In the end, the only reason VoIP is so cheap is that it passes the
> costs off to other sectors.
Or, to put the shoe on the other foot:
In the middle, a key reason that VOIP is so cheap is that huge amounts of secondary fees, taxes, and contributions (many of which do, in fact, get kicked over to other parts of the legacy telcos and other powerful beneficiaries) have been added to the traditional phone bill, raising it way above the base cost. As of now at least, very few of these have hit the VOIP product line.
Knowledge may be power, but communications is the key snipped-for-privacy@panix.com [to foil spammers, my address has been double rot-13 encoded]
[TELECOM Digest Editor's Note: Yeah, and can you imagine there are folks who want to place the blame on VOIP because it is so inexpensive; they seem to feel all those taxes and fees the landline telcos pay are justified. Why they want to blame VOIP instead of placing the blame of the government, squarely where it belongs, is anyone's guess. PAT]
Regulated telcos don't pay taxes. Only their customers pay taxes. Some of those taxes are itemized on the bill, and some are just buried in the rates, but one way or another, every dime of tax paid by the telco comes ultimately from the ratepayers.
This is not a problem insofar as the taxes in question are general taxes that apply to all businesses (or, more specifically, all businesses which offer a service which is substitutable for the service the telcos offer, in proportion to the service's relative value). At present, we have a regulatory system where some services are taxed specifically, and other, eminently substitutable services are not so taxed or indeed regulated at all, depending entirely on where in the protocol stack these services are implemented.
There is no question that substitutability is valuable in a competitive marketplace; indeed, it is a necessary condition of having a competitive marketplace. The problem, however, is that differential taxation and regulation of otherwise substitutable services causes consumers to make choices between services for reasons external to the market, to wit, on the basis of that differential taxation.
Telcos see this problem most clearly, because they are the ones being discriminated against in the current scenario. Unfortunately, the approach they have taken in their campaign, demanding that everyone be regulated and taxed in the same way as they are, is both counterproductive for the economy as a whole and ultimately futile as more and more non-telco voice services are designed to be unregulatable and untaxable.
The telephone regulatory regime needs to begin the process now of phasing itself out of existence. A good start would be eliminating direct taxation and cross-subsidy of telephone services (e.g., USF, franchise fees, state sales and excise taxes), while simultaneously prohibiting the itemization of non-tax costs of doing business, so that consumers are able to make a reasoned choice among different (but substitutable) communications offerings.
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