FCC chair advocates hands-off approach to VoIP

FCC Chairman Michael Powell says that after the presidential election he will try to wrest regulatory control of VoIP from the states because to thrive as a business, the technology needs a single, easy-handed regulator.

Bogging young VoIP carriers down in 51 separate regulatory commissions with different interpretations of how to tax, authorize and monitor the VoIP service providers as well as their own ideas on how to shape competition with better established carriers is a recipe for failure, Powell said today in his Fall VON 2004 keynote address.

He says that after the presidential election but before the inauguration, he will formally propose that this authority be shifted to the FCC and away from state public utility commissions.

The public utility commission system was set up for monopoly circuit-switched telephone networks that tied voice services to the physical networks, a model that doesn't hold for VoIP. Rather the copper, fiber and wireless networks are just transport for applications, with voice being just one of those applications. "VoIP is just a different way to make a phone call," Powell says. "It is a different way, and it needs a different regulatory structure."

The FCC proposal will start from scratch with as few VoIP regulations as possible, he says, not just modify current ones. "It's easy to get regulations on the books and impossible to get them off. We should be careful until we need them." Heavy regulation will stifle innovation and perhaps limit desirable services by unintentionally throwing up barriers for VoIP. "Do we really even know what it is yet?" he says.

This is important while VoIP is young, before dominant VoIP providers emerge, build power and entrench themselves in the regulations that got them there, he said. "[The FCC] wants proof that you need us," he told an overflow crowd of VoIP providers, vendors and users, "not make you prove that you don't."

He says state resistance to this may be caused by public utilities commissioners trying to defend their turf rather than trying to encourage new services. "To allow this is to dumb-down the Internet to match the vision of regulatory minds," he says.

Powell says he will champion common access to broadband networks that reach customers so that the providers that own the network cannot force customers to buy voice service from them as a condition of getting access. Without such access, IP service providers, including VoIP carriers, cannot survive, he says. "I want to establish a big warning shot about the importance government attaches to unfettered access over the network architecture," Powell says.

He says regulations should encourage applications vendors to cut loose developing new services that can run over IP networks. "Microsoft and Intel and Sun are now in the phone business. That's a win," he says.

On the issue of carrier compensation for services, he says an overhaul is needed to get rid of overcharging businesses, for example, to pay for residential services in rural areas, a practice known as funding universal service. He did not offer a specific solution.

With monopoly carriers of the past, such pricing models netted carriers the money they needed to pay into the universal-service fund. But with competition that has developed, this funding mechanism no longer works. "It is becoming arbitrary and unfair," he says. "We need to peel it apart and put it back together in a much more rational way."

Some VoIP proponents are concerned about the need of law enforcement to tap IP communications the way they can tap phone lines now, objecting that e-mail should be exempt or that instant messaging should be exempt, Powell says. "I think it's kind of goofy to say you can get voice information but not e-mail information," he says.

 But such access to IP communications is inevitable, he says, so VoIP proponents should concede it without a fight in exchange for lighter formal rules.

"Strategic concessions can be of value in staying unregulated," Powell says. "This one is not one that you want to go up against the wall over."  Law enforcement agencies will fight vigorously for this access, he says. With the ongoing fear of terrorist attacks, law enforcement officials are adamant. "These are people who wake up every morning terrified that they might have missed something and thousands of people died," he says.

Learn more about this topic

VoIP future hangs on regulatory decisions

Network World Fusion, 10/18/04

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