VoIP: On the Road to Increased Regulation

Carl Weinschenk

This New Telephony piece is a well-done look at whether VoIP is on the road to greatly increased state and federal regulation. The conclusion, which was written by three attorneys, is that things are moving in that direction -- and it's not a totally bad thing for VoIP.


The first section focuses on a hearing next month before the Missouri Public Service Commission. State regulators are asking the PSC to classify Comcast's Digital Voice as a competitive phone service. Laws take root and grow amid precedents. If this happens in Missouri, it is more likely to happen in other states.


At the federal level, the Federal Communications Commission (FCC) has chipped away at the unregulated status of VoIP with rulings concerning 911 emergency services, Communications Assistance to Law Enforcement Act (CALEA) wiretapping laws, and contributions to the federal Universal Service Fund.


The writers say that the VoIP industry considers itself to be clear of state oversight. Its confidence is based on FCC rulings and federal decisions that say "nomadic" VoIP providers such as Vonage are immune due to the impossibility of separating intrastate from interstate service elements. The FCC's position was upheld by the U.S. Court of Appeals for the Eighth Circuit. However, the court only held that the appeal wasn't "ripe," an indication that it didn't rule on the merits and could revisit the issue later. Indeed, the New Telephony article says there are indications that the exemption from most regulation may not extend to non-nomadic fixed VoIP services offered by cable operators.


The piece ends with a look at what would happen if VoIP providers became regulated. It would be a mixed bag: There would be new financial and disclosure requirements, but providers also would gain important rights. For instance, they would be able to demand direct interconnection with other carriers, something that is now done through third parties. The authors conclude that increasing regulatory oversight may reflect the reality that VoIP is coming of age and gaining broad acceptance in the telecommunications marketplace.


The story is worth a look. Clearly, a lot of things change if VoIP services do become regulated, and corporate telecommunications planners have to keep abreast of developments. The most immediate impact would be an increase in pricing due to both higher fees and taxes and the extra management layer that will be necessary to deal with state and federal bureaucracies. Competition, however, would keep such increases in check.


In general, as the piece says, an increase in regulation would be another sign of what has been evident for a long time: VoIP has largely completed the transition from its entrepreneurial roots and is now a part of the establishment.

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