VOIP Seeks Its FCC Level

Regulators are keeping VOIP separate from regular ol' telecom for now, but how long will that arrangement stick?

March 29, 2004

3 Min Read
VOIP Seeks Its FCC Level

The regulatory status of voice over IP (VOIP) is still undecided, even after one service's victory with the Federal Communications Commission (FCC), according to speakers at the Voice Over the Net (VON) conference.

Kicking off a day-long session [ed. note: a mighty long session, that] on policy and regulation, speakers reiterated the argument that VOIP is fundamentally different from telephone service and should be regulated differently.

The FCC has agreed -- for now. VOIP service Free World Dialup (FWD) was granted a February petition to be considered a data service rather than a telecommunications service (see VOIP to Star at FCC ). That puts FWD, and anything looking just like it, under Title I regulation for information services, as opposed to the more restrictive Title II for telephone service. (FWD is offered by Pulver.com, the same company that organizes VON).

But that's no reason for proponents of easily accessible VOIP to celebrate yet, said Blair Levin, managing director of Legg Mason Inc. who was chief of staff to former FCC commissioner Reed Hundt."The decision to deregulate a service that has never been regulated is not significant," Levin said. "In my view, the game hasn't actually started yet."

The key is that FWD is new. Had a similar proposal been submitted by Microsoft Corp. (Nasdaq: MSFT), it would have gotten deeper scrutiny, Levin said.

The long-run fate of VOIP is still to be decided, primarily because it's tied up with the finances of the old telephone network. Telecommunications revenues foot the bill for 911 service and help fund rural access, and how those items are affected in a VOIP world is a complicated issue.

Part of the FCC's challenge is this "Title" setup, where different services are regulated according to strict and neat definitions. VOIP is difficult to squeeze into any established category, and the fit gets more difficult if one considers VOIP to encompass general IP multimedia services, not just a phone call (and one does).

Indeed, the definition of VOIP is amorphous, judging by the pending petitions described by Julie Veach, assistant chief of the FCC's wireline competition bureau. AT&T Corp. (NYSE: T) has asked immunity from federal access charges for a service that uses the public switched telephone network (PSTN) on either end but routes the calls through an IP core. Level 3 Communications Inc. (Nasdaq: LVLT) has asked for forbearance -- in other words, an exception from Title II rules -- for services that involve an IP device on one end and a PSTN telephone on the other. And SBC Communications Inc. (NYSE: SBC) has asked for forbearance on IP services in general.

"We like to get the lawyers around the table and play this incredibly long game of 'In Which Box Does This Fit?' " said Kathryn Brown, vice president of policy development for Verizon Communications Inc. (NYSE: VZ) and former chief of staff to Hundt's successor, William Kennard. "People want to stick [VOIP] in its definitional silo: It's voice, therefore it must be a telephone service. Well, it's not. It's an application."

— Craig Matsumoto, Senior Editor, Light Reading

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