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Lawmaker aims to suspend VoIP regulation

A Pennsylvania state senator wants a five-year, statewide moratorium on regulations and taxes aimed at companies selling voice over Internet Protocol dialing.

A Pennsylvania state senator wants a five-year, statewide moratorium on regulations and taxes aimed at companies selling voice over Internet Protocol (VoIP) dialing.

VoIP is a new breed of cheaper phone service that lets people place calls through the Internet and avoid telephone companies' local and long-distance networks. Although there is a relatively small number of subscribers, analysts say Internet telephony is poised to threaten the long-standing dominance of major U.S. phone companies such as BellSouth, SBC Communications, Verizon Communications and Qwest Communications International.

A bill introduced this week by state Sen. Jake Corman could make Pennsylvania one of the first states to take a stance against regulating VoIP providers such as 8x8 or Vonage.

Corman spokesman Dan Houser said that forcing arduous reporting requirements or taxes on these young companies now could ultimately "stifle innovation."

"Those companies run into a mountain of legal work and expense that would take away from their research and development," he said.

Recent moves by Minnesota and Wisconsin regulators indicate that those states believe VoIP service providers should be regulated and taxed. The nation's largest carriers also support regulation, arguing that without it, there would be more people dialing, but fewer taxes collected. States provide 911 and other telephone services and are dependent on those taxes to pay for such services.

Representatives for the nation's largest phone companies did not immediately return calls seeking comment.