Regulating IP Telephony

The FCC should throw out preconceived ideas about VOIP.

The surest sign that VOIP is a success is the growing crowd of folks looking to get into its pockets. The Federal Communications Commission is arriving on the scene none too soon and could fill the role of police officer. The agency is now mulling how to regulate this evolving technology to the satisfaction of traditional phone carriers on one side and VOIP service providers on the other.

With a freshly minted Internet Policy Working Group in place, the FCC will kick off the new year by trying to decide how to handle VOIP. The most important thing the FCC can do is throw out preconceived ideas about VOIP. The FCC must avoid the temptation to retrofit the 100-year-old, 500-page arcana of Bell regulations to this new technology. Instead, it must deftly apply only the most narrowly tailored rules.

The Bells want VOIP deemed telephony to the extent that providers would have to pay fees to the Bells for access to their local networks; cash-strapped states want to make sure that the tax base of telecom providers isnt lost in the free-for-all world of Internet communications.

The Bells and the states offerings of special VOIP carve-outs—leaving VOIP providers responsible for line-sharing fees and local taxes but exempt from many other standing rules —has merit but also risks. Its likely that branding VOIP with a telephony designation would force VOIP into a red-tape morass that would stifle its development. Each paragraph of telephony rules includes a beneficiary ready to make an appeal for a piece of the VOIP action at precisely the time the technology needs to develop free of fetters.

Applying these rules to VOIP is a slippery slope that could lead to taxes and fees on VOIP providers and telephonylike rules about surveillance and wiretapping on other IP-based communications such as e-mail and instant messaging.

On the opposite side are VOIP providers, from small startups such as Vonage to the likes of AT&T and WorldCom. Bolstered by FCC Chairman Michael Powells early comments, this group seeks to keep VOIPs designation as an "information service" free from telephony regulations and responsibilities.

We hail Powell for telling the new panel that "IP-based services such as VOIP should evolve in a regulation-free zone." That said, there is a need to hold VOIP providers to some of the standards of traditional voice communication providers. The Universal Service Fund requires funds from communications providers to ensure build-out of services in poor and rural areas. Also, expectations that communications such as VOIP should adhere to accepted standards for consumer protection, 911 emergency calls and access for the disabled need to be addressed.

VOIP is neither traditional telephony nor routine data service. The FCCs working group must ensure VOIP is allowed to grow into a full-fledged alternative for enterprise voice communication.

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