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Communications

New York State Classifies Vonage As Phone Company 328

securitas writes "CNet's Evan Hansen reports that on Wednesday, the New York State Public Service Commission 'ruled that Vonage Holdings is a telephone company and thus subject to state regulation.' The decision is seen as a blow against the emerging voice over Internet protocol (VoIP) company and the industry in general."
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New York State Classifies Vonage As Phone Company

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  • First? (Score:3, Funny)

    by bobbis.u ( 703273 ) on Thursday May 20, 2004 @07:39AM (#9202829)
    Sounds like a bad call to me!
    • by stephenisu ( 580105 ) on Thursday May 20, 2004 @08:38AM (#9203257)
      This means schools and libraries will now have a better shot at getting E-Rate funding from the Universal Service Fund Again. Millions and millions of dollars were spent getting schools VOIP and the FCC decided that VOIP wasn't real phone service so they lost funding for it, almost closing many schools, public and private. If you have no idea what I am talking about, go to www.sl.universalservice.org for more info. You might be interested to find out where your USF charge on your phone bills go. (BTW I am an E-Rate consultant for schools, stephenisu@yahoo.com)
      • by gcaseye6677 ( 694805 ) on Thursday May 20, 2004 @09:35AM (#9203790)
        The Universal Service Fund is the biggest scam. Much of the money is wasted [forrelease.com]. Schools in poor areas need to focus on academics and maintaining a safe environment, not connecting every student to the internet so they can play Yahoo games, which is about all we ever used the internet for when I was in school. Getting crap like this taken off of our regular phone bills will help a lot more than trying to expand the socialism to VOIP.
        • You know what?

          All government programs are gonna have waste, someone will ALWAYS abuse the system, intentional or otherwise (I try and help them to NOT abuse the system and only ask for what they need)

          And I am find it rather funny that someone who HAS internet acces should complain. You see in lots of areas where there is little income and parents can't afford internet access. The amount of funding a school recieves is based on the schools students poverty level. Many of these student have no internet
      • by N3WBI3 ( 595976 ) on Thursday May 20, 2004 @10:37AM (#9204448) Homepage
        So our kids in poor schools wont be able to read but at leats they will be able to speetk 1337? I never touched a computer until University (1996) and did nothing to inhibit getting an EE degree with CSE minor..
    • Re:First? (Score:3, Insightful)

      by N3WBI3 ( 595976 )
      Welcome to NY where if we cant tax and regulate it we dont want it..
  • Taxes? (Score:5, Interesting)

    by millahtime ( 710421 ) on Thursday May 20, 2004 @07:40AM (#9202830) Homepage Journal
    Does this state regulation mean the load of taxes thrown on it. The 911 tax I can't knock but all the others.
    • Even the 911 tax is a lot of baloney. I read recently that the bulk of it goes to the NYS general fund. See http://query.nytimes.com/gst/abstract.html?res=F60 A16FD39580C738DDDAC0894DC404482
    • Re:Taxes? (Score:5, Informative)

      by Shakrai ( 717556 ) on Thursday May 20, 2004 @08:29AM (#9203182) Journal

      Does this state regulation mean the load of taxes thrown on it. The 911 tax I can't knock but all the others.

      Actually all this means is that they are subject to regulation by the PSC. That means they must file a tariff sheet with the PSC and that the PSC must approve any rate changes (up or down).

      The decision is seen as a blow against the emerging voice over Internet protocol (VoIP) company and the industry in general.

      I'm afraid I disagree. While I am somewhat leery of Government regulation the PSC does a good job. Ask anyone who has been stonewalled by their phone company. All it takes is one phone call to the PSC and a complaint and your phone company will fall all over you trying to fix the problem.

      Three cases in point (both for the Agency I work at): One of our satellite offices changed locates. We informed Verizon two months before the move and followed up with them as it was happening. Yet for some reason the lines weren't moved. After two days of arguing with them ("We'll have your new lines installed in a week") I filed a complaint with the PSC. A Verizon vice President called me back (based on the information the PSC gave her -- she knew nothing about our other dealings with Verizon until I told her) and we had a techie at our site within two hours. Granted he only installed one line but it got us operational again and we had the others installed by the next day.

      Another PSC story revolves around my boss deciding (against my better judgment) to move our local services to AT&T. Unfortunately the AT&T sales guy (actually working for a third-party that collected commissions from AT&T sales) lied to us about the services that they could provide. They were unable to provide us with an actual Centrex package so we lost the ability to transfer calls (our central offices handles all phone calls and dispatches them to the CSRs/Agents in the remotes that handle the account if we can't take care of the issue in the main office). This effectively shut our business down. I placed an order with Verizon's "Winback" group but AT&T refused to release the lines because they didn't have control over all of them yet -- so they claimed, funny how none of our Verizon features worked anymore and AT&T was billing us for calls during this time. After a full day of trying to get somewhere with AT&T (the PSC does require you to make a good faith effort to solve your problem first) I called up my friends at the PSC. Within twenty minutes I had somebody from AT&T corporate on the line who solved my problem and released the lines to Verizon. I also used the PSC (about a month later -- referring to the same case) to force AT&T to give us a credit for everything they billed us for since they (or their agents) lied about their services to begin with.

      I also have a PSC story that relates to the power company. One day we received an automated call information us that our power would be shut off on Wednesday for "scheduled maintenance". The call didn't say where this outage would be (would it be in a remote office or our main one? They all have the same billing addresses/phone number since the main office handles all the accounts payable). Calling several people at NYSEG and none of them knew jack shit about it -- and they refuse (as a matter of policy) to let you talk to the actual guys that work on the lines. We needed to know which office it would be so we could make a decision -- if they are cutting power to the main office for six hours we will probably close the agency for that day -- but we can't make that decision without reliable information in hand. Anyhow after two days of dealing with this BS I called up the PSC and opened a case. Within an hour we were speaking to a NYSEG Manager who tracked down the field manager that was working on the project in question. He informed us where the outage would be -- turns out it was in an area that we used to

      • Re:Taxes? (Score:5, Insightful)

        by Anonymous Coward on Thursday May 20, 2004 @08:36AM (#9203239)
        I wholeheartedly disagree.

        Vonage provides an internet phone service over your internet connection (which, btw, is not subject to the same stringent standards that your PSTN service is subject to).

        Phone companes need to be regulated because they are a natural monopoly, as in they own and maintain the lines that provide these basic and nessecary services to your home.

        The PSC shouldn't be used as a crutch for people who are too lazy to practice consumerism. If you don't like the service Vonage provides, don't use them! Your local Verizon service is subject to the rules your PSC puts out becuase Verizon is using public land and providing a type of service no one else can becuase they are given special rights to do this by the government.

        This is just simply a ploy by the government to suck more money out of people that does not belong to them (save for 911 service which should be paid for).
        • This is just simply a ploy by the government to suck more money out of people that does not belong to them (save for 911 service which should be paid for).

          Perhaps you'd care to enlighten us then as to how being regulated by the PSC "sucks money out and gives it to the Government"? Perhaps it will cost them a bit more to prepare and file their tariffs but the PSC isn't collecting a tax for NYS. Any fees collected by the PSC are used to fund the operation of that Agency -- they don't send money back to A

    • Re:Taxes? (Score:3, Insightful)

      by shrapnull ( 780217 )
      Not only that but it creates a horrific precedent. Basically any translation from the web to the "real world" can be considered under this, including internet-to-internet phone calls as user-to-user calls are now.

      This could be a staging ground to compare email to snailmail and attempts to apply applicable taxes will surely follow.

      Not that I'm wholly opposed to a digital postage stamp as it would help deter spam, but we are surely in poor shape if the argument comes up in the state of New York. They don't

      • Re:Taxes? (Score:5, Insightful)

        by jc42 ( 318812 ) on Thursday May 20, 2004 @10:26AM (#9204331) Homepage Journal
        [I]t creates a horrific precedent. Basically any translation from the web to the "real world" can be considered under this, ..

        Yeah; what I'm wondering is: Suppose I use the builtin microphone and speakers in my Mac Powerbook, or the plugin mike and speakers in my linux box, and write software to connect these to a program on another machine on the Net?

        Am I now a phone company? Do I have to file the appropiate papers, pay taxes, and so on?

        It gets more interesting when you consider that both I and my wife have PDAs with WiFi access. There are a number of these on the market now, such as the Palm Tungsten and the Blackberry RIM handhelds, and they mostly have a builtin mike and speaker. Also, voice-recognition software is available for all of these machines. Combine these with the Internet, and using them to remotely access sound files looks a lot like "phone" service.

        So if I write a browser plugin that lets me talk into my PDA, which connects to my home machine and retrieves some files, am I now running a phone company? How about if I connect to a friend's home machine and do the same?

        And some of us are working on voice-based interfaces for the benefit of the visually impaired. Is this all now to be considered a "phone" service, to be regulated and taxed as such?

        Maybe it's time to just declare the Internet to be a phone system?

  • Oh Well (Score:4, Interesting)

    by kpogoda ( 580939 ) on Thursday May 20, 2004 @07:41AM (#9202838)
    Looks like another stifled and regulated monopoly to me. So much for innovation in this industry. This looks like a bad case precedent.
    • Re:Oh Well (Score:2, Insightful)

      by Anonymous Coward
      If it looks like a duck
      Walks like a duck
      and quacks like a duck

      It must be a duck.

      Seriously, did you think vonage WASN'T a phone company?
      • Re:Oh Well (Score:4, Informative)

        by Loconut1389 ( 455297 ) on Thursday May 20, 2004 @08:12AM (#9203035)
        Telephone company implies a telephone. IP telephony (a misnomer really) is sending audio signals over the internet to a designated IP address. Only because they are trying to bridge people to VOIP are there any telephone numbers associated with VOIP. VOIP itself does not require any use of POTS. It seems to me that a pure VOIP company (even if perhaps the device you speak into looks like a telephone) where there is no POTS based phone number attached nor does it traverse any of the POTS networks, should have no fees incurred. Now it would make sense to me to have taxes involved when a phone number is attached to it. But either way, it seems that the courts are trying to squeeze VOIP into the telephone paradigm, just like every non-technie in america. It makes it easier to embrace if its just a fancy phone.
        • Re:Oh Well (Score:2, Insightful)

          by irenetheno ( 643089 )
          Wait.. So can Vonage customers receive incoming calls or not?

          VOIP companies appear to be selling digital PBX services. Isn't that still being a phone company?
          They're just replacing some of the POTS lines and phone switches with ethernet, routers, etc.

          • Re:Oh Well (Score:5, Insightful)

            by Frennzy ( 730093 ) on Thursday May 20, 2004 @09:46AM (#9203917) Homepage
            YES! Incoming. Outgoing. It's a phone, dammit. The primary difference is they use a physical adapter to encapsulate an analog phone signal into IP packets. The device establishes a connection with Vonage proxies, which make the decision about how/where to route the packet, based on the destination phone number. If that number isn't a Vonage number, it ends up going out through a peering point (usually pretty damn close to the termination point of the phone call) and through the last mile copper to the destination. People keep talking about the 'internet' as if it's somehow completely distinct from the 'POTS' system. The vast majority of 'POTS' calls run over the same pipes as your internet data does. Major carriers aggregate circuit switched calls and push them into packet switched networks, because packet switched networks have much greater bandwidth. The thing is, I *already* pay taxes on my broadband connection. I also pay surcharges to Vonage. Why should there be an *additional* tax just because it's providing the same service as the incumbent telcos? Why the hell does the state gov have to be involved? Most of the work being done here is already paid for in other ways. Vonage is a Good Idea(TM) Company, and had the vision and agility to get to market early. They don't NEED regulation. They *lowered* their prices! The only reason phone companies are so heavily regulated is because they are typically lying, cheating, slamming scumbags. They NEED the government to watchdog them. Better yet, they need to be slapped down by the consumer. How? By consumers switching to things like Vonage. Pretty simple. Let the incumbent telcos end up as infrastructure managers. Keep them out of the consumer's pockets/homes.
        • Re:Oh Well (Score:5, Insightful)

          by skarmor ( 538124 ) on Thursday May 20, 2004 @09:10AM (#9203568)
          It seems to me that a pure VOIP company (even if perhaps the device you speak into looks like a telephone) where there is no POTS based phone number attached nor does it traverse any of the POTS networks, should have no fees incurred.

          If there is no interconnection with the PSTN then no charges are incurred. The problem is that most voip companies are routing voip traffic over the public internet and then interconnecting to the PSTN for the last-mile.

          It makes it easier to embrace if its just a fancy phone.

          The problem is that voip is going to be used by everyone - not just techies. The average person is not going to see the difference between POTS and voip. They will expect voip service to behave the same as POTS. However, becasue it is not regulated, voip service does not currently need to provdie 911 service, full battery backup or meet any other quality of service standards.

          Many people who will purchase voip services in order to save a buck will not understand that these standards are not there. So when one of these consumers tries to call 911 from their voip phone and the 911 operator thinks they are in NYC when they are really in Albany - there will be excessive bitching from the general public - and with good reason.

          The same will be true in situations where the power goes out and these people can't use their phones. The regulators are just trying to stay "ahead of the curve"...
          • Re:Oh Well (Score:3, Insightful)

            by JimBobJoe ( 2758 )
            The problem is that voip is going to be used by everyone - not just techies...The same will be true in situations where the power goes out and these people can't use their phones. The regulators are just trying to stay "ahead of the curve"...

            I find this line of thinking extremely distasteful.

            First, Vonage goes out of its way to make it very clear to new customers that it may not be as realiable as POTS, does not work for 911, et cetera. The warning is huge, and to imply that only techies would get it is
      • Re:Oh Well (Score:5, Insightful)

        by hpavc ( 129350 ) on Thursday May 20, 2004 @08:18AM (#9203079)
        sure ... now i want to see webex, microsofts meeting service, and others charge the same taxes as vonage is forced to.
        • Re:Oh Well (Score:2, Insightful)

          by LostCluster ( 625375 ) *
          The difference is that those Computer-to-Computer meeting services don't offer phone servicce. That is to say, they don't offer the ability to call a PSTN number...
      • Re:Oh Well (Score:5, Insightful)

        by h4rm0ny ( 722443 ) * on Thursday May 20, 2004 @08:18AM (#9203086) Journal

        If it looks like a duck
        Walks like a duck
        and quacks like a duck


        It must be a duck.

        Seriously, did you think vonage WASN'T a phone company?


        Vonage may or may not be a duck... I mean phone comapany, but what about less dedicated companies? What about an ISP that includes VoIP? What about a company that outsources their network management to a company that sets up VoIP for them internally to their company? What if some friends and I set up our own system, say about fifty of us? What if we've created a new animal that can quack when it wants to and bark the rest of the time?

        The only clear cut off point is when we start connecting to the existing phone network. But I could set that up from my home network with a bit of fiddling. Would they come down on me?

        If you don't use the connection to the existing phone network then do they want to monitor all internet traffic? Do they want to access encrypted traffic? Because that's the only way they can regulate VoIP.

        And if they do use the connection to the existing phone network as their definition, then what happens 5-10 years down the line when VoIP dwarfs the old network. Do we just disconnect and saev ourselves a lot of money?
  • by whizkid042 ( 515649 ) on Thursday May 20, 2004 @07:41AM (#9202842) Homepage
    So, I use Vonage (and love it, btw) in New York State. And I have never known New York State to not charge a tax on something that it could. So, what kinds of extra taxes will I have to pay now?

    If the taxes are large, then it is starting to look like I should just go back to having a cell phone again.
    • Just more of this

      http://vonage.com/help/?topic=rrf

      The Regulatory Recovery Fee is $1.50 per phone number. This is a fee that Vonage charges its customers to recover the costs related to Federal and State Universal Service Funds (USF) and other similar country specific funds, as well as other domestic and international fees and surcharges. Your total Regulatory Recovery Fee reflects a $1.50 surcharge for every phone number you have, including primary voice lines, second lines, fax lines, Toll Free PlusSM nu
  • From the article (Score:4, Insightful)

    by I_M_Noman ( 653982 ) on Thursday May 20, 2004 @07:42AM (#9202844)
    "I am quite disappointed to see that New York State decided to apply legacy telephone regulation to Internet based communications..." [Industry advocate Jeff Pulver] wrote.
    Why am I not surprised that an "industry advocate" would be disappointed?
    • Re:From the article (Score:5, Informative)

      by CptChipJew ( 301983 ) * <michaelmiller@AA ... inus threevowels> on Thursday May 20, 2004 @07:48AM (#9202891) Homepage Journal
      Jeff Pulver created Free World Dialup [freeworlddialup.com], and AMAZING service that is free, and lets you make any domestic US call for free, as well as toll-free numbers in the UK and Japan.

      He is an advocate in that he wants to keep VoIP free. They make money be selling SIP phones (some of what actually look really cool).

      He sees this as a disappointment, because if taxes are applied, it's going to be quite difficult to give a person free long distance in the US (from anywhere in the world) for free. They don't even sell off e-mail addresses.
      • Sounds good, but do they offer encryption? Better yet decentralised server (ala P2P?)?

        Only skyp offers both of these. Yes it only works via software now but they are coming up with a siemens adapter/phone later this year.

        Also, unlike may of these voip software packages. Skype worked the first time around with NO configuration. Crystal clear sound every time all the time. Even when both or all parties are behind firewalls.

        Try that with FWD..

        Also, when will we be getting "a la carte" voip? here in the uk
  • by asdfasdfasdfasdf ( 211581 ) on Thursday May 20, 2004 @07:42AM (#9202845)
    It does have to connect to a real telephone exchange SOMEWHERE... If it was internet to internet telephony only, then I would be against this, but considering that it has to be able to send/recieve calls to other telcos, it should be considered a Telco itself, and taxed/regulated accordingly... Certainly vonage users should have to pay the 911 taxes. This is one of the few taxes in our society that actually pays for a service that is used directly.

    I hate taxes (in general) as much as the next telephone user, I'm not saying they're fair-- but as long as they are there, customers should be taxed equally.
    • by gdbjr ( 751194 ) on Thursday May 20, 2004 @07:50AM (#9202897) Journal
      But what if you are calling another Vonage user? There should be no telephone exchange involved.
    • by Mazzie ( 672533 ) on Thursday May 20, 2004 @08:03AM (#9202970)
      I agree with this 100%. I think that Vonage found a way to temprarily circumvent the taxes by originating all calls from an Internet connection, although I'm guessing a large percentage of the calls connect to a legacy phone system.

      This idea is doomed for two reasons:

      1. Goverment is cut out of tax revenue.
      2. Mega monopoly telcos that lobby/stroke/pay-off politicians are now being undersold and are pissed.

      If Vonage was strictly IP to IP and did not provide public services like 911, I think it would be a different story. Anyways, you really don't need a 3rd party involved for IP to IP. That technology has been around for quite a while, although both parties wanting to communicate need the hardware/software to make it work.
      • I'm worried they're going to try to tax the software involved. That's the only way to really kill it.

        While I'm thinking about it: Has anyone developed a peer-to-peer VoIP system yet? Something that could be patched into a p2p IM network?
    • by div_2n ( 525075 )
      t does have to connect to a real telephone exchange SOMEWHERE.

      That is irrelevant. You are taxed on your phone line at home because you use a piece of wired infastructure COMING TO YOUR HOME. You are not taxed for contacting others. You are taxed if you never make a call. If you were taxed at both ends, that would be double taxation.

      Your call to Vonage only touches the line when it goes to someone that isn't a Vonage user and thus is paying taxes on THEIR line.

      If you the customer have to pay tax on u
  • by millahtime ( 710421 ) on Thursday May 20, 2004 @07:43AM (#9202851) Homepage Journal
    Because of the internets coverage every state could regualte every VoIP company (in theory). I wouldn't be like a local phone company that has regions. Thanks to the internet they have a huge encompasing area they can reach which could lead to all states regulating it.

    If each state sets down different regulations that could lead to a logistics nightmare.
    • What if a foreign company creates a similar service, will they be regulated in New York, PA, NJ, CT, NH, VT, et al, including every other nation on Earth?

      The internet is a fundamentally different communications system that needs different rules. I suppose that iChat AV, because it allows voice calls, would be considered a phone service and subject to regulation in NY.

      Politicians and judges shouldn't be allowed to make rules about stuff they're clueless on. We have a bunch of stodgy old luddites telling us h

  • Taxes (Score:3, Insightful)

    by stealthmidget ( 761031 ) on Thursday May 20, 2004 @07:43AM (#9202857) Homepage
    I'd imagine the taxes will be quite large; the state isn't going to let Vonage come in and undersell the market. If this caught on tax-free, they'd be expected to get a significant portion of the market...now who knows
    • the state isn't going to let Vonage come in and undersell the market.

      At this point the infamous analogy of horse and cart users protesting the unfairness of the motorcar undercutting them appears appropriate.

      Whether that anaology is historically accurate or not I don't know, but this present situation is the same in principle. New technology is ready to change everything and increase society's wealth, and the entrenched powers are ready to cripple it in any way they can.

      They do not care how big th
  • by MrRTFM ( 740877 ) * on Thursday May 20, 2004 @07:44AM (#9202864) Journal
    If they are going to regulate companies that develop VOIP applications it will be interesting to see what happens with OS projects.

    At the moment its only going to be 'minor regulations', but when it takes off and the "potential tax losses" start getting serious will we see all these companies/ projects move offshore.

    Certainly not much could stop it if people want to use it.
  • by WCMI92 ( 592436 ) on Thursday May 20, 2004 @07:46AM (#9202872) Homepage
    Hell hath no fury like government that thinks it's not getting it's "cut".

    This is an attitude of our government that frankly, you and I shouldn't put up with, this thinking that government is entitled to tax EVERYTHING.
    • Hell hath no fury like government that thinks it's not getting it's "cut".

      This may not be a case of them wanting the money. It may be a case of them wanting to make sure regulations are on it so they don't run rampant and do things they shouldn't. SOmetimes regulations are needed when an industry won't police itself.
      • This may not be a case of them wanting the money. It may be a case of them wanting to make sure regulations are on it so they don't run rampant and do things they shouldn't.

        Ha! Don't kid yourself, it's about the money (taxes)...

        Just what is it that they should not be doing that required regulation? Vonage is a buisness, if they screw thier customers, some other company will step in and take thier customers away.

    • This may be overly idealistic, but there is a simple solution to the problem -- vote them out. This country (contrary to popular /. opinion) is not a dictatorship.
      • "This may be overly idealistic, but there is a simple solution to the problem -- vote them out. This country (contrary to popular /. opinion) is not a dictatorship."

        Unfortunately, the government long ago sold the majority on the idea of getting "bread and circuses" from the public treasury.

        It's so bad that "YOUR CHILDREN WILL STARVE" is effective propoganda against proposed tax cuts...

        Sad.
      • This country (contrary to popular /. opinion) is not a dictatorship.

        That is correct, it is not a dictatorship, it is an oligarchy.
  • by Anonymous Coward on Thursday May 20, 2004 @07:46AM (#9202874)
    I thought Oregon or California tried this and they lost the case! Moreover, the FCC along with Congress wrote legislation to prevent them from being regulated and taxed, thus I'd think anything NY state does would automatically be void too! I see a supreme court case in the works here to settle it once and for all. Most of NY state is the old GTE (now Verizon) phone company and the company stands to lose alot of jobs, along with state revenue.
    • If it's true that there is federal law preempting states from applying their own, then it probably won't go to the Supreme Court; the District Court would decide one way or another (probably against NY), the Court of Appeals would decide for Vonage, and the Supreme Court would deny certiorari. This isn't complex, novel, or important enough for the Supreme Court to get involved.
    • If they get deemed a utility company this might become a grey area. Utility companies are regulated by the state and not federally.
  • It all depends... (Score:3, Insightful)

    by llamaguy ( 773335 ) on Thursday May 20, 2004 @07:46AM (#9202879)
    Is Vonage a phone company? First, lets look up the meaning of telephone. Telephone: Noun, An instrument that converts voice and other sound signals into a form that can be transmitted to remote locations and that receives and reconverts waves into sound signals. (Dictionary.com) So, by this definition the service that Vonage was offering was a telephone service. However, like practically all else, this is open to debate. So go debate.
  • The lesson here (Score:5, Interesting)

    by squarooticus ( 5092 ) on Thursday May 20, 2004 @07:47AM (#9202883) Homepage
    The lesson here, especially to investors, is: "Don't try to provide innovative service in a heavily regulated industry." All that will happen is you'll blow a lot of money to get your business off the ground, only to be slapped down by a regulatory environment that, intentionally (through corruption) or not (through the law of unforeseen consequences), effectively acts as a defender of the status quo: the behemoth government-protected monopolies who've already learned the lesson.
    • Re:The lesson here (Score:4, Insightful)

      by malchus842 ( 741252 ) <stephen@adamsemail.net> on Thursday May 20, 2004 @08:06AM (#9202993) Homepage

      And, said regulated industry has high-priced, professional lobbyists who are constantly making sure that a) their monopoly (if they have one) is protected; b) new entrants who try to offer a different, but competing service are barred from entry by regulation, taxes, etc , and c) that "shared" resources are priced high enough that startups have problems using them.

      Look at the battle going on between the satellite companies and cable cos. Most cable cos are regulated locally, and have significant taxes. Satellite companies have been able (for the most part) to avoid this because of their model (only downlink located in most localities, and that downlink is privately owned).

      I'm not surprised by this classification - every level of government believes that it has a $DEITY-given right to tax and regulate everything. Heck, hosting a home poker game in my state can get you a year in jail! I'm not opposed to all regulation by any stretch of the imagination, but regulation stifles creativity and needs to be applied only in very clear, very limited ways.

      • Satellite companies have been able (for the most part) to avoid this because of their model (only downlink located in most localities, and that downlink is privately owned).

        So, are you saying that cable companies want the satellite companies subject to the same regs? How do they justify this? Like you say, the satellite companies are a purely private venture - they don't need a right of way from the city or the state government.

        This is pretty much like the vonage case - the only shared resource in use a

    • Nonsense (Score:4, Insightful)

      by north.coaster ( 136450 ) on Thursday May 20, 2004 @08:33AM (#9203217) Homepage

      This is pure nonsense. Weren't cellular telephones at one time considered an innovative service in a heavily regulated industry? Didn't the cellular phone industry manage to survive dispite regulation?

      VoIP will survive as long as it provides a useful service that is in some way advantageous over existing land-based and/or cellular systems.

      /Don

  • "only minimal regulations to ensure that it does not interfere with the rapid, widespread deployment of new technologies."
    Riiiight. Because when you hand a new area of legislation to a bunch of bureaucrats the last thing on their minds is interfering.
    Watch this space for a long list of restrictive and unneccesary regulations being pushed through by people who haven't suddenly become the phone companies best friends, oh no.
    Hmmm...
    1) Spot a new area of technology that threatens entrenched interests.
    2) Sta
  • by esarjeant ( 100503 ) on Thursday May 20, 2004 @07:48AM (#9202890) Homepage
    This may be the deathknell for most small startups in the VoIP sector. Only the megaconglomerates (AT&T, Sprint, Verizon, SBC) will be able to compete in this kind of arena.

    Very unfortunate. I had hoped to jump onboard the VoIP bandwagon in the near future (once my area code is available), but the cost benefit could be going out the window.
  • by Matt1313 ( 165628 ) on Thursday May 20, 2004 @07:50AM (#9202899)
    New York State Public Service Commission said, "...saying that it nevertheless hoped to apply "only minimal regulations to ensure that it does not interfere with the rapid, widespread deployment of new technologies."

    When was the last time a Government Agency applied "only minimal regulations" to anything? The tendency of bureaucracy, once involved in something, is to strengthen their involvement in that thing.
  • IP only telephony (Score:4, Interesting)

    by 80N ( 591022 ) on Thursday May 20, 2004 @07:52AM (#9202906)
    The incumbent telecoms companies ought to be really worried by VoIP. Right now they can get a slice of the action providing someone is trying to make a call to a legacy phone, by if its VoIP to VoIP they dont stand a chance.

    Imagine, free unlimited and unrestricted (open source, of course) telephone services worldwide. Just like email. It will happen and there's nothing they can do about it.

    And cell phones will be replaced by WiFi phones, with the gentle propagation of free WiFi hot spots in Cafes etc who's going to need to pay for a cell phone?

    80N
    • Imagine, free unlimited and unrestricted (open source, of course) telephone services worldwide. Just like email. It will happen and there's nothing they can do about it.

      Oh, just wonderful. We all know how well e-mail works now that it's completely unregulated and free for all. VoIP spam. I can't wait. "Mommy, what's a hot young asian fuck stud and why does he want to sell me viagra?"

    • Re:IP only telephony (Score:5, Informative)

      by redfenix ( 456698 ) on Thursday May 20, 2004 @08:18AM (#9203082)
      The telcos don't get a slice for internet traffic? Since when?Who owns the internet backbones? [navigators.com]

      27.9% - UUNET/WorldCom/MCI
      10.0% - AT&T
      6.5% - Sprint
      6.3% - Genuity (level 3)
      4.1% - PSINet (cogent)
      3.5% - Cable & Wireless
      2.8% - XO Communications
      2.6% - Verio
      1.5% - Qwest
      1.3% - Global Crossing

      Hmm, these names are sounding awfully familiar!
  • Did we not expect this to come from a state so desperate for cash that on the tax forms this year you are required to report purchases over the internet? This is so that while you didn't pay sales tax up front, they will get it somehow. They even talked about requiring people to report inter-county purchases. The NY state legislature never met a dollar they couldn't spend, although I highly doubt NY is alone in this arena. I need to move to New Hampshire.
  • by SWroclawski ( 95770 ) <serge@wroclaws[ ]org ['ki.' in gap]> on Thursday May 20, 2004 @07:53AM (#9202916) Homepage
    Okay, so most of us agree that this is a bad thing- it places more regulation on the Internet and protocals (taxes are just one step, wiretapping, etc. are of course going to follow and be required in all VOIP protocals (yes we know the reality is something else, nonetheless this is what I fear will happen).

    But this does bring up an interesting point. Phone companies are regulated in what they are and aren't allowed to do with the phone conversations. They can't, for example, monitor your calls for marketing ala Gmail "Oh, you asked your wife to bring home some milk- well there's a deal at the local Megamart".

    So can we as consumers now require that if VOIP providers are telephone companies, that ISPs be regulated in how they can and can't monitor us, and stop practices like purposefully slowing down connections from rivals? (Time Warner Cable vs Disney.com, etc.)

    I would rather none of this existed, but maybe we can force the legal arm to swing in our favor as consumers.

  • by christowang ( 590054 ) <chris AT sysice DOT com> on Thursday May 20, 2004 @07:56AM (#9202931) Homepage
    By doing this, they are technically taxing Internet traffic. Right now Vonage adds on taxes for regulatory fees for the Phone number, but by doing this, what prevents New York from saying IM's or email's should be taxed as long distance communication?
  • by Jonny Royale ( 62364 ) on Thursday May 20, 2004 @07:58AM (#9202944) Homepage Journal
    Given the differences in technology between Vonage, and the traditional telco, and some of the items in the article, it seems that there's going to be different standards applied to the VoIP company, which is a good thing.

    As the traditional telcos move from the traditional circut switched networks of current phone systems to a more packet switched network, there needs to be a way for the regulatory agencies to keep up with the changes, and ensure that necessary services (e.g. 911) and quality are maintainted.

    In the long run, this will probably be seen as a good move, since they're actually trying to keep up with changes in technology, rather than waiting to get run over by it.
  • by _LORAX_ ( 4790 ) on Thursday May 20, 2004 @08:00AM (#9202955) Homepage
    Consitering that Time Warner just launched it's VoIP service in the past month. I have to wonder if they are pulling the strings in order to wipe out it's only signifigant competition in this area. TW's prices are ( of course ) much higher and provide fewer services than Vongae does.
  • I've looked some at the VoIP phones, and so far regular phone service seems to win out mainly because of high reliability...though I don't have any direct experience actually installing or managing VoIP. (T1 and regular phone services, yes.)

    Are there phone companies -- regular or VoIP -- that folks use on a small scale, such as Cavilier, that anyone can recommend?

    Any good sites -- something like Broadband/DSL Reports [dslreports.com] but for phone/VoIP issues?

  • I wonder if this decision will have any impact in Canada. The CRTC (rough equivalent to the FCC) has ruled that traditional telcos must follow traditional regulations for VoIP, but those regulations do not apply to non-telcos such as cable companies, Vonage, etc... that offer/will soon offer VoIP services in Canada. Seriously hurts the ability for telcos to compete. Maybe this ruling will have an affect north of the border.
    • traditional telcos must follow traditional regulations for VoIP, but those regulations do not apply to non-telcos such as cable companies, Vonage, etc... that offer/will soon offer VoIP services in Canada. Seriously hurts the ability for telcos to compete.

      Then maybe it's time for the incumbent telco to offer VOIP.

      • That's the problem. The CRTC is stiffling incumbent telcos where VoIP is concerned. I've heard (but can't quantify) and telcos will have to wait until 2007 before being able to offer VoIP due to regulations, while cable cos and companies liek Volnage do not have those limitations.

        A crap load more of info can be found here [cablecastermagazine.com].
  • Vonage Rocks (Score:5, Informative)

    by qwerty75 ( 775323 ) on Thursday May 20, 2004 @08:12AM (#9203029)
    Personally I hope this does not signal an end to their business model. I have had Vonage service for 6 months and I could not be more pleased. Thier billing and reporting is awesome. I can actually log into their site to view all incoming and outgoing calls. I can download my voicemail to a wave file. Meaning I can check it anywhere there is a computer with internet access and a sound card. But here is the real shocker. I had a problem sending faxes through their system. Called them up. Had a short wait time ~30 Seconds. They had my problem fixed within 5 minutes. Not only that but they actually asked about what hardware and software I was using to add it to their knowledge base. I was floored. Try having that type of service from Southwestern HELL. Not to mention saving $30.00 a month and having way more features. And the voice quality is excellent.
  • Surprise surprise (Score:3, Interesting)

    by Galvatron ( 115029 ) on Thursday May 20, 2004 @08:13AM (#9203039)
    Yeah, this is what generally happens with government regulations. What was originally set up to keep a monopoly from exploiting the people eventually becomes a tool of that monopoly. This is exactly like how the railroads used the Interstate Commerce Commission to repress the trucking industry for decades on end. Bah!
  • Well, since with Vonage, you can get a number in any exchange, If you lived in NY and they tried to levy taxes on vonage, get a NJ or CT phone number as your primary number and switch your current phone number to a secondary number that others can call you on, but your outgoing calls will never originate from.

    On the other hand, I am pissed that a friend who switched to vonage on my recommendation has been paying for two accounts for six months. It seems that not only does one company own the phone line to
  • Great (Score:2, Informative)

    by SlongNY ( 766017 )
    Great.. Now my packet8 phone line is going to be taxed too?!?! 20 bux a month so so sweet.
  • Dear FCC, (Score:5, Insightful)

    by orangesquid ( 79734 ) <orangesquid@NoSpaM.yahoo.com> on Thursday May 20, 2004 @08:18AM (#9203088) Homepage Journal
    It is the whole world's Internet.

    Not just the U.S. Government's.

    Please go home now and leave us in peace.

    Thanks,
    Matthew C. Williams
    and a cast of thousands
  • by north.coaster ( 136450 ) on Thursday May 20, 2004 @08:23AM (#9203138) Homepage

    ... sounds like a telephone, acts like a telphone, works like a telephone...

    Then it must be a telephone!

    Who cares what technology it uses? If I can pick up the handset, dial a number, and expect a recipient on the other end to answer, then the state has every right (and obligation) to deal with it like any other telephone service.

    If this were not the case, then cellular telephones would also be exempt from taxes.

    /Don

    • the state has every right (and obligation) to deal with it like any other telephone service.

      Why?

      The massive web of regulation on POTS carriers exists for three reasons - One, dealing with them having a monopoly in many areas. Two, making sure everyone can have a phone. And three, dealing with the property rights involved in laying physical lines.

      In the case of VOIP, none of those apply. Almost no barrier-to-entry exists (TW just stepped up to the plate, for example), and even if it did, you don't n
  • How about e-mail?? (Score:3, Interesting)

    by Fuzzums ( 250400 ) on Thursday May 20, 2004 @08:28AM (#9203175) Homepage
    Should that be regulated too?

    Yes. There is a cry for regulation and legislation. Just only think about spam.

    and on the other hand: who forbids you to write your own application to communicate? eg write your own private VoIP server. Friends only, ssl, safe from tapping.

    Just a thought...
  • by hwestiii ( 11787 ) on Thursday May 20, 2004 @08:44AM (#9203297) Homepage
    Coming from the Slashdot crowd, all this excitement over whether Vonage is a phone company or not is particularly amusing.

    Granted, not everyone that reads Slashdot is programmer, but clearly a lot either are or have more than a passing acquaintance with programming concepts and theory.

    I think what we are seeing here is simply a bureaucratic manifestation of the separation of interface from implementation. The whole point of companies like Vonage is that the do all the stuff a normal telephone company does, but using non-standard methods. If they didn't, they'd have no customer base, and their users would stick with existing providers.

    If the users think its a phone company, why shouldn't the regulators? Isn't that the whole basis of OOP over the last several decades? What a thing does is more important than how it does it.
  • Vonage is advertising their service as a replacement to phone service despite any disclaimers they make about feature limitations. Recently visiting their website would activate a pop-up that invited you to cut your phone bill. However Vonage and other VoIP providers have been immune from the regulations that increase costs for POTS providers, their competitors. The argument should not be whether Vonage should be treated as a phone company, but rather what taxes and regulations should be applied to the se
  • by jonwil ( 467024 ) on Thursday May 20, 2004 @08:59AM (#9203436)
    or any programs that run on it.

    What this is is a decision that a company that lets you call up people on any other phone companies network (Verizon etc) including calls to Emergency numbers shouldnt be granted an exemption from this particular piece of state legislation that regulates phone companies just because their phone connects to the Internet instead of to a regular phone network.

    Programs (including voice chat progams and such), protocols and internet services that dont talk to the regulat PSTN network wont be affected by this decision.
    Also, even programs that are used for services that connect to the PSTN wont be affected. The only affect this will have is on companies offering a telephone service that lets you ring up someone on the regular PSTN (or on a mobile etc) and lets them ring you.
  • New York State is home to New York City, which contains how many telecommunication giants, exactly? Verizon alone wields enough clout in New York politics to influence decisions like this. This state (or entire region) is not exactly the place for emerging players.

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