The Jeff Pulver Blog: Shout out to the Internet Communications Industry -- Help Oppose VoIP Stifling Hill Amendment

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June 08, 2006

Shout out to the Internet Communications Industry -- Help Oppose VoIP Stifling Hill Amendment

We – the Internet communications industry, entrepreneurs, innovators and enthusiasts -- need your help. And we need it today. In addition to the US House of Representatives voting the COPE Bill -- designed primarily to allow the Bell Companies franchising relief to deliver IPTV services (ho hum –I that is all that the IP revolution is about, we will be all the poorer – but I diverge), an amendment to the House Cope Bill has just been approved for a US House floor vote tomorrow morning. The Amendment, offered up by Rep Gutknecht would serve to Boost Charges on Internet Communications. The Amendment would do the following:

1) reverses the landmark Vonage decision asserting exclusive federal jurisdiction over VoIP and subjecting VoIP to a potential patchwork of conflicting 50 state regulatory frameworks,
2) would raise rates on VoIP service by requiring the FCC to apply the broken access charge regime to VoIP, and
3) gives the FCC the green light to apply their current USF proposal that would require VoIP to pay into USF at more than double the current wireless safe harbor.

I think we should encourage Members of Congress to oppose the rate raising Gutknecht Amendment which would apply the broken access charge system, meant for the 100 year old telephone network to Internet voice communications. This amendment failed at both the subcommittee and full committee level, and should not be adopted on the floor.

The Gutknecht amendment should be opposed because it would:
• raise rates on our troops trying to stay in touch with their families while serving their country – VoIP is often the only form of voice or video communication available to our troops.
• increase the costs of broadband applications and slow the President’s goal of achieving universal broadband deployment by 2007 at a time when America has fallen to 16th in the world in broadband deployment
• Consumers could miss out on the new services, competition, and lower prices that VoIP can deliver
• stunt voice competition, one of the core tenets Congress adopted in the Telecommunications Act of 1996 – which is just beginning to appear in the marketplace.
• eliminate the flat-rate VoIP plans that are so popular with constituents, by applying per-minute access charges

Gutknecht Amendment Reverses Congressional Sentiment for allowing VoIP to Thrive Without a Patchwork of State Regulation. A bipartisan group of more than 60 members of Congress told the FCC that VoIP, enabled by the global Internet, must develop without the threat of a patchwork of state regulations stifling innovation. This resulted in the FCC’s “Vonage decision” to assert exclusive but limited federal jurisdiction over VoIP. The Gutknecht amendment will reverse this key decision, and potentially subject Internet voice services to a set of 50 different potentially conflicting state regulatory frameworks – creating new market uncertainty and slowing consumer benefits.

Congress Should Not Adopt Rate Raising, Growth-Sapping, Innovation Reducing Application of Access Charges. At the dawn of a new era in voice communications, Congress should continue its pro-growth, pro-innovation policies that for 20 years have ensured that Internet communications are not saddled with the broken access charge regime. There is no evidence of any compelling need for such a rate-raising, growth-sapping, innovation-reducing policy change. Instead, the FCC has a regulatory proceeding already underway, as required by Congress, to seek comprehensive intercarrier compensation reform.

Phone Companies Are Already Compensated For Use of Their Networks. Applying the broken access charges regime to VoIP service is unnecessary because incumbent phone companies are already fully compensated for their costs when Internet phone calls are terminated on their networks. When a phone company terminates VoIP services on its network, along with its subscriber fees the phone company receives reciprocal compensation or some other cost-based rate which fully compensates incumbent phone companies for the cost of terminating the traffic.

Consumers and Businesses Would be Harmed. If Congress changes course and subjects tomorrow’s technologies to yesterday’s broken systems, consumers and business users will miss out on the new services, increased choices and lower prices that VoIP can deliver.

Commerce Committee Specifically Chose Not To Address Universal Service in the Bill. On Universal Service, the Commerce Committee specifically decided not to address comprehensive universal service reform in this bill. Cable VoIP services already pay into universal service at the same rates as wireless providers pay – and the FCC Chairman has made universal service contribution reform one of his top priorities. A telephone or connections based contribution reform would capture all services equitably in a world without geographic distinctions.

Automatically applying yesterday’s rules to tomorrow’s technologies could stifle emerging innovations. We are on the verge of a vast new wave of VoIP-led technological innovations that has the potential to fundamentally revolutionize the way we communicate. This transformation will enable consumers to do things never before thought possible, businesses to transform the way they do business, and the economy to become an engine for higher paying information age jobs.

The Gutknecht amendment will stifle innovation, increase rates, stall these important consumer benefits, reverse Congressional efforts to advance new technologies, and slow demand for broadband.

***

Again, this bill will be on the House floor Friday morning. We are encouraging you, friends and colleagues who are trying to realize the promise of Internet communications to speak against the Amendment. Please help get the message to your Member of Congress. (You may find your member at www.congress.org

Please let Congress know that you oppose efforts that would stifle innovation, increase rates, stall these important consumer benefits, reverse Congressional efforts to advance new technologies, and slow demand for broadband.

Tags: Access Charges, Universal Service, VoIP, Congress, Jeff Pulver

(c) 2006 Jeff Pulver. All Rights Reserved.
(This blog posting is copyright protected by Jeff Pulver. Portions of this blog posting may be quoted or abstracted if attributed.)

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Posted by jeff on June 8, 2006 02:38 PM | Permalink

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Comments

Setting the Record Straight on Rural

Upon reading your blog it is apparent that there is a lack of understanding of the amendment to the COPE Act.

First of all the amendment you speak of offered by Rep. Gutknecht (and 5 other members of Congress) simply leaves the door open for the FCC to rightly assess VoIP providers for their use of other companies communications networks and to rightly contribute to the universal service fund.

In Pulver’s blog he listed three ramifications of the amendment that are false. I have listed them below and stated the truth under each one to set the record straight:

Pulver’s statement #1: [the amendment] reverses the landmark Vonage decision asserting exclusive federal jurisdiction over VoIP and subjecting VoIP to a potential patchwork of conflicting 50 state regulatory frameworks.
TRUTH: This statement could not be more bogus or misleading. The Amendment does not contain one word pertaining to the jurisdiction of VoIP services. VoIP will continue to be a federally regulated service under the amendment which was UNANIMOUSLY adopted by the United States House of Representatives on June 8, 2006.

Pulver’s statement #2: [the amendment] would raise rates on VoIP service by requiring the FCC to apply the broken access charge regime to VoIP.
TRUTH: Again, this statement is incorrect. The amendment DOES NOT “require” that the FCC assess any VoIP provider to pay access charges as Pulver would lead you to believe. The amendment simply leaves the door open for the FCC to rightly assess VoIP providers for the use of the communications networks built by other companies rather than continuing to steal from them as they do today (the FCC is moving in this direction anyway!). It is important to note here that all other communications providers compensate each other for the use of each other’s networks. VoIP providers do not own their own networks.

Pulver’s statement #3: [the amendment] gives the FCC the green light to apply their current USF proposal that would require VoIP to pay into USF at more than double the current wireless safe harbor.
TRUTH: AGAIN Pulver couldn’t be more wrong. The amendment simply confirms the authority of the FCC (the expert agency on communications) to make such a determination if it finds doing so would be in the public interest (which of course it is).

The other worthless points made by Pulver are not worth response. It is sad that Jeff Pulver thinks so little of you that he believes that he can lie to you and you’ll all believe it. We know you are smarter than that. And we’ve included the exact language of the amendment so you can see for yourself that Pulver is wrong. Now aren’t you wondering why Pulver didn’t attach the text of the amendment for you…..

AMENDMENT TO H.R. 5252, AS REPORTED OFFERED BY MR. GUTKNECHT OF MINNESOTA AND MR. STUPAK OF MICHIGAN

At the end of title III of the bill, add the following new section:
SEC. 302. COMPENSATION AND CONTRIBUTION.
(a) RULE OF CONSTRUCTION.—Nothing in this Act (including the amendments made by this Act) shall be construed to exempt a VOIP service provider from requirements imposed by the Federal Communications Commission or a State commission on all VOIP service providers to—
(1) pay appropriate compensation for the transmission of a VOIP service over the facilities and equipment of another provider; or (2) contribute on an equitable and non-discriminatory basis to the preservation and advancement of universal service.
(b) DEFINITIONS.—As used in this section— (1) the terms ‘‘VOIP service provider’’ and ‘‘VOIP service’’ have the meanings given such terms in section 716(h) of the Communications Act of 934, as added by section 301 of this Act; and (2) the term ‘‘State commission’’ has the meaning given such term in section 3 of the Communications Act of 1934 (47 U.S.C. 153).

Now to correct Jeff Mendelson…
Well, he is correct on one thing. One reason why VoIP is cheaper is because it avoids taxes.

HOWEVER, poor Mr. Mendelson only knows part of the story. Not only do VoIP providers avoid taxes, they also avoid the cost of building a network because they steal the network from others by not compensating the network owners for the use of the network and not contributing the upkeep of the network via universal service. Pulver’s company is benefiting greatly from the toil of those who coughed up the billions of dollars to build the network…. shouldn’t it be in his interested to keep that network in great shape so he can continue to be profitable? All those that benefit to the network should contribute to its maintenance and upgrade equitably.

ADDITIONALLY, Mr. Mendelson’s belief that there are only a handful of landline phone companies out there IS VERY WRONG. In fact, there are over ONE THOUSAND such companies in this country. They serve rural and insular areas of this country that the large Bell companies refused to serve to due to the high cost. Without these small carriers and the universal service fund millions of Americans would be without affordable phone service.

The universal service fund was a key component in reaching the 94% telephone penetration rate we enjoy today and we need to broaden the scope of universal service to include broadband deployment so we can enjoy that same penetration rate in broadband deployment so that technologies such as Mr. Pulver’s offering can flourish.

The goal of universal service is comparable services at comparable rates. If it’s not affordable people won’t buy it and it won’t get deployed. We need to ensure that broadband is deployed to all American’s and it’s going to take the universal service fund to do it!

Posted by: Rural American at June 9, 2006 03:59 PM

Hi,
as far as my knowledge concern vonage provides voip technology with broadband phone...

Posted by: kathy at June 9, 2006 07:50 AM

Jeff, the problem is Vonage. They wanted NOT to be an VoIP company, but a cheaper TELEPHONE company that used VoIP as technology, instead of copper wire.

They created the mindset that "it's just another telephone, but cheaper". One reason it was cheaper is that it avoided taxes. Like everything else, sooner or later the taxes follow. It's only fair to apply the same taxes to telephone companies like Vonage as any other telephone company.

I thnink that what needs to change is the rate, tax and protection model that the taxes are based upon. For example, why should everyone pay to subsidise the rural telephone network?

It's not 1930 and the farmers can't afford to pay for a phone line. Nor are there hundreds of little phone companies that would go broke if they had to run a central office for one customer, because without the subsidies only one in 100 could afford one.

It's 2006 and in the U.S. you can count the number of landline phone companies on one hand. To be really fair they would have to charge ALL of their customers the same rates, not more for rural customers (through a tax, or higher rates), or less for residents of one state or another.

Geoff.

Posted by: Geoff Mendelson at June 8, 2006 06:01 PM