How to – or should we – regulate the New World?

One of the nagging questions in telecom is what role, if any, federal and state regulators should play as VoIP, wireless and other broadband IP services become commonplace.

A new business model brought on by broadband and wireless – access providers vs. service providers – will necessitate a restructuring of the regulatory framework, says Thomas Nolle, president of telecom consultancy CIMI Corp.

“Access is what we have to regulate in the future and not service,” Nolle says. “I think that’s consistent with the idea that the Internet – which is a service and not a network – should be regulation-free. But the access to the Internet has to conform to public policy requirements to the extent that those requirements are law.”

Those policies include Enhanced 911, wiretapping under the Communications Assistance for Law Enforcement Act (CALEA) and universal service funds, which help fund voice service to rural and poor areas.

Regulators at the federal level already have their plates full trying to determine VoIP policy and allocating wireless spectrum (See “FCC takes first step toward VoIP policy”). The role of state public utility commissions (PUC), however, is less clear. PUCs ensure that telecom services and their providers adhere to state guidelines for consumer protection, public safety, law enforcement and the like. But some see the potential for inconsistencies between states, especially when the service – such as VoIP or broadband access – is considered interstate in nature.

Analysts say the current state of state regulation cannot continue in the broadband world.

“It doesn’t make much sense to have 50 different regulations for each state on something like a telephone that, by it’s nature, is an interstate service,” says John Barrett, an analyst at Parks Associates. “I think everybody would like to see one set of rules established everywhere – though there’s disagreements between the state regulators and the FCC on what should be done and when.”

BellSouth agrees. The RBOC  is trying to thwart some states’ attempts to have it decouple DSL service from plain old telephone service and provide broadband connectivity to competitors’ voice customers.

“We do not think it is appropriate for state commissions to be ordering us to provide what we believe to be an interstate, federally regulated service pursuant to state orders,” says Glenn Reynolds, vice president of federal regulation at BellSouth. “Our petition has more to do with the regulatory mechanism and who it is that gets to regulate these services rather than what the actual service is.”

State regulators should continue to act in the public’s best interests, says James Ramsay, general counsel at the National Association of Regulatory Utility Commissioners. That includes establishing a level playing field for voice, whether it’s delivered over circuit-switch landlines or broadband wireless  IP.

“Functionally equivalent services should be treated the same unless you think the state regulators should be picking winners and losers,” Ramsay says.

Find room for the feds

On the federal level, some feel the regulatory framework – constructed in an age when monopolies operated circuit-switched landline networks optimized for voice – should be tweaked, restructured or dismantled entirely. At the very least, Internet- and public switched telephone network-based services should be granted parity.

“I believe a new framework needs to be constructed because the guidelines that are in place didn’t take into account what was happening in telecommunications and the advent of the Internet,” says Teresa Mastrangelo, program director for RHK’s Broadband Access Networks program.

What’s unclear though, is whether the Internet should be so lightly regulated while the traditional circuit-switched realm is still heavily regulated, Mastrangelo says. “You’ve got to ease up on both to make it an even playing field.” Whether policy is set at the state or federal level, that policy won’t last for long, some believe. It will be rendered irrelevant by the separation of the service from the underlying access infrastructure, which will be further abstracted by wireless.

“I think it’s a tough angle to pin your hopes on being able to regulate voice over packet,” says Allan Tumolillo, chief operating officer at Probe Group. “My guess is that it will ultimately fail.”

Back to article: “New realities roiling telecom mean everything is changing”