Sununu said that next year he and others in a Senate committee, under the leadership of Sen. Ted Stevens (R-Alaska), will be writing a broad telecom act to deal with broadband voice, universal service reform and some spectrum issues. Universal service fees are those subsidies paid to carriers in areas of low population density, to compensate them for lower subscriber revenue.
The "Regulatory Freedom Act" (S2281) that Sununu submitted to the Senate Commerce Committee in July passed the committee hearing "with one problematic amendment that gave some power back to state regulators to impose [universal] service fees at the state level," Sununu said.
He added that the House of Representatives is expected to rule that VOIP is an interstate service, and at a new, post-election session in January 2005, he will submit his legislation as originally introduced, with a goal of including it as part of a broader telecom bill later in 2005.
Sununu, an engineer by training, told the audience that VOIP had come to his attention through owners of small startups in his state, businesses of 15 to 20 employees for whom IP telephony systems were a "no-brainer."
"I thought, This is an adoption process that is likely to happen a lot faster that people in my current line of work, policy makers, think," he said. "In the fall of last year, I started worrying that if we werent careful, there would be a lot of pressure to take the old regulatory system and impose it on these networks."
The current system of telecom regulation, he said, is based on local switchboards, operators and infrastructure connected by long-distance carriers. These carriers historically have been regulated by state public utility commissions, which determine pricing, services, and entry and exit requirements.
This has no relevance to the IP world, where the "voice" provider—the entity that switches the calls or the signaling for calls—may be located anywhere in the country, or even abroad.
"These are global nets," Sununu said. "We ought to have uniform standards, not 50 different sets of regulations imposing price limitations and hurdles on competition."
VOIP needs national standards, he said, "so that participants would know what this playing field would look like. Its not an effort to try to apply favorable treatment, just a clear, stable environment, so that those taking the risks know what the rules will be."
The senator said four constituencies comprise the major challenges to telecom legislation. The first named were state regulators themselves, who range from free-market-oriented public utility commissions to those determined to protect their turfs at all costs.
The RBOCs (regional Bell operating companies), who are "of a mixed mind," are in as strong a position as anyone to deploy VOIP technology. "The problem is, from their perspective, this is a purely cannibalistic product," Sununu said. "It completely supplants their existing product offerings."
He sees the third opposing interest group as rural and cooperative carriers, estimating that 70 percent to 90 percent of rural telco revenue comes from universal service subsidies and access charges—those charges paid by long-distance carriers to reach their customers. Only 10 to 20 percent of their revenues come from customers. "I dont know if thats sustainable," said Sununu, who advocates an ultimate "bill and keep" scheme, in which each carrier bills its own customer and keeps all revenue from that customer.
And finally, Sununu mentioned law enforcement. "They would like to take exactly the regime they have, in terms of CALEA [wiretapping] requirements, and apply it to the broadband world."
"This will be very difficult to do for several reasons," Sununu said. "Because were talking about packetized data. One packet looks the same as another packet. We dont want to get into a world where we differentiate and regulate on the basis of what a packet is. Is it a spreadsheet? Video? Voice?"
"Then, you put yourself in the position of parsing and sniffing every packet, and apply regulation based on what that packet smells like."