The line of demarcation between what has traditionally been considered a telecommunications service was once very clear. It was tangible – there were wires, end points, towers, switches, facilities. Essentially, there was infrastructure required to relay voice or data from point A to point B.

Today that line is fuzzy, if not invisible. The legacy infrastructure remains, but an industry of cloud-based services that don’t require the physical connections has exploded. Voice, data, SMS, and video conferencing can now be conveniently delivered OTT. Enabled by simple API integrations, businesses can embed just one of these services or a complete communications platform-as-a-service (CPaaS) into an app, service, or product.

Cloudification is a game changer

This “cloudification” of communications services makes it easy to include voice, data, SMS, and video within any existing application, product, or service. These are essential components for many business models.

Consider these services we have come to rely on in our daily lives: food or grocery delivery, ride services, and business and personal communications. These require multiple methods of communication with shoppers, drivers, co-workers, watch party groups, and external business partners.

The exciting news is there is no end in sight. Use cases will continue to evolve and growth will continue to skyrocket. The scale cloud delivery accommodates is massive. These untethered, easy to embed communications services are a critical differentiator for both business-to-business and business-to-consumer buyers, and the lifeblood of the businesses providing both the end user subscriptions and the APIs.

In fact, one industry juggernaut saw H1 YoY video application service demand grow nearly 600% in 2020.

Not surprisingly, as business demand for these services increases smaller CPaaS players continue to enter the market to quickly snag market share. According to a recent IDC study, “the global market revenue for CPaaS reached $5.9bn in 2020, up from $4.26bn in 2019, and is expected to reach $17.71bn by 2024.”

Merger and acquisition activity is aligned with this hockey stick growth forecast. Large telcos, SaaS providers, and even other CPaaS providers are all on the hunt. Whether they want to add additional features to punch up their products or eliminate the competition in a very tight, nuanced market, the end game is clear – as the market expands, the players will ultimately contract leaving only the most competitive offerings.

Don’t let communications tax take you by surprise

One of the least understood risks when adding cloud-based voice, data, SMS, or video conferencing to an existing product or service is new eligibility for and exposure to the complex world of communications taxation. Making mistakes can get costly very quickly.

Here are some of the key pitfalls to keep an eye on:

• Expanded nexus: Understanding communications tax nexus is different – and exceptionally more complicated – than sales tax. There are approximately 60,000 federal, state, local, and special taxing jurisdictions, each with uniquely complex rules that tend to change at their own pace. Rules are very different for each service.
• More complex calculations: The more communications services you provide via API, the more complicated communications taxes will be. Each feature can be taxed at different rates in each individual jurisdiction, or the whole bundle can be taxed at one rate. It’s critical to monitor monthly to avoid audit issues.
• Maintaining overall compliance: Just as tax rates and rules need to be maintained, so must tax and regulatory filing forms in each jurisdiction. Some of these are very long and require significant detail.  They must be filed in a timely, accurate cadence to avoid additional audit risk.

Bottom line: Don’t assume, be prepared! As these communications services become more pervasive a larger swath of technology providers will find themselves liable for communications tax. The more your business falls behind, the more it can cost you.

It pays to be proactive and prepared. Tax and legal advisory experts can help determine your level of risk, and tax and compliance software providers can help you keep up with changing rules and regulations. Don’t underestimate the ongoing value of networking with peers who are either struggling to answer the same questions or have already overcome the hurdles you’re facing today.

Steve Lacoff is General Manager of Avalara for Communications. With a focus on data, VoIP, and video streaming, Steve has spent 15 years in various product and marketing leadership roles in communications and technology industries, including Disney’s streaming services and Comcast technology solutions. Steve now drives business strategy on today’s changing industry landscape and associated tax impacts. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

WASHINGTON, October 8, 2021 – Experts on digital empowerment pressed the federal government to maintain a focus on broadband equity during a Wednesday event, hosted on Wednesday by the National Digital Inclusion Alliance as part of “National Digital Inclusion Week.”

Speaking about the broader agenda for NDIA, Angela Siefer, the non-profit group’s executive director, said that NDIA’s purpose was to provide “peer-to-peer learning. We get the conversation started. Everything we get is from boots on the ground.”

This theme of community-informed practice and knowledge sharing echoed throughout the presentation.

Siefer said that NDIA “learned that digital redlining is happening in Cleveland” from discoveries that came from having boots on the ground and from living there.

“Digital redlining” refers to discrimination by ISPs in deployment, maintenance, upgrade or delivery of services. Often, as was alleged in Cleveland, NDIA accused AT&T of avoiding making fiber upgrades to broadband infrastructure. The group has also published reports with the Communications Workers of America making similar charges.

These discoveries have built momentum for some, including New York Democratic Rep. Yvette Clark’s Anti-Digital Redlining Act, introduced in August. The bill attempts to ban systematic broadband underinvestment in low-income communities.

Panelists argued that federal government perpetuates digital divide

Underinvestment in historically excluded communities extends beyond large corporations’ – it includes the U.S. federal government’s broadband investment approach. Paolo Balboa, NDIA’s programs and data manager, said that federal government perpetuates racism within the digital divide.

Balboa discussed how federal broadband programs focus funds on expanding availability to residents in unserved and underserved rural areas, but ignore the many – often black and brown – urban Americans lacking high-speed internet access.

But NDIA’s research found that most Americans benefitting from federal spending on rural broadband are white non-Hispanic Americans. Americans who lack home broadband service for reasons besides local network availability are disproportionately of color, says NDIA.

The panelists argued that federal policies directed at closing the digital divide by spending primarily on rural infrastructure leaves out the digital inclusion programs urban and some rural inhabitants need.

In finding that fewer than 5 % of the bulk of American households without home broadband are rural, NDIA argues for a federal policy approach centering cost of access as the solution to connecting more families of color. The officials advocate a broader focus that includes the experiences of urban city and county residents for whom cost is the major barrier.

Munirih Jester, NDIA programs director said that NDIA keeps an active list of free and low-cost internet plan available for low-income households, and how they may access it to find affordable ISPs.

Amy Huffman, NDIA policy director, discussed the provision of COVID-19 response funding. She highlighted organization’s resources to raise awareness of the FCC’s Emergency Broadband Benefit, a program to help households afford Internet service during the pandemic.

This year, more than 100 events were registered as part of this week’s Digital Inclusion week, with many visible on the NDIA blog, said Yvette Scorse, NDIA Communications Director.

In a statement this Monday, the Commerce Department’s National Telecommunications Infrastructure Agency spotlighted the agency’s efforts on the topic, including its Tribal Broadband Connectivity Program which is making $980 million available to Native American communities.

As previously reported this August, NTIA recently launched Connecting Minority Communities Pilot Program making $268 million in grant funds available to HBCUs and other Minority-serving institutions.

WASHINGTON, October 7, 2021 – A Senate subcommittee heard Thursday that affordability is the greatest barrier to broadband adoption and that lawmakers should exercise regulatory flexibility when it comes to the forms of telehealth to help reduce inessential hospital visits.

Covid-19 often brings about extreme shortness of breath, the severity of which is best assessed by a doctor, Deanna Larson, president of Avel eCARE, told the Senate Subcommittee on Communications, Media, and Broadband, which convened a hearing on the state of telehealth and removing barriers to access and improving patient outcomes.

Patients with affordable, high speed internet access can be monitored at home by doctors so that they don’t enter an emergency room or take up a hospital bed prematurely, she said.

Larson urged Congress to extend or make permanent their regulatory flexibility toward telehealth especially as it relates to being neutral on the kinds of telemedicine, such as phone-only care, asynchronous care, and remote patient monitoring. An economic benefit of which would be keeping medical commerce local, she said. Patients wouldn’t be required as often to move to a higher level of care out of town.

Physicians would have 24-hour access to the patient through video calls, monitoring patients in a way which significantly lightens the burdens of the healthcare system, added Larson. With telehealth, doctors can advise patients on exactly when and if they need to go to an emergency room.

Steps to improve telehealth

The committee also heard testimony from Sterling Ransone Jr., president of the American Academy of Family Physicians. Ransone, a strong proponent of telehealth, has found that the digital divide touches rural, tribal and urban communities alike and proposed a series of steps Congress could take to increase public health through broadband policy, including investing in universal affordable broadband service, digital literacy services, end-user devices, audio-only telehealth and data collection in the determinants and outcomes of telehealth as it relates to key factors such as race, gender, ethnicity and language.

Defining broadband as a social determinant of health, Ransone highlighted that affordability is possibly the greatest barrier to broadband adoption and that affordability and access disproportionately affect rural communities.

Sanjeev Arora, founder of Project ECHO and distinguished professor of medicine at the University of New Mexico, agreed: “expanding access to high-quality, high-speed broadband connectivity is critical. It’s a prerequisite for the success of any telehealth model in rural communities and urban underserved areas.”

Telehealth isn’t just vital and broadly popular, it is cost saving. Federal Communications Commissioner Brendan Carr, who also appeared before the subcommittee, shared an estimate that widespread telehealth availability could save the health care system $305 billion a year.

Carr, in an effort to reduce inessential hospital visits and decrease the risk of spreading Covid-19, endorsed the CONNECT for Health Act, the RUSH Act of 2021, the Telehealth Modernization Act, and the Protecting Rural Telehealth Access Act, which in combination would remove geographic restrictions to telehealth services, foster use of telehealth in skilled nursing facilities, grant the Secretary of Health and Human Services greater ability to reduce telehealth restrictions and more.