Court Says VoIP Is Not A Telco Service; States Can't Tax It As One

from the just-say-no-to-usf dept

In recent years, various state regulators, desperate to dredge up extra tax income, have targeted VoIP providers, using the infamous "like a duck" test, to say that since they look like a traditional telephone service, they need to pay taxes like one -- despite the fact that they don't make use of the same infrastructure (which is part of the reason why telco services were taxed in the first place). A couple years ago, an appeals court rejected this theory in Minnesota, and now an appeals court has come to the same conclusion in Nebraska, stating that VoIP services, such as Vonage, are not telecom service providers, and thus are not responsible for taxes such as the Universal Service Fund. Of course, this also contradicts some other rulings... so perhaps we'll eventually see this in the Supreme Court as well.

Filed Under: telco service, voip
Companies: vonage

Want To Get Out Of Your iPhone Contract on T-Mobile Germany? Easy, Just Use Skype

from the verboten dept

Skype has gotten some press this week after it announced the availability of a an iPhone client for its service (except in Canada, though, thanks to patent issues). The application only works over WiFi, though, and not the cellular data network. Operators typically say these restrictions are in order to prevent the use of massive amounts of bandwidth and harm network performance for other users; what seems more likely is they're worried that Skype will "steal voice minutes" away from their network. That's a silly belief though, because when users are already paying for a big bundle of minutes, and have unlimited off-peak minutes, and so on, it's not very likely they'll go to the trouble of using Skype for most calls. Perhaps the only ones they'd use such an application for are for calls they weren't going to make through the operator's network anyway -- such as international calls, for which they'd use a cheaper landline, a calling card, or wait until they're in front of a PC. Blocking Skype from working over the mobile network only hurts the operators by putting up a barrier in front of customers, it really doesn't protect any revenues. But no matter, the blocking -- or worse -- goes on. In Germany, where Skype is the top download from the App Store, T-Mobile (the operator which sells the iPhone there) is threatening to terminate the contracts of customers who use Skype on their iPhones, because the contracts prohibit the use of VoIP services. That's a nice touch: play by our rules, or you'll no longer have the privilege of giving us your money. You know, that doesn't sound so bad, because then users are free to take their business elsewhere. Although, as Skype's general counsel points out, every other mobile operator in Germany also bans VoIP.

Filed Under: contract, germany, skype, voip
Companies: t-mobile

Things That Won't Get Your Company Through The Recession: Limited, Hard To Use Free VoIP

from the well-trod-path-of-failure dept

The price of voice calling has long been moving towards zero, making the "cheap phone calls" business model a fairly unattractive one. But, as Om Malik points out, that doesn't stop VoIP startups from traveling down the same path as previous failures by trying to use "free calling" offerings to build a business. The latest is a company called Jaxtr, which is touting a service that allows its users to call each other for free (how original!). But it's not so straightforward: in addition to both people on a call having to be Jaxtr members, the service gives each of them a special local number to call to reach the other person. So instead of just dialing, or clicking on a user in a buddy list, this is the process:

Jaxtr members simply enter the number of the jaxtr member they wish to call. Jaxtr will then give them a local number to reach that person. Once they initiate the call, jaxtr notifies the person they are calling, and will give that person a local number to call, too -- allowing the parties to connect directly. They can then talk for as long as they like, free of any charge from jaxtr. These assigned local phone numbers can also be used again by the same parties on an ongoing basis.

Two points: it still requires members to have their own phone service and make a local call, and, as Om notes, it's the same kludgy approach that's been tried before by other VoIP companies, with little success. Prices of voice calls are falling across the board, making the inconvenience of systems like this a huge barrier for users to overcome when compared to direct-dialing or other voice-calling or voice-chat services. But Om hits the nail on the head when he asks how VoIP companies can make money from free calls. Jaxtr says its plan is to convert free users to paid customers; they should check out how that's fared so far for Skype, even with its tens of millions of users.

Filed Under: voip

Verizon Gets Smacked Down For Its VoIP Patent Suing Spree

from the so-much-for-whacking-cable-competitors dept

Verizon was one of the last players to the VoIP party. Cable companies had been offering VoIP for years, and then Vonage, AT&T and a variety of other startups really built the market before Verizon even bothered to enter the space with an overpriced, uninspiring "me too" product that the market made clear it didn't want. Yet, somehow, Verizon was able to get some patents on the technology, despite a ton of rather clear prior art that showed Verizon's patents should never have been granted.

So, with those patents, Verizon began suing -- and it started with the lame duck in the VoIP space: Vonage. The company has been struggling for a variety of reasons, and a bunch of patent holders swept in to sue the firm that actually made VoIP a viable product in the market. Vonage came under massive pressure from shareholders to get rid of these lawsuits, so it settled rather than deal with a lengthy court room battle.

Verizon interpreted this as a validation of its patents and set off to find others to sue. Its next target was Cox Cable for its digital telephony solution. The plan was clear. After beating Cox, it would turn its legal guns on the big boys like Comcast and Time Warner. Except, it appears the courts have tossed a wrench into those plans by siding with Cox in pointing out that the company doesn't violate Verizon's patents. While Verizon will most likely appeal, this should be seen as a pretty big win for Time Warner Cable and Comcast, who may not even have to defend themselves against Verizon's questionable patent claims at all.

Filed Under: cable, patents, voip
Companies: cox, verizon

German Court Bans VoIP On The iPhone; Says It's Unfair

from the felony-interference-with-a-business-model dept

We've pointed to a bunch of stories that involved Apple somewhat arbitrarily forbidding or banning iPhone apps, but now it appears that the courts are getting in on the game as well. A German court has banned a VoIP iPhone app after T-Mobile, the mobile operator who offers the iPhone in Germany, complained. The court says that this VoIP app "makes use of unfair business practices," though it's difficult to see how. VoIP is a perfectly acceptable application, so why is it unfair? The court's explanation here seems a bit stretched as well. Apparently, the only way to run this particular VoIP app is on a jailbroken iPhone, and T-Mobile's contract forbids jailbreaking the phone. Of course, if that's true, isn't it an issue between T-Mobile and its customers who broke the contract? Why should the app maker be blamed? All it did was build a useful app? This seems like yet another case where a company is arguing that interference with a business model should be illegal.

Filed Under: ban, germany, iphone, voip
Companies: apple

Voice Is Data: Tech Won't Be Able To Stop VoIP In The Air

from the of-course-not dept

With increasing attempts to turn internet access on in the sky, there's been some concern about people making VoIP calls from airplanes, just as there is a concern over mobile phone use in the sky being too "annoying." Some of the companies providing internet-in-the-sky have claimed that they would block VoIP calls, but that's going to be pretty difficult. As we've pointed out in the past voice is just data and you can always find a way to disguise the data, such that it won't be blocked. And, indeed, that seems to be exactly what's happening. Andy Abramson talks about how he got around AirCell's VoIP blocking when talking to a friend who was on one of these wired airplanes. There's always going to be away around those things, so unless Congress really decides to ban all voice calls on phones, why not wait and see if people chatting really is a problem?

Filed Under: data, in-flight, voip, wifi

Forget Credit Cards, Scammers Now Want Your VoIP Accounts?

from the worth-more-money dept

Last month, we pointed out that the market for stolen credit card data was so saturated that prices were falling. Of course, that just inspired scammers to go looking for other types of data that was a bit harder to find: VoIP accounts. According to the BBC, scammers selling VoIP account info are now able to get higher prices than those selling credit card data. Of course, it's not at all clear how widespread this really is. The info seems to be coming from a company trying to sell a solution to deal with this -- which already makes it somewhat suspect. Also, you have to wonder how valuable VoIP account data really can be compared to credit card numbers which have much wider applicability. Either way, it will be interesting to see how the market deals with the "glut" of credit card data out there, and where else data scammers turn.

Filed Under: credit cards, identity fraud, voip

Will Self-Control Work For In-Flight Internet Access?

from the are-people-trustworthy? dept

With in-flight internet access getting closer and closer to reality for many airlines, there are still plenty of questions about etiquette and acceptable behaviors. Some airlines are purposely setting up content filters and blocking the use of VoIP (as much as possible, since it's possible to get around most blocks), but as Broadband Reports points out, some believe that people will self-regulate, in most cases. People surfing porn at open WiFi hotspots hasn't been a huge issue, because people know that others are around and so they have enough self-control. The same should be true on airplanes. And while we all know people who are oblivious to how rude it is to hold a loud mobile phone conversation in public, a few reminders and social cues may be enough to keep that from being a serious problem in the air. There will be exceptions -- but is trying to eliminate those few exceptions worth having a near total ban on certain activities?

Filed Under: etiquette, filters, flying, in-flight internet, internet access, self-control, voip

Chinese Going Off The Official Telco System To Call Taiwan

from the time-for-the-great-voice-firewall dept

Paul Kedrosky points us to the news that, for the first time in 11 years, the "official" volume of phone calls from China to Taiwan has dropped rather significantly. Both the Digitimes report and Kedrosky suspect (reasonably) that this shows how many Chinese are jumping to use services like Skype to make these calls. Skype has long had a popular following in China, so this shouldn't be a huge surprise -- but it does make you wonder if the Chinese government will follow the path of various countries like Bangladesh, Belarus, Namibia and Jordan in banning Skype. We've already seen some experiments in China with blocking or banning certain types of calls. If the government feels that too many people are using these services, don't be surprised to see a wider ban enacted.

Filed Under: china, skype, taiwan, voip

Net2Phone Jumps Into The VoIP Patent Lawsuit Business: Sues Skype

from the everyone's-doing-it dept

In the last year, we've witnessed plenty of companies dig up VoIP patents with which to sue market innovator Vonage. Verizon, AT&T, Sprint and Nortel all were able to get Vonage to cough up some money, rather than continue to fight some questionable patents. The fact that there are so many overlapping patents, is exactly the "patent thicket" problem that our current patent system encourages. Of course, there are always more patents to choose from, and it appears that Net2Phone has dug out an old patent and decided not to sue Vonage, but to go after Skype instead. Unfortunately, there's very little in the way of detail. The ZDNet post just claims it happened, but doesn't give any details about the actual lawsuit (even where it's been filed). Also, the writer seems amazed that it's based on a patent filed in 2000, even though it's common enough to see old patents used in patent lawsuits. In this case, it's absolutely true that Net2Phone was an early pioneer in the VoIP space, but saw its business eclipsed when it had trouble coming up with a product people actually wanted to use (and then watched as providers like Skype passed them by). If anything, this seems like yet another example of those who lost in the marketplace punishing those who innovated better. Skype came up with a good product that people wanted to use. Net2Phone did not. It's hard to see why Skype should be punished for doing a better job serving the market.

Filed Under: patents, voip
Companies: net2phone, skype