VoIP Regulation: When Senators Retract

Good lord! It has been an awfully busy day in the telecom world. Between conferences, earnings calls and the AT&T bombshell, I was not ready for another stink bomb today. Even a hard nosed cynic like moi does have his limits. (Well Boston is losing so that makes me happy!) Anyway just as the day was ending, here come news that Senate is allowing states to tax VoIP services. As Stuart “Sportscenter” Scott would say: what dawg? Yup you heard it right.

The Senate Commerce Committee approved an amendment pushed by Sen. Byron Dorgon (D-SD) that would allow states to levy taxes on VoIP services to pay for universal service and to compensate traditional telephone companies for the use of their phone lines by imposing of access charges. A separate amendment would give states the power to force VoIP providers to pay for 911 services.

Today, in a surprise reversal of a bill that was originally intended to shield VoIP from state regulation, the Senate Committee on Commerce adopted an amendment that permits states to regulate VoIP services in two ways: levying taxes to pay for universal service (USF) and for compensating traditional telephone companies for the use of their phone lines through so-called access charges.

Jason Talley, president and CEO of Nuvio Corporation, a leading VoIP provider commented on the unexpected bill revision, “The amendments that were made to this bill obviously demonstrate a gross misunderstanding of the way that our technology operates and touches traditional telephone networks. The requirement that we subsidize this antiquated technology through USF is tantamount to taxing email to support the US Postal System.”

“As I read this amendment, it effectively guts the bill by turning back to the state commissions all their regulatory powers having to with existing telephone service,” Sen. John Sununu (R-N.H.), the author of the legislation told InternetNews.com. “We fear that premature assessment of fees and taxes will undermine the potential of new technologies that will revolutionize the way Americans communicate,” Russell Frisby, head of Comptel/ASCENT, which represents smaller telecommunications carriers told Reuters.

Well this is the worse kind of news for Vonage, which I am sure was getting ready for the price-war with the bells and gasping for breath Ma Bell. For AT&T the day cannot get worse. But more on that later!