FCC ASKED TO EXEMPT UNDERSERVED MARKET VoIP PROVIDERS FROM ACCESS CHARGES

“One interesting aspect… [is that] in the past 20 years, local phone companies have collected about $300 billion to eradicate… the communications gap between those who have the phone service and those who don’t,” Goldsmith said. “I'd like to know what happened to all that money. We still have in some areas of our country [telephone] penetration rates that don’t exceed 80%.” He said of the digital divide, “before you can talk about connecting people to the Internet, you have to find a way of connecting them to voice services… We have to find ways to create a much stronger link between the market needs of a particular segment and the functionality of the technology that’s offered to that segment.”

Goldsmith said his company’s target in underserved communities was to drive the price of telephone service down to $7-10 per month. However, he said: “If we would do that, that would mean that $6 or $7 would be collected in [additional] fees that would go back to that pool that was intended to provide service to those who can’t afford it.”

Inflexion Chief Technology Officer Daniel Berninger said the FCC had floated a proposal to impose 1 cents a min. access fees on VoIP -- split between origination and termination; a company would pay $10 monthly for a customer that uses the phone 30 mins. daily. “If Inflexion can find ways to drive costs down” to $5-7 per month, it would be “forced to charge $17 because we have to hand out $10 to a local service company,” Goldsmith said. “If you take a look at the lower income segments of the consumer base, you'll find that a $3 or $4 increase in price would mean that 2 out of 3 individuals would not be able to afford that service… Our belief is that it was never the intent of the whole access fee charging regime to actually penalize the customers that would ultimately benefit from that fees.”

Goldsmith said when access fees were created, “technology like VoIP, wireless, fiber weren’t considered. What we have here is another example of how an outdated regulatory framework inappropriately” applied to new technology “really is going to cause some harm to folks that we think regulators really want to help.”

In the petition filed Fri., Inflexion said the imposition of access charges on VoIP would: (1) Prevent Inflexion from serving people “stuck in the periphery market outside the reach of the” Universal Service Fund (USF). (2) Be “counterproductive with respect to achieving universal service and serving the public interest.” It said it contributed to the USF by “creating products and services addressing the needs of the over 5 million American citizens without regular access to telephone service, as well as the enterprises and government entities serving them.” (3) Violate antitrust principles. It said while the ability to collect access fees discouraged ILECs from investing in their networks, it eliminated “incremental strategies that might produce a more efficient network. Competitors must either deploy an entirely separate and ubiquitous network or suffer the ILECs’ ability to extract most of the value in the form of access charges. The status quo leaves everyone paying too much, and people in the periphery market find themselves completely disconnected.” (4) Destroy the basic elements underlying the success of the Internet.

“To the extent ILEC interconnection means imposition of access charges, it establishes a cost floor that prevents Inflexion from deploying the ExtendIP VoIP service to low- income and underserved customers -- the very group supposedly served by the Universal Service program” (USP), the petition said. It said the current debate on applying access charges to VoIP traffic didn’t “distinguish between the goal of the universal service and the traditional subsidy program associated with the Universal Service Fund (USF).” It said “the primary challenge” in providing communications for underserved markets was “delivering basic connectivity… At scales above 1,000 users, the vast majority of costs arise from providing connectivity and not the basic voice application. Providing popular enhanced calling services like caller ID, voice mail and call waiting do not add substantially to the cost of service.”

“VoIP can serve the goal of universal service even if it does not get incorporated into existing subsidy mechanism,” Inflexion said. It said while VoIP regulation supporters had cited USF sustainability as one of the most important reasons for regulating VoIP, “the lower cost basis and flexibility of Internet communication applications offer significant promise to accelerate progress in reaching the underserved market.” It said 10% of residents in some states didn’t have regular access to basic telephone service, and at the present rate of progress, it could take another 40 years for the USP to “move telephone service within reach of three-nines or 99.9% of the population.”