Real taxes for virtual phones?
By Scott Bradner
Network World, 05/31/99
It doesn't look like many of the charges on my current phone bill
would survive a transition to Internet-based telephony. Unless
the regulators notice their revenue seeping away and decide to
get in the way, Internet phones look like they will be
economically attractive. 'Net phones may be attractive enough
that many users will tolerate poor quality, as they currently do
with cellular phones, to save money.
Inspired by a column in the May issue of Business Communications
Review, I looked at my phone bill to see what I am being charged
for. My last Bell Atlantic bill for my fax machine phone line
totaled about $33. (Well, it actually totaled just over $58
because I forgot to pay the previous bill.) Of the roughly $33
for the previous month's service, $6.94 was for the basic Bell
Atlantic service, $1.26 was for various federal and state taxes,
$17.94 for mandated fees of one type or another. There were also
charges for touch-tone service, an unlisted number and actual
phone calls.
Parenthetically, it seems quite strange that I have to pay extra
for the number to be unlisted and for touch-tone dialing, both of
which help Bell Atlantic reduce its costs.
The mandated fees included a $9.91 access line charge, $6.07 for
a federal line charge, $1.70 for an AT&T carrier line charge
and a universal connectivity charge.
How many of these charges would I expect to see on a bill from an
Internet-based telephone company? Not many. No fee for being
unlisted, no touch-tone fee, none of the mandated fees and few of
the taxes. Even if one assumed the charge for the calls and the
basic service would not change, the result might be less than $10
- one-third of the current bill. But I'd expect that the base
charge would be less and that calls would cost less except when
made to a non-Internet phone.
Removal of the line charges would mean a loss of revenue for
telephone companies, which would break my heart. Removal of these
charges would also mean less revenue for state and federal
governments that might not like that. The governments' autonomic
reaction will be to put real taxes on the virtual phones, but it
is not clear if those taxes could look anything like the ones we
now have. I can run dozens of virtual phones over my one physical
cable-based Internet connection.
Will regulators try to put line charges on what I could do and
charge for the potential connections, rather than what I actually
do? How can they find out what I do? I can change the protocol I
use so the packets do not look like telephone traffic. Might
governments have to stop treating voice as a cash cow? That may
be wishful thinking on my part.
Disclaimer: Wishful thinking is the main job of any educational
institution, including Harvard, but the above wish is my own.