Even as the FCC conducts its very public debate over whether to regulate IP phone services, two lesser-known issues have emerged that could have a big effect on availability of VoIP offerings from the RBOCs.

The first issue involves regulators in a handful of Southern states that are forcing BellSouth to make DSL broadband Internet access available to competitors' voice customers. This undercuts an RBOC strategy to retain primary-access-line revenue by making VoIP available exclusively to customers that buy its voice/DSL bundle.

The second issue has to do with whether regulators will force the Bells to provide VoIP links into customer premises to competitors at or below wholesale rates if those links are connected to Class 5 switches or other regulated equipment deeper in the carrier network. Such a policy, which already exists for TDM-based copper loops, could discourage the Bells from rolling out VoIP because of an unfavorable return on investment.

"I can't see how the state could allow a Class 5 switch like a [Lucent] 5ESS, no matter what the flavor, and not order wholesale unbundling of the transport service," says Timothy Jasionowski, an independent telecom consultant and a former director of VoIP product management at Qwest. "The only thing that's really changing is that you've taken out the T-1 or the [plain old telephone service] line and replaced it with an IP pipe. It's literally POTS-over-IP."

Both situations come at a critical time for VoIP. While the RBOCs plot their imminent service rollouts (www.nwfusion.com, DocFinder: 9535), the FCC is trying to determine whether VoIP should be regulated like current circuit-based voice services or be treated as an unregulated Internet service such as e-mail.

The BellSouth DSL unbundling rulings by Georgia, Kentucky and Louisiana could negatively affect the growth of the Bell's broadband and VoIP services, which are key to the ability to retain customers and access lines.

"This is a fairly contentious issue," John Hodulik, an analyst at UBS Warburg, said in a recent bulletin on the situation. "If enforced, the Bells would see faster primary-line substitution as broadband telephony from AT&T, Vonage and others takes hold."

RBOC competitors entitled to lease the Bells' access facilities under the Telecom Act of 1996's Unbundled Network Element-Platform (UNE-P) provisions would also improve their competitive position, Hodulik said. UNE-P mandates that the Bells open their local copper loops to competitors at rates set by the regulators as a prerequisite for entering the long-distance market.

Naturally, BellSouth disputes the states' DSL unbundling ruling. "We developed [our DSL infrastructure], spent the resources to develop it, and we do not believe it's appropriate or fair that we should have to share that innovation or make it available for the benefit of our competitors," says Fred McCallum, the carrier's vice president of regulatory and external affairs staff.

One competitor is MCI, which says BellSouth is really unbundling voice - not DSL. MCI says the RBOC is engaging in monopolistic practices by requiring customers to subscribe to voice as a prerequisite for DSL.

"The states should have a right to look at these instances where an [incumbent local exchange carrier] is acting in an anticompetitive manner," says Kim Scardino, a director in MCI's Federal Advocacy group. "Basically, what BellSouth is doing is denying consumers a choice of providers."

She says the situation arose recently when BellSouth denied voice and DSL customers' request to switch their voice service to MCI while retaining BellSouth DSL.

"It just shows how in order to maintain their monopoly in the voice market, they're willing to do anything," Scardino says.

MCI's reaction would be no different, according to BellSouth.