FCC Vote Is Good News for VOIP

Opinion: While it leaves a lot of the regulation tangle still to be sorted out, the FCC's decision to remove VOIP from state control pumps adrenalin into the industry and gives customers a great range of choices.

Tuesdays FCC vote exempting Vonage Holding Corp. from "traditional state public utility regulation" comes as no surprise and gives the VOIP (voice over IP) industry cause for celebration. In the decision, the commission stated that it—and not individual states—would decide which regulations apply to VOIP. The official order will be handed down in two weeks.

/zimages/7/28571.gifClick here to read more about the FCCs decision to exempt VOIP from state rules.

The FCCs five commissioners voted unanimously in favor of Vonage, with the two Democratic members, Michael Copps and Jonathan Adelstein, "concurring" but expressing some reservations about the regulatory decisions left unmade. These issues, including intercarrier compensation (fees paid between carriers for completing a subscribers call); universal service fees to subsidize rural carriers, and emergency 911 services, are to be ironed out in the ongoing "IP-Enabled Services Proceeding." No deadline was given.

Even at this point, however, the ruling clears the way for existing VOIP service providers to continue their rollout into new markets. It encourages the PSTN (Public Switched Telephone Network) incumbents whove launched VOIP services of their own. For business and residential customers, it portends a wide choice of providers and hot competition to differentiate based on customized services.

"If you dont like provider A, it will be very easy to switch," said Robert Jackson, a telecommunications attorney affiliated with the firm of Reed Smith, in Washington. "Thats the result of divorcing the service from the facilities." In other words, divorcing the voice service from the broadband service, typically provided by cable companies or telcos, or perhaps, in rural areas down the road, through WiMax wireless broadband access.

"The trick for service providers will be adding value to keep their customers," Jackson said. "I think well see an awful lot of new features that will be customized in ways we cant see now. Its got a lot of potential to let customers customize their service to meet their own needs."

And certainly dont count out competition based on price. Zultys Technologies, which is expected to announce next week that it will co-market its IP PBX with interoperability-tested VOIP trunking services, predicts a scenario in which enterprise customers can pick and choose multiple VOIP providers for outbound calling or inbound 800-number service, based on their best long-distance rates to specific destinations.

While theres relatively recent precedent for choosing providers in the PSTN world, theres nothing close to VOIP for ease of setup, said Patrick Ferriter, vice president of product marketing at Zultys. An enterprise plan with a carrier to Brazil, for example, might require that carriers delivery, installation and configuration of a new T-1 circuit, which could take three to five weeks and incur an $800 setup charge. It would also require an $1800 piece of network interface hardware on the PBX end for 24 ports of calling.

Next Page: Point-and-shoot provisioning.