Senate Mulls Internet Tax Ban - VoIP Exempt?

securitas writes "eWEEK's Caron Carlson reports that this week the U.S. Senate will vote on renewing an Internet tax ban, but voice over IP (VoIP) may be taxed. The bill renews a state/local ban on taxing Internet services like VoIP. The federal government wants to define VoIP as a software application exempt from taxes while most states see it as an alternate form of telephony subject to telecommunications taxes. House and Senate bills that define VoIP as a software application have already been introduced but may not be voted on before the Internet tax vote."

What defines VoIP?

[ZaMoose]

For instance, Unreal Tournament 2004 has VoIP functionality built-in in order to facilitate communication between teammates. Might it be subject to taxation?

What about GAIM's VoIP plugins? Or Gnomemeeting/Netmeeting?

Are we just talking about apps that mimic a telephone, or are we talking about all VoIP applications?

I don't trust Congress on these matters. I get the feeling that VoIP will end up being broadly defined and some horror stories resulting from the mess.

They might be right

[SquierStrat]

I'm not saying what I think they should do. But I'm going to play devil's advocate and say they might have a point. VoIP isn't the internet. It is a service. VoIP isn't necesarilly an international domain thing. It's really not all that different from any other telephone service. It would be like them placing a 1 dollar a month user-fee on ISP's services. Not the same as putting a sales tax on internet goods, or taxing it based on usage, or charging for e-mails. I beleive the term politicians use is "luxury tax." Would no doubt bring in huge revenues.

Like I said, I'm just playing devil's advocate.

Re:Bah

[Trent05]

So.. can I spoof my IP address and get my calls billed to my neighbor??

Skype?

[Locky]

Skype [skype.com] is a P2P VoIP application that is independant of any central servers, has great quality audio, NAT, etc.

How exactly do they intend to regulate the unregulatable?

What I would really like for VoIP...

[Kjella]

...is to use the recent short-range band (Bluetooth, WLAN, direct phone-phone connections et al) to turn my cell phone into a landline w/wireless, when in range. That would be a real boon for IP telephony. VoIP with headset or specialized IP-capable phones have their use, but if you could use any cell phone the market would explode.

Kjella

Re:Bah

[SquierStrat]

Is it so ridiculous? Attach it like a sales tax. Your SMTP server provider would be the tax collector. They track how many e-mails you send and you get the bill at the end of the month. Every time a spammer sends you an e-mail, they pay for one of your e-mails and that e-mail.

VoIP (as in the serve ices that are like using telephones) taxation wouldn't be that much different. I don't know much about VoIP but IIRC you need a service provider (I'm not talking about the kind of VoIP you have in games) so just charge a 25 cent a month user-fee.

I'm not saying I think they should do it. I'm just saying it's not all that ridiculous of a thing to do.

Re:They might be right

[nkh]

VoIP means "Voice Over IP", and IP means "the Internet".
VoIP can be coded in a software (which can be Free, as in Free Beer), and that's why it is neither a good, nor a service.

Technically, how would this be possible?

[zogger]

How could they do this without monitoring all data streams extensively, and determing somehow "gee, this is voice and this isn't", etc. And tracing them to individual IP addresses? Just throw some random numbers at the whole internet? I mean, speech (and video) between people over the net has been around a long time, CUSEEME as an example.

This sounds more like some sort of random tax that still won't allow what you want to do with your machine, just like the blank CD tax/fees you pay still won't let you completely off the hook with the RIAA MPAA goons and their pet legislation they inspired, even though it was supposed to.

The only way to keep the net free is just that, no taxes on it for any reason. It's slippery slope, once the government gets a money toe hold on it, eventually it will be highly regulated.

And speaking of taxes and unnecessary fees, why can't we get unbundled POTS yet? Why do I have to pay all these ridiculous fees I see on my phone bill to use a phone line just for the net? I don't use it for anything but net access. I certainly can't get unbundled copper, no negotiations there as far as I know without jumping through a ton of ridiculous hoops and expense. I guess what I am asking is, why can't I be my own isp with just a pair of copper wires, why do I need all the extra fees and go through someone who has a fat pipe, is there any technical reason they can't throw some switches, etc, and just let me use PPP? Is this an artifical blockade they put on it? I honestly don't know the answer to that, not familiar enough with how it is set up at the local telco or how this is arranged beyond getting an assigned IP and/or domain name and IP. Would it be technically possible to just buy an IP directly, and eliminate a couple of middleman steps? I've never worked at an ISP or anything so I don't know what steps are involved with access and hardware and software and protocols.

Re:Skype?

[sploo22]

Good point, but if the packets use a predefined protocol they'll still be able to do traffic analysis, even if they can't decode the data. Just scan for the headers and bill people per packet.

I guess you could get around this by using IPsec, OTOH.

Re:What defines VoIP?

[bwy]

My guess is that if this goes through, their intention is to tax VOIP when it is implemented through a telco. It is hard to tell from these articles that were posted though because aren't written with a lot of technical detail.

Sure, there are other ways to use VOIP technology, but it is totally nothing compared to the number of people who use the PSTN. My guess is they would like to position themselves to levy taxes as some telcos go from circuit switched technology to packet switched.

You're probably right though, I think the laws will end up being written so broadly and poorly that nothing will really be exempt.

They still own all the cards...for now.

[Famatra]

"Apparently, the local phone companies are scared shitless because the internet is capable of destroying their stranglehold on the telecommunications market."

The phone companies might hurt for the short run, but they still seem to own the vast majority of the connections on which the internet (and thus VoIP [wikipedia.org]) ultimately operate.

People creating their own interconnected wireless internet [infoshop.org] networks will probably hurt them more in the long run. Get a large enough tower you can transmit to people like a pirate TV or radio station.

Isn't it already taxed?

[no_such_user]

Because it'd be near impossible to meter, it's unreasonable to expect VOIP-to-VOIP traffic to be regulated and taxed. However, VOIP which peers with the PSTN (i.e. the phone company) is a much easier target. But aren't taxes already being collected here? For each phone number assigned to a VOIP device, the party providing you with service (i.e. voice ISP, such as Vonage) needs to get a PRI or similar hookup to the phone system. Doesn't that get taxed? And what about sales tax? An argument could be made that wherever the VOIP provider has POPs, they could charge sales tax. And don't I already pay taxes to my ISP for my internet connection?

I'm not against taxes - I'm against excessive, stupid taxes. Like paying an E911 tax, only to find out [usatoday.com] that the money collected is going towards office supplies, dry cleaning, cars, etc. Or paying over 20% tax on my cell phone service.