atcomsystems.ca/forum Forums VOIP Phones & IP PBX VoIP & Cloud Phones, Hosted PBX, General IP Phones MagicJack and other VoIP

I was thinking the other day about VoIP servcies such as the MagicJack, Vonage, etc. When you make a traditional long distance call, you are billed for the time you are on the call. This money goes towards paying access charges on the network. Well, with these VoIP services you are simply paying a flat monthly fee. These calls still have to terminate somewhere and are still using access on someone's network. So, who is paying for these access minutes that aren't getting billed to the customer? I would think that most telco's would block VoIP traffic if it was using their network w/o paying for access. Just a curious thought of mine...

And a very good curious thought indeed. What is happening is that these termination fees are resulting in increased federal and local taxes being levied upon land lines. Sadly, land lines are easy prey for taxation, just like tobacco, gasoline and alcohol. Since it is not likely that land line services will go away anytime in the near future, the taxing authorities are latching onto these staples as much as they can.

Cellular, VoIP and many other transport media for voice traffic is difficult to trace or tax. For example, it is possible to select these virtual phone numbers from service territories having less-stringent taxation. Since long-distance calling charges are practically non-existent anymore, people are starting to just look at the flat-rate price tag associated with a phone number.

Yes, the little end office service providers are paying a heavy price for this. This explains why so many mergers or buyouts are occurring between the LECs. Many of these "free" long distance providers, specifically Verizon and at&t Wireless are also LECs. Since their LEC territories favor major cities, they are able to offset their costs through customer volume.

As for the smaller telcos, my guess is that they are in a holding pattern waiting to get purchased by one of the big boys. This is happening left and right lately. Not necessarily a good thing for the employees, but since the big boys are hungry with seemingly open-check books, the little companies can hardly refuse.

The REA (now RUS) that has supported the smaller independent telcos may be losing funding with the state of the economy.

25+ years ago, I heard a story from a pal of mine who worked for Bell (C&P Telephone). The tiny hamlet of Gore, VA near the WV border was so remote that the GTE LEC in WV provided the town's service and support. Being so far away, GTE wasn't doing a very good job and the community complained to the county commissioners. They requested that Gore be included in the rest of the county's Bell service territory. The county agreed. This was the first time that I ever heard of service provider territories literally being sold. GTE and Bell practices were so dramatically different that I couldn't see it happening without starting the town over from scratch.

Then came the Bell Atlantic-GTE merger to form Verizon. Again, two companies with completely different methods of operations and practices. They are slowly becoming more uniform after ten years.

It is all about finding different ways to make money while managing to maintain ways to lose money in order to maximize profits. These IP providers aren't hurting the big guys a bit. They are actually helping to put more money into their pockets to buy more and more small telcos. The remote telcos that they gobble up are considered to be loss-leaders and subsequent tax write-offs.

It stinks, but this is the sad state of affairs in the telecommunications business today. I will be surprised if at&t doesn't end up purchasing all of the US local service providers within ten years. Then, we will return to 1984 and start the divestiture process all over again.

Ed, I've always had a problem accepting the statement that LD subsidizes Local service, esp. since the statement flip-flops from the same LEC, depending on which statement best serves their immediate need. That said, the VOIP-type providers STILL have to get phone numbers in the C.O. in order to 'go the last mile' so to speak. That would certainly help the LEC, esp. where the VOIP providers equipment is co-located.
Maybe I'm trying to say it's all a conspiracy to circumvent Judge Green's decision(s). John C.

It no different than when MCI started up and would only take the gravy and all it's traffic went over the AT&T network. They buy a block of trunks, or in Vonage and MJ case lines that terminate into their Virtual switch. The way they make money is they have a large number of customers with a minimal number of lines, so the customer gets a busy now and again they will try later. So they are paying a discounted rate no different that a CLEC that resells blocks of dial tone. That why your "local" number is only in the larger cities.

I use the comparison of MCI because that's what they would do also have many customer with a minimum number to trunks to the AT&T LD network.

If I got that wrong one of our CO guys will correct it.

Let's get real here. Uncle FED is going to realize that there is a WHOLE BUNCH of untaxed communication going on and they're gonna make it pay for government health care. Man, are we in trouble! John C.

I'm kind of thinking the same way. As LEC's lose customers and access, the government is going to realize that all this unregulated traffic is some prime, revenue generating potential. Maybe if they did, it would help to level the playing field. I work for a small LEC and I hear from customers all the time complaining about why taxes, USF, surcharges for local taxes, 911, etc, are so high when cable companies and cell companies are so cheap. All I can tell them, is that we don't play by the same set of rules and that our hands are tied most of the time.

John C...

Every topic does not have to end up a political bashing. Please stay on topic and keep those posts in the Phone Booth.

Dave

The next time that they complain, you might want to remind them that the very fact that you are a live body standing there to field their complaints is worth a little extra per-month on their bill. They will never talk to or see a representative from Magic Jack or many other IP service providers.

As for 911 fees, let their (God forbid) call land at a dispatch center in Milwaukee when the emergency is in "Imperial, KS". I'll be those few bucks saved won't be such a big deal next time if they are so fortunate.

Employees cost money and many of these alternate service providers are saving a ton of money by not having to pay for them. That is how they can offer their services so inexpensively. That is all well and good in the customer's eyes until something goes wrong.

I wonder when the ILECs are going to realize that they have an 'untarriffed' (?) revenue source in the imbedded cable. Spin it off as a separate division and rent cable pairs seperately, without all the taxes, tarriffs, etc. I suppose they've already tried it and got shot down. John C.