Regulatory pains for VoIP?


Internet Voice is a disruptive force, but there are some nagging signs of early pain for the technology. Most of these issues are around technological and regulatory issues. For instance, politicians are now lobbying hard to regulate VoIP. U.S. Rep. Chip Pickering (R-MS) and 61 other members of Congress, in a letter to the Federal Communications Commission (FCC) wrote that “VoIP services are inherently interstate in nature and should not be subject to a patchwork of state rules and regulations.” The legislators say that FCC should hurry up and pass a ruling on Vonage’s petition to classify business as an interstate information service no different than applications like e-mail. Such a ruling would put VoIP beyond the taxing and regulatory reach of the states, Internet News says. FCC chairman wants to leave this ruling as his legacy, we are told. But if the lobbying effort fails, you can pretty much kiss the independent business goodbye, because most companies would be left dealing with 52-state level regulatory regimes.

Recommended reading: Telephony magazine’s current cover story.



I agree with Jonathan’Äôs comment. Here is my reasoning: As a VoIP user I am looking for two basic services from a provider: 1) potential parties trying to reach me must be able to get my reachability information; 2) ability to connect to PSTN worldwide. (Given the state of home routers, I need assistance in traversing it. But this is a transient situation.) The first service is offered by AOL IM, Yahoo Messenger, MSN Messenger et al. As there is no talk about regulating them, why talk about regulating VoIP providers? Is it just because they have ’Äúvoice’Äù in their name?

Currently PSTN IXCs are regulated due to some policy reasons. If we want to maintain those regulations, then we must maintain the same set of regulations on PSTN/VoIP interconnection as well; otherwise traditional IXCs will masquerade as VoIP providers and undermine the social objectives of IXC regulations. But there is a catch: some VoIP providers may not be able to meet all the obligations. For example, some (like Skype) may not be able to stop abusers of Do Not Call list. PSTN users may opt to prohibit interconnection to these providers.

If you analyze the actions of FCC thus far, you will conclude that they are thinking along these lines. Pulver order indicates that they will focus only on PSTN interconnection scenarios and will keep end-to-end IP free of regulation; they have rejected AT&T petition (’ÄúIP in the middle’Äù) suggesting that they do not want to dilute IXC regulations. They have to extend this reasoning to cover VoIP providers as well, because at the interconnection point it is difficult to distinguish ’ÄúIP in the middle’Äù and “IP from the end-point’Äù.

Dan Ryan

The question of whether IP telephony should be classified as an interstate service is distinct from whether it should be an information service. Traditional long distance and cellular are regulated as interstate services, but nobody pretends these are not telephone services. The level of regulation is very modest because everybody recognizes that these are competitive markets.

Powell’s intent in pushing for an information services classification is largely tactical. He can start from the zero regulation that the “information services” classification affords, and prudently add a minimal set of regulations. Or he can start from the “telephone service” classification and hack away the unnecessary parts. Powell worries that the latter course will leave him with more regulation than he wants because every attempt to hack away a regulation will turn into a multi-year battle with the incumbent telcos.


VoIP should only be taxed and regulated if the call ever touches the PSTN network. Beyond that, leave it alone.

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