VoIP providers: Regulation hampers growth

U.S. regulators can play an important role in the spread of VoIP services by showing the rest of the world that the best way to encourage growth is by limiting regulation, said vendors of VoIP service and equipment Friday.

A consistent "light touch" approach on regulation throughout the U.S., European Union (EU) and other countries will also help VoIP grow, said vendors of VoIP-related products, speaking at a FCC forum on global IP regulation in Washington, D.C.

Regulators in many nations still question how to regulate VoIP services, said Jonathan Draluck, vice president of business affairs and general counsel for iBasis, a VoIP service provider. "Nothing has been a clearer beacon and signal for these countries and these regulators than to hold up the U.S. as an example," Draluck said. "The U.S. has had a light regulatory touch, and this has fueled, more than anything, the innovation and the growth of this industry."

The six vendors represented at Friday's forum seemed united in their call for a largely hands-off approach to regulating VoIP, as opposed to the heavy regulations that traditional telephone carriers still face from the FCC. But asked if regulation might be needed if competitors such as cable companies give priority to their own VoIP products, at least one panelist advocated that kind of regulation.

If cable companies gave priority to their own VoIP packets over competitors' products, VoIP providers may petition the FCC to step in, said Jeff Pulver, president and CEO of Pulver.com, provider of the Free World Dialup VoIP service. "If cable operators or other operators are discriminating against traffic, such that not every packet is the same type of packet ... if that could be proven, that's a problem," Pulver said. "I do think commercially around the world, we need to have equal and fair access. Right now it's not regulated, it's just assumed that everybody plays fair."

But Pulver also criticized amendments to a U.S. Senate bill intended to keep VoIP free of most regulation. In July, the Senate Commerce, Science and Transportation Committee approved the VoIP Regulatory Freedom Act, but amended it to allow states to require VoIP applications to provide 911 services and to require VoIP providers to contribute to state universal service programs and to pay intrastate access charges to other telecom providers.

The amendment allowing states to collect universal service fees and access charges on voice services over IP networks could allow states to collect fees on online chat features in console-based gaming systems, such as Microsoft's Xbox Live. Pulver said he's worried that the committee's action, along with debates in the EU and elsewhere, may open VoIP up to "arcane telecom regulations."

In February, Pulver won an FCC order that designated his computer-to-computer Free World Dialup service as an unregulated information service. But Pulver said he'd oppose the VoIP Regulatory Freedom Act because the added amendments run counter to the FCC's Pulver order. He predicted the next two years would be a "pivotal" time for the future of VoIP as U.S. regulators decide what rules apply to the service.

Others, including lawmakers from rural states and the U.S. Department of Justice, have pushed for some regulations for VoIP. Some rural-state lawmakers want VoIP to contribute to the Universal Service Fund, which helps fund telecom services in rural and poor areas, and law enforcement officials want wiretap regulations to apply to VoIP calls as well as traditional telephone calls. Some traditional telephone carriers say VoIP should face the same set of regulations as they do.

But panelists Friday argued that old telecom regulations don't make sense for IP services, where state or national borders are erased. VoIP has the potential to break down not only national boundaries but boundaries between devices such as PCs, personal digital assistants and telephones, and traditional ways of regulating those devices no longer apply, said Al Safarikas, vice president of wireline networks for Nortel.

"The world's innovators are right now working on devices that we probably can't think of in this room in 100 years," he said. "IP will enable that, and all those boundaries will come down. (Regulatory) limits and boundaries are broken by technology."

What VoIP providers are looking for is consistent regulations throughout the world with certainty over what regulations they will face, added Kristen Neller Verderame, vice president for U.S. regulation and government relations at British Telecom Americas. She advocated that nations "regulate where it's necessary, and only when it's necessary."

But U.S. debates over regulations such as access costs -- what prices competitors have to pay to gain access to U.S. broadband providers' networks -- are a major concern to British Telecom, she said. She called on the FCC to give VoIP "reasonable access costs," even as the FCC in the past year has moved away from regulations that require the incumbent owners of the U.S. telecommunications networks to share much of their networks with competitors. Since February, the FCC has been working on a policy for VoIP regulation.

"Regulatory uncertainty is a huge barrier," Neller Verderame said. "Look at the market, see where it's competitive, and see where it's not. Where it is needed, do the regulation. We're a bit worried about the U.S. at the moment, to be frank."

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Copyright © 2004 IDG Communications, Inc.