Over 30 Citizen Groups Urge FCC to Rule Out Regs, Taxes on Internet, National Taxpayers Union, 4-7-04

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For Immediate Release Apr 7, 2004

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Over 30 Citizen Groups Urge FCC to Rule Out Burdensome Regulations, Taxes on Emerging Internet Communication

(Alexandria, VA) -- As the Federal Communications Commission (FCC) weighs policy toward a vital technology that would provide voice communication on the Internet, a joint letter from 33 citizen groups today asked FCC Chairman Michael Powell to protect this development from crushing taxes and regulations. The 350,000-member National Taxpayers Union (NTU) organized the statement.

"[T]he FCC will [shortly] decide whether to extend to Internet communication the same system of regulation and taxation that governs our nation's phone networks," the letter stated. "We urge the Commission to send a clear signal of forbearance on new taxation and regulation. Such a policy will be a powerful sign to entrepreneurs, investors, and consumers that the FCC supports the unfettered development of this promising new technology."

Voice over Internet Protocol (VoIP) is widely regarded as one of the most significant online technology innovations of the future, as it will allow telecommunications services to travel over Internet connections. However, governments at all levels are eyeing VoIP as a revenue source, leading the signatories to warn that the "climate for investment and development will be greatly chilled" unless the FCC preempts such reckless decisions.

The breadth of the NTU-led coalition likewise underscores the importance of the VoIP issue. It consists of national grassroots organizations, policy groups, and think tanks with a combined membership in the millions, including the American Legislative Exchange Council, Small Business Survival Committee, Council for Citizens Against Government Waste, and the Family Research Council. A host of state-level citizen organizations have also joined the effort, hailing from California, Iowa, New York, and many points in between. The signatories based their call for FCC forbearance on four main issues:

Economic Development -- After suffering tens of thousands of job losses in recent years, VoIP is the telecom sector's "best hope to reestablish growth."
Unique Origins -- Unlike land-line phone systems, which developed under a government- sanctioned monopoly, the Internet has emerged primarily due to private initiative. Government over-regulation and levies could drive up the price of VoIP and hinder accessibility to consumers, especially those with moderate incomes.
Productivity Gains -- Internet telephony will be "more stable than ordinary copper networks" and will encourage consumers to purchase broadband service, resulting in "stunning" productivity benefits.
Long-Term Stability -- Current attempts by states and localities to expand tax options after the expiration of the Internet Tax Moratoriumought to convince the FCC of the need to "keep successive regulators from extending taxes and other regulations to VoIP."

"Very soon, the FCC will have the chance to establish an important legacy concerning government's role in the future development of the Internet," the signatories noted. "A government policy of forbearance will hasten the growth of VoIP's advancements for all users."

NTU is a non-partisan citizen group founded in 1969 to work for lower taxes, less wasteful spending, and accountable government at all levels. The group has taken a leading and active role in telecommunications and Internet tax policies. Note: Full text of the letter to FCC Chairman Powell is available online at www.ntu.org.