient and not cost effective to require IP Carriers/ITSPs to connect with a T1 to the various rates centers across North America. Given the nature of IP, a DS3 connection in a given region should be sufficient to qualify as a locally connected service provider. The ILEC would still be able to charge for backhaul to the interconnection point but the public would see immediate cost savings.

Given sales over the Internet is mostly free. It is surprising that voice over the Internet should be taxed. It is a service or product of the Internet. With the consolidation of the ILECs into a postmodern AT&T, telecom competition is certainly threatened. The ITSPs should not be paying taxes until they have sustained some level of long-term competitiveness. Moreover, even if it is decided the taxes are defendable, then what of the inequality of the amounts. In many cases, they are not prorated, and should be. By having the ITSPs pay the exact same amount as the ILECs, gives the ILECs the advantage.

Finally, innovation was never the strong suit of the ILECs and with IP communications, it is no different. Innovation is seen through companies like Broadvox, Magicjack, Skype and others. The ILECs are trying to dip their toes in the water with eye looking backwards to their current revenue streams. Innovation in America has been driven multiple parties such as the government, Bell Labs, many entrepreneurs and individuals. However, the current instantiation of ILECs will not result in any major innovations but delay capabilities that could be delivered to their customer base today.

My thanks to Rich Tehrani and IT Expo for the experience. I hope to participate again in the fall.

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