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FCC Chairman Explains 'Sideshow'

LAS VEGAS – The pace of technical innovation in the telecom industry is much faster than the speed at which regulators can set up rules to ensure fair competition among carriers. At least, that's the view embraced by Federal Communications Commission (FCC) chairman Michael Powell.

"If you think the regulatory system can keep pace with Moore's Law, you're drinkin' something," Powell told the United States Telecom Association (USTA) annual conference here in Gomorrah West.

Though many carriers clinked their glasses in agreement, they still wanted answers from Powell as to why the rule-making process is such a mess and what they can do about it. The latter question was avoided entirely, but Powell did offer insight into what he dubbed the "sideshow" that has the FCC split on how much regulation is too much for incumbent carriers (see FCC Rumbles on the Rules ).

As Powell explained, the commissioners have a common goal in mind: to let market forces decide who stays in business and who doesn't, while still making sure that all Americans are afforded with some basic communications services. The problem is: Some are in favor of wiping the regulatory slate clean and adding rules where appropriate, while others want to take the existing rules and go line by line to see what should be kept and what should be tossed.

"Real change is never comfortable," said Powell. "It will produce anxiety for the incumbents, for regulators, for politicians, and for the consuming public."

Powell's "real change" aptly contrasts with the holding pattern the industry seems to be in as investment stalls while everybody awaits the decipherment of the FCC's Triennial Review in the state courts.

So what's next? The crossroads, it seems, comes in finding consensus on what should stay and what should go.

"Where we haven't been seeing as much competition, the Commission has left regulations in place," offers FCC Commissioner Kevin Martin. In the instance of landline voice competition, Martin says it's "unclear" whether wireless phones are a substitute or a supplement to wireline services, and that's what keeps the rules governing some parts of the public telephone network the same as they were under the Telecom Act of 1996 (see RBOCs Appeal Directly to FCC and Bells Challenge FCC Ruling). In other instances, Martin says, carriers are free to innovate. If they want to change their voice switches to packet switches, for instance, they could do so without regulatory interference.

As Powell sees it, the choice lawmakers face now is whether the "child" of Internet-based communications services will be fitted with its own "regulatory clothing" or whether "it will be forced to wear Ma Bell's hand-me-downs." He opines that, rather than having "discourse, thought, and careful decision making," the rules governing the telecom world today are a product of "accidental regulation," where new services are shoehorned into old rules.

"We do not yet have the Communications Act of the IP world," Powell says. He grouses that companies often have to endure arcane labeling even though "there's very little difference between communications providers other than from whence they hailed."

"One day... the [old telecom] statute will break," Powell warns. In the meantime, he says, the Commission is "trying to look at the Internet from the cleanest slate possible" and not as something that's been around for 100 years.

The telecom industry is left with two paths: Either lawmakers will wipe the slate clean and make new telecom rules that take into account Internet services; or they'll gradually ease the old rules as competition manifests itself in the market.

In either scenario, attendees here agree that regulations can't catch up with technology's pace and, while they try, things will likely get worse before they get better. "I think we're in for more regulation," says Randy Browning, a partner at PricewaterhouseCoopers. "It won't be long before the states are saying, 'Hey, why can't I make a buck on these VOIP calls?' "

— Phil Harvey, Senior Editor, Light Reading

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firstmiler 12/4/2012 | 11:20:19 PM
re: FCC Chairman Explains 'Sideshow' What is the over/under on how long the Internet VoIP SPs escape regulation? Specifically will Vonage be allowed to offer services nation wide without any Universal Service Charges, FCC and State taxes, and the burden of CLEC regulatory confines for much longer?

I give it to the middle of '04 before this party, just like Napster before it, ends! There is no such thing as an indefinite free lunch.

fm
aswath 12/4/2012 | 11:20:17 PM
re: FCC Chairman Explains 'Sideshow' Vonage's "free lunch" may end soon. But, unlike music download application, use of VoIP does not infringe on others' rights. So consumers can (will?) use this technology to communicate between themselves. No SP is needed, thank you. The arbitrage model is alive and well and the consumers are the only beneficiaries.

Aswath
bcarroll888 12/4/2012 | 11:20:16 PM
re: FCC Chairman Explains 'Sideshow' What do you mean no SP needed? High-speed data service is needed from a provider that has invested in the access infrastructure. It is a free lunch for Vonage that absolutely will end.
alchemy 12/4/2012 | 11:20:15 PM
re: FCC Chairman Explains 'Sideshow' If I were a Bell Operating Company or an MSO offering broadband services, I'd traffic shape Vonage service flows to the point where Vonage is useless. Read the fine print in your service agreement... there's nothing to prevent them from doing this.

By the way, has anyone played with Skype? The voice quality is excellent for a Napster-esque PC to PC phone program.
optical_man 12/4/2012 | 11:20:15 PM
re: FCC Chairman Explains 'Sideshow' Go to FCC.gov.
ATT last year petitioned the FCC for exactly what you discussed.
FCC hasn't ruled on it yet, but all the big boys want this.
Just turns out Napster is along for the ride.
jnj 12/4/2012 | 11:20:15 PM
re: FCC Chairman Explains 'Sideshow' Skype should shake things up when they institute pc to any phone calls...pc to pc is free but after that what happens
optical_man 12/4/2012 | 11:20:14 PM
re: FCC Chairman Explains 'Sideshow' Skype pc to pc. Free.
Fine. Great

PC to POTS. How you gonna make that free?
Just try telling BellSouth "oh, we're dumping calls from the internet onto your circuit switches for local termination, but don't bill us, cause we're offering it to our customers for free."?


jnj 12/4/2012 | 11:20:10 PM
re: FCC Chairman Explains 'Sideshow' That's where it gets real
skype was formed by the creators of Kazaa
this time they want to make some money

so they'll chage something and the bells will want to charge them and what about the regulators
is there still a value proposition here
it should be interesting
sevenbrooks 12/4/2012 | 11:19:58 PM
re: FCC Chairman Explains 'Sideshow'
The free bit will go away for 2 reasons:

CALEA
Patriot Acts

Both of these require a service provider to perform wiretapping services for law enforcement. As things develop in this area, service provider bypass will necessarily die. This does not mean that ILEC bypass will die, but there will require a service provider intercept point.

seven
firstmiler 12/4/2012 | 11:19:58 PM
re: FCC Chairman Explains 'Sideshow' Looks like Napster...er..Vonage has won the first round...


http://www.nysd.uscourts.gov/c...
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