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Hearing of the Senate Commerce, Science, and Transportation Committee - Voice-Over-Internet Protocol (VOIP)

By:
Date:
Location: Washington, DC

Federal News Service

HEADLINE: HEARING OF THE SENATE COMMERCE, SCIENCE, AND TRANSPORTATION COMMITTEE

SUBJECT: VOICE-OVER-INTERNET-PROTOCOL (VOIP)

CHAIRED BY: SENATOR JOHN MCCAIN (R-AZ)

LOCATION: 253 RUSSELL SENATE OFFICE BUILDING, WASHINGTON, D.C.

WITNESSES: PANEL I:

SENATOR LAMAR ALEXANDER (R-TN);

PANEL II:

MICHAEL K. POWELL, CHAIRMAN, FEDERAL COMMUNICATIONS COMMISSION;

PANEL III:

JEFFREY CITRON, CHAIRMAN AND CHIEF EXECUTIVE OFFICER, VONAGE HOLDINGS CORP.;

GLENN A. BRITT, CHAIRMAN AND CHIEF EXECUTIVE OFFICER, TIME WARNER CABLE;

GLEN F. POST, III, CHAIRMAN AND CHIEF EXECUTIVE OFFICER, CENTURYTEL INC.;

STAN WISE, PRESIDENT, NATIONAL ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS;

KEVIN WERBACH, FOUNDER, SUPERNOVA GROUP LLC

BODY:
SEN. GEORGE ALLEN (R-VA): Thank you, Mr. Chairman.

Just for clarification of our bill that you're a key lead on, along obviously with Senator Wyden and Senator Sununu. S. 150 has to do with Internet access taxes. The opponents who are in favor of allowing access taxes on the Internet try to get-have maybe misunderstood intentionally or unintentionally in some of their projections of the fiscal impact that this measure somehow affects Voice Over IP. Our measure clearly was never intended to. The managers amendment made clear that the issue of Voice Over IP would not be adjudicated or disposed of in our measure. That's what this hearing is about, Voice Over IP, and I'm glad the chairman of the FCC is here, and indeed Senator Sununu's initiative.

To make it abundantly clear for folks so that we don't have this continued confusion, I will be offering an amendment, Mr. Chairman, to our measure on Internet access taxes that makes it very clear in plain English that Voice Over IP is not affected one way or the other. That can be adjudicated elsewhere. We were trying, Senator Wyden and myself, to make it a clear bill, don't get bogged down with all the things-out of state collection of sales and use taxes and compelling remote retailers to collect and remit sales taxes to 7,600 different jurisdictions. That's not part of this measure either.

Voice Over Internet Protocol, in my view, is a great advancement. I think we ought to happy with the enable-ment and further people-more people wanting to use broadband. This committee has heard dozens of proposals over the years to try to get broadband extended to small towns and rural areas because of its benefits, whether for telemedicine, for education, for commerce and enabling people to compete anywhere in this country or over the world. So I look forward to hearing the chairman of the FCC's testimony, but let's just make it clear for Senator Alexander-he and I had a debate a few weeks ago at Heritage and made it clear that Voice Over IP is not a part of our measure.

It will be perfectly clear the actual fiscal impact of this measure is maybe $80 to $120 million at most.

And I would also point out that what we're having are not elected people taxing broadband, DSL, but in fact they're unelected commissioners and public utility commissions and all those that are taxing the advancements in broadband, and what we ought to be about in this committee is embracing advances in technology. How that's improving people's lives, the competitiveness of businesses in our country, and the fact that there are so many Internet Service Providers is actually an example of less taxation, less regulation, allowing those in the creative private sector to provide consumers with more choices at the best prices.

So, Mr. Chairman, I look forward to hearing the chairman's comments on Voice Over Internet Protocol, but let's make it clear and stipulate for the record that Voice Over IP has nothing to do with Senate bill 150 as amended, and will be amended even further. And we can even underline it, if that will assuage those who are concerned so that we can get accurate figures. And I will also point out that insofar as an unfunded mandate, you know, in the Medicare bill that we passed on prescription drug benefits, in the midst of that was a prohibition on states putting on insurance premiums taxes on drug policies.

I will also point out that the federal government year after year has come up-where there is a case clearly of interstate and international commerce, such as airlines tickets, no taxes are allowed there. Food stamp purchases. Senator Bob Dole made sure there's no sales taxes put on that. And I can tell that the chairman wants to get on to the chairman of the FCC, so we can carry on this debate hopefully soon on the floor of the United States Senate so we can protect people in this country from onerous access taxes to broadband services. Thank you, Mr. Chairman.

BREAK IN TRANSCRIPT

SEN. ALLEN: Thank you, Mr. Chairman and thank you again for having this most timely hearing.

Mr. Chairman Powell, let's get these definitions straight here and then I'd like to question on how we can actually enforce this and how that could have an impact on jobs here in this country. First, the question here is Voice Over IP and whether it's a telecommunications service or not. That issue has not yet been determined completely by you all. But even if Voice Over IP is determined to be, depending on how it-all the different configurations, even if Voice Over IP were to be determined to be a telecommunications service, it could not be used for Internet or to provide Internet access. Is that your understanding?

MR. POWELL: Yeah, it would seem to me that the touchstone is what's the definition of Internet access? In the Telecom Act there is a definition, and I think section 151D and as that description reads, which is what I'm familiar with, I don't think anything about what we're doing affects that at all. That definition speaks very clearly about, you know, separating the difference between the access and physical layers and such from applications, contents and services. And the way I at least look at the development of Voice Over IP generally puts it outside-regardless of what we say it is in telecom statute, seems to me to put it outside of what you're specifically trying to reach.

SEN. ALLEN: Right. And as I understand, Mr. Chairman, reading your testimony here, you look at Voice Over IP more as an Internet-it's an application as opposed to an access?

MR. POWELL: Yeah. I mean, there is no question as a technical matter that is what it is.

SEN. ALLEN: Now, since Voice Over IP is an application as opposed to access, that solves the question on definition of what's an access tax versus taxes on applications, and there are a variety of applications for broadband. Now, if-and really Voice Over IP essentially is a software application provided over the Internet, broadband. Now, could a company theoretically provide Voice Over IP outside this country?

MR. POWELL: Oh, absolutely and are right now.

SEN. ALLEN: All right. And so in the event that they could, let's assume that you-that the regulations-I want to use your-this killer app here unfettered by state or federal regulations. If they were more fettering, if they were more burdensome, could those Voice Over IP applications be-if they could be provided overseas, how would you have any jurisdiction or ability to affect those?

MR. POWELL: You wouldn't. And the critical point that you're making, which I think comes up whether we're talking about taxing, whether we're talking about law enforcement, whether we're talking about a lot of our goals, we have to be very, very careful because if you're going to regulate on the assumption you can physically cap something where it is, you're making a serious mistake. The last thing I would want to see this country do is create a hostile regulatory environment, a hostile technical environment, you know, an onerous enforcement regime which would make setting up shop in other parts of the world more attractive and taking with it the revenue associated with that company, taking with it the jobs associated with that company, taking with it the company that you can go and serve a subpoena on for catching the bad guys, because now he lives in a jurisdiction in which it becomes very complicated to do any of those things and we lose our effectiveness and we lose the economic benefits.

SEN. ALLEN: Well, Mr. Chairman, I think I-I have no further questions. The main point is as they move forward, obviously this has nothing to do with our Internet access tax measure. But more importantly, as decisions are made, whether by the FCC or in conjunction with this committee and the Congress, we do have to make sure that what we do is not excessively onerous, otherwise we're going to be losing those jobs, we're going to be losing that ability to affect companies that can virtually be anywhere in the world. And I know that you, Mr. Chairman, care a great deal, as do everyone in this committee, about making sure the United States stays competitive for more investment and more jobs, as well as protecting our intellectual property.

And I thank the chairman. You have a very difficult job, a balancing act to determine these definitions and once you determine those definitions, then even if it is somehow a telecommunications service, not doing it-not burdening it in such a way as that it harms further deployment of broadband, reducing opportunities for jobs here in this country, but in fact driving jobs away and companies away from this country to provide those services, Voice Over Internet Protocol, that I think people in this country look at as a great innovation for the future.

Thank you, Mr. Chairman.

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