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PC2100 DDR SDRAM - Internet phone service is cheap, if it's not subject to access fees.By Jon VanTribune staff reporterA former Ameritech executive believes he can deliver phone servicethrough the Internet to low-income people for $5 a month.Dwayne Goldsmith, now chief of Detroit-based Inflexion CommunicationsCorp., and his bargain-phone scheme embody the promise and peril ofInternet telephony. Most experts agree that the technology, calledvoice over Internet protocol, is far cheaper and more feature richthan regular phone service.But the VoIP technology runs smack into a thicket of regulations, feesand taxes that dominate traditional phone service. If Inflexion's $5service were subject to these regulations and fees, the cost structurewouldn't work.Many of those fees were established to promote universal phone servicethat helps the poor -- now they could prevent public housing residentsfrom getting phones, Goldsmith said."It doesn't make sense to collect all these dollars and then push themback to the very phone companies that failed to provide trulyuniversal service," he said.Inflexion has asked the Federal Communications Commission to exemptits service from the system of subsidized payments that characterizestraditional phone service.So-called access fees typically paid by long-distance companies likeAT&T Corp. to local phone companies like SBC Communications Inc. wereinstituted decades ago to keep local phone service rates low.But Inflexion's ultralow rates won't be possible if it is subject toaccess fees, Goldsmith argues.Goldsmith wants to supply high-speed Internet connections to denselyoccupied housing projects in Detroit, offering phone service as aWeb-based application, much like e-mail. Residents who have computerscould access the Internet from Inflexion's system, but others withoutcomputers would be supplied with phones to use Internet telephony.Inflexion would avoid the expense of billing and metering the serviceby selling communications in bulk to landlords who could add $5 amonth to rent to cover costs, he said.FCC Chairman Michael Powell has called for "lightly regulated"Internet telephony, and Congress recently approved extending a taxmoratorium on Internet services. But whether the FCC will grantInflexion's plea to avoid traditional phone fees is unknown.Last month the FCC unanimously turned down a request from AT&TCorp. that would exempt it from paying traditional access charges oncalls that use VoIP technology."This is a landscape that's very treacherous and exciting," said DavidRoddy, managing director of the telecom practice at FTI ConsultingInc. "You're dealing with policy issues -- not light regulation versusheavy. Do the states give up billions in revenue they get from taxingphone service?"Rural firms wield cloutIf access fees go uncollected, rural phone companies will face seriousfinancial trouble, he said, and they have considerable clout withCongress.David Siddall, a Washington lawyer who specializes in communicationsand a former FCC staffer, said that the agency is truly in a quandaryover what to do with VoIP.Neither Siddall nor Roddy expect action from the FCC until nextyear. In the absence of specific rulings, VoIP companies tend to beunregulated.Vonage, a leading Internet phone provider with more than 100,000customers, for instance, pays no access fees."Right now VoIP is a small dribble and doesn't make much difference,"said Siddall. "But the FCC recognizes that as this continues, thecurrent system will be harmed."Roddy said that the telecom industry is headed for a "perfect storm,"led by VoIP's disruptive technology.VoIP customers must have a broadband connection to make voice calls,and today most consumers get broadband either over a DSL phone line ora cable modem. But more choices are on the horizon.Wireless broadband using a standard called WiMax should becomeavailable next year, and most electric utilities are experimentingwith technology to bring broadband to their customers, Roddy said."We're about to see true competition to provide broadband, and




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