Kelly and all,
This is a ploy bcause once it gets going, they will either find or already
realize that to maintain and expand the infrastructure, they'll have to up
the charges. They want the regulations to go away so they don't have to
provide the services and they don't have to deal with the rules for
competition in the market place. I would not want to give up the hard
fought for free directory assistance unless I had to pay more to get it
which the telecom act now prohibits but which would be possible under the
deragulatory scheme which defeats the purpose of having it in the first
place. Once they get going, you will have to pay for every little service
and tweak.
----- Original Message -----
From: "Kelly Pierce" <[log in to unmask]>
To: <[log in to unmask]>
Sent: Saturday, May 22, 2004 8:06 AM
Subject: FCC in a quandary over VoIP
if the FCC were to loosen some of its rules, we could have $5 a month local
phone service. While not mentioned in the article, an FCC rule that does
add an expense is that requiring local phone services to offer services be
on par with the big wireline provider services, such as SBC, Verizon, and
Qwest. This includes paying to publish subscribers telephone numbers in a
local directory and providing access to that directory to the blind, usually
through free directory assistance. for $5 a month local phone service,
would people give up free directory assistance?
for me it is difficult to answer this question because I have always had
telephone service. If I had a really low income and went without telephone
service for long periods of time because of cost issues, the possibility of
unlimited $5 a month local service would be a godsend. While the directory
may not be accessible, just having extraordinarily inexpensive phone service
would be very useful compared to no phone service at all.
Kelly
Chicago Tribune
May 22, 2004
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
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.
"This is a landscape that's very treacherous and exciting," said David
Roddy, managing director of the telecom practice at FTI Consulting Inc.
"You're dealing with policy issues--not light regulation versus heavy. Do
the states give up billions in revenue they get from taxing phone
service?"
Rural firms wield clout
If access fees go uncollected, rural phone companies will face serious
financial trouble, he said, and they have considerable clout with
Congress.
David Siddall, a Washington lawyer who specializes in communications
and a former FCC staffer, said that the agency is truly in a quandary over
what to do with VoIP.
Neither Siddall nor Roddy expect action from the FCC until next year.
In the absence of specific rulings, VoIP companies tend to be unregulated.
Vonage, a leading Internet phone provider with more than 100,000
customers, for instance, pays no access fees.
"Right now VoIP is a small dribble and doesn't make much difference,"
said Siddall. "But the FCC recognizes that as this continues, the current
system will be harmed."
Roddy said that the telecom industry is headed for a "perfect storm,"
led by VoIP's disruptive technology.
VoIP customers must have a broadband connection to make voice calls,
and today most consumers get broadband either over a DSL phone line or a
cable modem. But more choices are on the horizon.
Wireless broadband using a standard called WiMax should become
available next year, and most electric utilities are experimenting with
technology to bring broadband to their customers, Roddy said.
"We're about to see true competition to provide broadband, and VoIP is
the key to the whole play," he said.
Internet telephony's economics are so attractive that the technology
will spread no matter what regulators do, said Jim Hart, senior vice
president with the Burwood Group Inc.
"Businesses are adopting this technology," Hart said. "It's ready for
prime time. The bottom line is there."
Regulators have pushed for reducing access fees and their
cross-service subsidies for years, and they have become less important for
large carriers like SBC and Verizon Communications. But access fees are
still a major part of the revenue flow to many rural phone carriers.
TDS plans market trials
An important carrier is Chicago-based Telephone and Data Systems Inc.,
which serves more than 1 million wired phone customers, mostly in small
towns and rural areas, through its TDS Telecom unit.
"We're certainly looking at VoIP," said David Wittwer, chief financial
officer of TDS Telecom. "We plan to do a couple of small market trials to
understand how we may offer it to our customers."
Industry groups are trying to build a consensus of how the existing
system of intercarrier compensation should be revised, said Kevin Hess,
TDS' vice president for regulatory affairs.
"Clearly, changes will be made," he said. "It cannot stay the way it's
done today."
Inflexion's Goldsmith agrees. "We need to adjust regulation so that it
matches the technological landscape," he said.
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