James S. Granelli, Contributor
Microsoft Chief Executive Officer, Steve Ballmer. - REUTERS
Los Angeles Times:
INEXPENSIVE INTERNET phone calls could get more expensive under provisions added to federal legislation that sparked heated congressional debates over pay television competition and equal access to data networks.
Internet phone companies such as Vonage Holdings Corp. worry that their new service is being subjected to old rules at a time when the Republican-led Congress and the Bush administration are deregulating the telecommunications industry.
If approved, those rules could drive up prices for Internet calling, which allows customers to make inexpensive or even free calls worldwide using technology similar to the way email is delivered. That, in turn, could hamper the industry just as it is getting started.
"It's got me to the point of absolute depression," said Jeff Pulver, a pioneer in bringing the technology - known as voice over Internet protocol, or VOIP - to the mass market.
AMENDMENT
An amendment to the first major telecommunications legislation in a decade would give states authority over payments to state universal service funds and over rates that Internet phone companies pay to complete calls.
Many industry experts thought that kind of authority was pulled out of state hands two years ago by the Federal Communications Commission.
Separately, a pending order before the FCC would force Internet phone companies to pay a steep price and wireless carriers to pay more into the federal US$7 billion universal service fund, which defrays the high cost of serving rural customers and subsidises low-income customers. The fund is facing a US$350 million shortfall.
RISE IN BILL
Internet calling companies project that a US$25 monthly bill would rise US$1.77 with the universal service fund fee. They could not estimate what state access charges could be, although the average cost is five cents a minute and can go as high as 34 cents in some states.
The companies said they see the hand of rural phone carriers, which stand to benefit from increased contributions to the fund as well as higher fees for completing phone calls over their lines to customers' homes.
"Gold-plated rural telephone companies are afraid of losing billions of dollars in subsidies they currently receive, afraid of a level economic playing field and afraid of competition from the Internet," said Christopher Murray, a Vonage executive in charge of regulatory affairs.
Rural carriers countered that Vonage and other companies have been getting a free ride for several years by avoiding charges to complete calls or paying too little for access.
