VOIP Service Providers Should Speak Up on Regulation

Opinion: If they don't drop the double-talk and define their position, they may find themselves saddled with the same baggage as plain old telephone service providers.

The congressional debate over regulation of IP-based telephony is complex, multifaceted and hairy, pitting state public utility commissions against the FCC and VOIP service providers. In the meantime, Bell operating companies profit from the present state of FUD as potential deserters wait for the smoke to clear before disconnecting.

"You have 500 different lobbyists trying to tell people whats really occurring," says Jason Talley, CEO of VOIP provider Nuvio. "And theres probably a true story in there somewhere, but no one is getting the full picture."

This weeks surprise amendments to Sen. John Sununus VOIP-friendly "Regulatory Freedom Act" in Senate Commerce Committee hearings showed that the states determination to regulate—and tax—VOIP the way it does telcos is alive and kicking.

/zimages/3/28571.gifRead more here about the amended act, which passed by a vote of 13 to 9.

The argument that the VON (Voice over the Net) Coalition should be making, and making clearly, is not that VOIP should be exempt from all regulation. Instead, it should assert that regulation should be limited to "social obligations" (such as 911 service, wiretapping by law enforcement and support for universal phone service) and should be determined on a federal level.

Intracarrier and intercarrier compensation rules established circa 1934 are meaningless to something that runs over the Internet and has no geographic monopoly.

Of those regulations aimed at the VOIP providers, easiest to understand are the "social" obligations incurred by traditional telecommunications services:

  • Callers must have 911 services that route distress calls to the proper emergency-response agencies. An upgrade of this requirement for wireless services—E911, not enforceable until 2005—has mandated that wireless calls be geographically traceable to within 50 to 100 square meters.
  • The FBI and other police agencies must be able to tap phone lines as part of criminal investigations.
  • Those who live in sparsely populated areas must have telephone service, too, even if telecom companies find no profit in extending their networks to them.

The more impenetrable part of the puzzle lies in access charges: what my carrier pays your local carrier—if youre still using POTS (plain old telephone service)—to use its central office switch and local loop to complete the last leg of my call to you.

This is a very complicated state of affairs even in the present POTS world–one in which the NECA (National Exchange Carrier Association) figures out what Qwest owes Verizon, or SBC owes MCI, and who terminated for whom more.

So much for what the regulation arguments are about. As far as avoiding regulation goes, the VOIP folks should have acknowledged the distinction between categories: the first a matter of public well-being, the second a historical irrelevancy to Internet-based services.

Next Page: Who me, a telephone service?