Net Neutrality And How VoIP Will Be Impacted By New Internet Taxes

Some significant changes are on the horizon regarding Internet service, and those changes are very likely to have a major impact on VoIP service providers. With net neutrality rules being overthrown, the entire landscape of the Internet is likely to look at a little different in the near future.

Net neutrality was the concept that prevented Internet service providers (ISPs) from applying variable rates for users which would be based on the type of data being used, the location of the individual, or the website or service in use. It was also not permitted to charge extra for ‘fast lane services’, i.e. those which would benefit from a higher Internet speed.

It’s easy to see that with net neutrality out of the picture, VoIP providers will be heavily impacted, simply because they will now be literally at the mercy of the ISPs. Up til now, ISPs were prevented from charging customers higher amounts for carrying voice calls, and could not charge extra for bundling services such as including both voice capabilities and non-voice capabilities.

It was also unnecessary to pay ISPs extra money for using fast lane service in those situations where it would be highly beneficial. With net neutrality gone, there is literally nothing to govern how ISPs charge their customers, and that means that only the more secure and established VoIP operators will be able to withstand the likely increases on service charges. While this is the most obvious fallout from the absence of net neutrality on the Internet, it certainly isn’t the only one.

Why Changes are Coming

For a great many years, analog phone service has been provided by carriers considered to be in a category designated as ‘common carriers’. As such, they were obliged to offer their services in locations where it may not have been profitable to do so, and they were also obliged to pay taxes that were used to implement phone service for populations that would otherwise not be served.

VoIP service providers have never been in that common carrier category, and that allowed them to avoid paying those special taxes, which translated to cost savings for users. However, that was in the days when VoIP was considered a niche service, and nowadays VoIP is on the threshold of replacing analog phone service in most areas.

In effect, VoIP will soon become the standard choice for communications, which means their status as a niche business will be dropped, and they will be considered a common carrier. Of course, the VoIP service industry is strongly opposed to this designation, because it would affect not only sales, but it would decrease the amount of money available for research and development.

It seems likely that the increased costs will be at least partially passed on to customers, and that could result in significant downturns in business. It would also stifle research and development so that technology won’t advance as quickly as before, and the industry as a whole could stagnate.

At present, there is a lull where changes to legislation are being considered, but not yet enacted. It will also take a while for the FCC to review the whole situation, so it can establish its own position on the coming changes. However, there seems little doubt that VoIP service providers can expect to pay increased fees and taxes to their upstream ISPs.

The impact on internet-based businesses due to the repeal of net neutrality has yet to be fully felt. Increased service cost among many industries is expected.

How Users and Businesses Will be Impacted by the Repeal of Net Neutrality

Any changes which are passed down to ISPs and VoIP service providers are still months away from happening, so whatever trickle-down effect occurs with individual users and businesses will likewise remain on the horizon for now. The impact is likely to be far less for individuals when changes are implemented, because many individuals have already shifted to mobile telephones, and there are also alternative services available to further reduce any impact.

Small businesses and corporations, however, are quite likely to feel the impact of the coming changes to a much greater extent. The cost savings which were the biggest selling point of VoIP telephony will likely be reduced significantly. Businesses will see their costs rise, in some cases dramatically, to their VoIP service providers.

Companies which have not yet made the leap to VoIP service may reconsider their plans to do so, or they may abandon those plans altogether. If the telephone service fees imposed by VoIP service providers are not much more appealing than the current services a company has, there would be far less motivation to make the switch and incur implementation costs.

The big questions about the coming tax increases relate to how much the increases will be, and what percentage of those increases will be absorbed by VoIP service providers. If the increased fees are not exorbitant, at least some portion of that extra cost is likely to be absorbed by VoIP service providers.

If the fees are too high for service providers to absorb on their own, that will mean they have to pass along some of that increase to their customers, i.e. individuals and businesses. VoIP service providers fully expect that their profitability will be affected by the repeal of net neutrality, and they are preparing themselves for this new business model. How much these changes will actually affect end-users and corporations remains to be seen.