VOIP Rules Inch Toward Internet

Federal officials move toward a decision on whether to regulate IP telephony.

Federal regulators this week will begin the process of deciding whether to regulate telephone calls placed over the Internet the same way they regulate traditional telephony.

Its a task policymakers have put off since Congress opened the local phone market to competition in 1996 and one that is likely to determine what types of voice services are available in the future and who can provide them.

The debate pits the RBOCs (Regional Bell Operating Companies), which once held monopolies, against startup VOIP (voice-over-IP) providers, such as Vonage Holding Inc., and against long-distance carriers AT&T Corp. and WorldCom Inc.s MCI. Verizon Communications Inc. and SBC Communications Inc. (see story, Page 26) recently launched VOIP services in selected cities. Qwest Communications Inc. plans to phase in VOIP services in Minnesota later this month, with about 200 residential customers, adding enterprise services in the first half of next year, a Qwest spokeswoman said.

The Federal Communications Commission, which scheduled a public forum on VOIP Dec. 1, is delving into the otherwise mostly unregulated Internet because state regulators have moved swiftly to put their own mark on VOIP. Earlier this year, Minnesota ordered Vonage to comply with the states telephone rules—including Enhanced 911 mandates—but the federal district court there quickly issued a permanent injunction against enforcing the order. The court ruled that Vonage provides an information service rather than a telecom service.

In arguments to the FCC, the RBOCs point to Vonages marketing as an illustration that VOIP is the functional equivalent of regular telephone service, but others, including manufacturers such as Cisco Systems Inc., argue that it is an Internet application like instant messaging or e-mail.

Meanwhile, manufacturers are gradually developing products to make it easier for enterprises to deploy VOIP. This week, Quintum Technologies Inc., of Eatontown, N.J., is rolling out a VOIP switch and a configuration manager that includes a GUI.

Spiral Bindings Inc., a manufacturer in Totoa, N.J., this year deployed Quintum equipment at its seven sites in the United States and Canada. All calls among the companys offices are now free, and all the companys long-distance calls travel over a WAN to the headquarters, said Ivo Allen, director of technology for Spiral Bindings.

"Were able to save an estimated average of $4,346 a month," Allen said.