FCC's Powell: Let VOIP Be

On Monday, Federal Communications Commission (FCC) Chairman Michael Powell made clear his position on voice-over-IP regulation at the first public VOIP Forum meeting in Washington D.C.: He wants nothing to do with it.

"I have heard nothing today to dissuade me that this can’t be solved by free-market protections," he said.

Powell’s remarks were part of a day-long forum arranged by the FCC to kick off its long-awaited ruling on VOIP, expected early next year. The issue has been a lightning rod for debate in recent weeks, as several states have attempted to regulate the new technology as a traditional telephone service.

Addressing this issue, Powell asked: "Does VOIP look like a duck and quack like a duck because you [the service providers] chose to create it that way -- or can it be made to look like a fish?"

No, Chairman Powell isn’t talking about an episode of Sesame Street. [Ed. note: Although Big Bird might do a better job of explaining this stuff!] He is trying to address the issue at the heart of the debate over regulating VOIP services, namely whether or not these services should be regulated like traditional telephone services. "We don’t want to regulate it on how it looks," he said.

Last month, a federal judge in Minnesota overturned the state's attempt to regulate VOIP service, ruling that treating VOIP as a telecommunications service is "not permissible because of the recognizable congressional intent to leave the Internet and information services largely unregulated" (see Qwest Jumps Into VOIP Hotbed).

That said, everyone at the meeting agreed that VOIP services are at a tipping point, and that there needs to be some clarity around these services so that consumers know what they are signing up for.

Following the Chairman's comments, the other four FCC Commissioners weighed in with their suggestions. All were concerned with how VOIP services should be regulated with regard to the Universal Service Fund, a $6 billion federal program funded by telephone charges that subsidizes phone services in rural areas and Internet service for schools.

According to California public utility commissioner Carl Wood, almost half of the funding that currently supports the Universal Service Fund will be lost due to VOIP services by 2008.

The Commissioners are also worried that many VOIP services do not provide support for 911 emergency calling, CALEA (Communications Assistance to Law Enforcement Act), and other homeland security provisions.

"These question marks have haunted VOIP for too long," said Commissioner Michael Copps.

"We must protect universal service, and public safety is not negotiable," said Commissioner Jonathan Adelstein.

The debate (available via Webcast) continued for most of the afternoon, with more political soapbox speeches. According to sources at the meeting, it seems most of the so-called experts are in agreement that a "light touch" approach to regulating VOIP is the best way forward.

"The same 'light touch' regulation should be applied to all VOIP providers. There is no evidence of a monopoly power in this market that would call out for regulation," said Tom Evslin, CEO of ITXC Corp. (Nasdaq: ITXC).

Others raised the point that not all VOIP services are created equal, and they should be regulated accordingly. Kevin Werbach, founder of Supernova Group, provided a shopping list of different technologies that offer VOIP as a slice of services including handheld PDAs, Web cameras, Yahoo! Messenger, push-to-talk services, and Microsoft’s Xbox online gaming service.

"911 support doesn't need to be applied to online gaming" he scoffed. "Help, I’ve been stabbed by an orc!"

— Jo Maitland, Senior Editor, Boardwatch