Thumbs Down On Taxing Internet Calls
Imagine if a federal agency in the 1920s imposed a tax on cars because they interfered with the production of horse carriages. Or, if regulators in the 1980s slapped a tax on desktop computers because they impeded sales of giant mainframes.
Sound absurd? Well, welcome to 2003, where established giants in the telecommunications industry are attempting to stop the growth of a promising new technology, perhaps with the federal government`s help.
At issue is the growing number of consumers and small businesses using their high-speed Internet connections to make telephone calls.
Additionally, some long-distance companies have begun sending calls over the Net, bypassing the usual phone networks.
Clear advantages
BusinessWeek magazine recently covered the rise of Internet calling, terming it "cheaper than most traditional voice (calls) while offering better features."
The advantages of Internet calling are clear. As BusinessWeek noted, there are significant savings compared with using traditional phone lines.
Moreover, Internet calling has obvious benefits for small businesses — over and above price. For the mobile entrepreneur, calls and voice mail follow whenever he or she logs on. Also, customers using this new technology can choose any area code — not just the one from their region. This allows a small business in Oklahoma to create a "virtual presence" in, say, Chicago.
Unfortunately, where small businesses and consumers see potential savings and better service, the local Bell companies see a threat. With their 80 to 90 percent market share, they don`t like the idea of a promising technology offering consumers a different option.
Their argument is that all phone calls, not just some, must pay for maintenance of the nation`s phone networks, and that`s why the nation`s four Bell companies have approached regulators at the Federal Communications Commission (FCC). They recently filed a request with the FCC asking for authority to place a tax on Internet calls. The new "access charges" would merely serve to protect the Bells` existing networks while handing consumers higher costs and fewer innovative choices.
Should the FCC accede, it would not only set a dangerous precedent for the taxation of other Internet services, it would eradicate what is now a small but promising market for competitively offered Internet telephony.
The requested "access charges" would be used by the Bells to drive current Internet phone service providers, many of them small businesses, out of the market.
Small businesses are also growing users of phone cards to save long-distance billing charges, such as when their personnel are traveling. Since many phone card services are delivered via Internet calling, this tax would deny many businesses the opportunity to economize.
The FCC has traditionally taken a "hands off" attitude toward the Internet. Regulators have generally and correctly preferred to let the industry develop naturally, without prematurely tying it down with new taxes or regulation that would thwart innovation.
Federal regulators should not help a small group of giant companies protect their dominant market share. The lifeblood of our economy is that new technologies supplant old ones — with consumers and small businesses being the ultimate beneficiaries.
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KAREN KERRIGAN founded the Small Business Survival Committee (www.sbsc.org), a nonprofit, nonpartisan advocacy group based in Washington, D.C., and serves as the group`s chairwoman.
