Back in the day, telecommunications expenditures were among the top ten of a business. The carriers act as legalized bandits using rates and tariffs to put it to everyone, and unless you know--or know someone that knows--the craft well enough, odds are against you. Carriers still hide, dodge and manipulate to their advantage by changing rules, policies and even terms of service as they please. These are all living, breathing documents that the carriers master.With next generation networks we need new generation thinking and business/government practices to provide fair and balanced services, applications and equitable prices for the Internet. The PSTN was our old model. It was built for the public good and with good intentions, but since has been used as a political football and for lining government coffers from disproportionate tax revenues operating under outdated legislation. There is no question that the Internet serves the good of the public. The questions remaining are whether the Internet will remain free and open, achieve fair equity and escape unfair taxation and regulations.
Since the carriers are regulated, there's a need to reciprocate on both ends of the regulations. Old premiums on wire speeds for T1s and PRIs are no longer justified, yet every carrier knows that they've got you in their proverbial grip. Landlines will continue to erode and the carriers will speak up and rationalize their rates and even their terms and conditions. Fat, pretty smart and happy--the carriers are making out while Uncle Sam including the many State and local taxing authorities sit idly by--fat, dumb and happy getting their significant cut ranging from the low end of 10% to about 38% in my neck of the woods. There are significant questions and concerns that all lead to more questions and issues regarding the fate of the PSTN. Whether or not government and industry can mold and then migrate a transition path that provides best of class services, fair pricing and reasonable taxes that are destined to provide value and not just for the sake of revenue, still remains as big of a challenge as is building the NGN. Had this process been applied to a business, one of the first questions arising should be "where's the roadmap?"
What remains in our industry are exorbitant tax rates on services that take on different meaning for consumers and businesses alike. For consumers, local telephone bills are like paying double what they should for services while for businesses--their taxes serve as the cash cows for government revenues, and the costs are passed down again to the consumers and other businesses.
Last year I made some predictions about landlines and Cable Cutters and since then I've continued to ponder over this. The effective combined telecom tax rates for Nevada and Montana remain just below 10% and the lowest in the country. People across the U.S. are moving from one state to another and sometimes bordering states to escape higher taxes. Millionaires left California and Maryland for the same reasons and because they are fed up with excessive taxes levied on their businesses and incomes. Those familiar with the Laffer Curve may relate to this and according to Dr. Laffer, excessive taxes influences people's and companies' behavior, and for those of you that are not aware, then know that higher taxes including these endured by telecom are anti-competitive and they do hinder job growth, investment and economic well-being. On the flip side of the Laffer curve you also need to know that lower tax rates change people's economic behavior and stimulate economic growth creating more tax revenues and having instead positive effects on job growth, investment and economic wellbeing. In the early 1980s, call centers relocated to Iowa and Nevada because some enterprises were not willing to pay premiums on their telecom bills. Today, businesses can easily exercise this right of location or relocation because of the Internet. For service providers and MSPs--you may want to exercise caution because once taxation and pay-per-packet rules materialize you can bet that everyone will take ten steps backwards from you.
Today, telecom costs continue to be ruled by carriers that are largely self-governed, working in a regulated framework that only serves the government and carriers' interests. The ongoing exodus away from traditional services will tell the tale and until there's fairness across the board, expect more of the same. The FCC's and governments' role seems to be to collect revenue and provide little value other than making wind about ineffective policies and then collecting misdirected tax revenues that often end up in general funds. When customers continue to eat the other costs billed as "surcharges or other fees" it becomes clear that the old model must die. Let me say it in a different way--the old method of billing and regulation for telecom services falls under the auspices of TDM; the billing methods, practices, regulation and taxes are unfair, anti-competitive and to continue these past practices in the NGN environment or the Internet is self-defeating to our best interests. In short, if correcting these inequities means death to TDM then so be it, but that death must include killing past practices of how telecom users are charged and taxed for services. The FCC's DA 09-2517 released December 1, 2009 calls for "Comment Sought On Transition From Circuit Switched Network To All IP Network." My suggestion is to start making comments.
Excessive telecom taxes give enough reason to consider that penalizing consumers and businesses that utilize the telecom infrastructure is not only ill advised but it kills jobs and opportunity. The national telecom infrastructure is also a tool that will contribute to greening and increasing energy efficiency. As has been said many times before, "After all, bandwidth is bandwidth!" Competitively speaking, the current taxes and pricing structure (rates & tariffs) reduces the overall effectiveness of the nation to compete globally. A lesson in how not to tax the Internet or Google can be learned from France wanting to tax Google for being a successful business (search engine). I've also stated before that charging users per-packet rates (amount of bandwidth used) is also ill advised. The excessive amount of telecommunications tax and other hidden revenues collected, serves not the best interests of the country and repeating and applying the use of the old model to the Internet today and the NGN is definitely bad karma.
