VoIP and P2P, the Telco Kryptonite

No matter what the FCC decides Tuesday in its rules for the 700 MHz spectrum auctions, the political deck remains heavily stacked in favor of communications incumbents. Just ask anyone playing the the independent VoIP or the peer-to-peer worlds, two areas of innovation that are under constant attack from the entrenched powers that be, hampering any small chance they have of gaining critical mass.

So even if Google or longshot Frontline Wireless gains a foothold Tuesday, it’s still a long way to the actual auction of spectrum and even longer to the deployment of networks. Along the way, expect incumbents — mainly AT&T, Verizon and the cablecos — to use all their regulatory influence to inhibit innovative entrants, just like they are currently doing to VoIP and P2P.


There is no reason here to blame the telcos for their actions — if your company had buckets of ready cash and a well-established corps of lobbyists, your shareholders would expect no less. What communications innovators need are more deep-pocket lobbying efforts like the one underway at Google, to refute positions like FCC commissioner Robert McDowell’s faith-based entrepreneurialism, which ignores the fact that the FCC has been party to regulations (like the VoIP E911 requirements) that put a serious money hurt on VoIP players like Vonage.

This isn’t to say that upstarts like Vonage and SunRocket had business models that made sense; but if you are going to publicly proclaim that there shouldn’t be regulation of communications, then why aren’t wireless providers being held to the same E911 standards as VoIP? A “light touch” is certainly something defined differently by the eye of the beholder.

And now watch for telco-backed lawmakers to try to put similar regulatory hurdles in front of P2P providers, whose anarchist and de-centralized systems are currently the cause of many sleepless nights in the incumbent provider world. Funny how the don’t-regulate-the-Internet crowd of telco cheerleaders never seem to put their rhetorical skills to use arguing against VoIP or P2P regulation.

In his opinion piece in last week’s Wall Street Journal, McDowell waxes warmly about how history shows that when network pressures loom, “some brilliant entrepreneur finds a way to use the airwaves more efficiently.” What he’s leaving out is the fact that incumbent-backed regulation is sure to quickly follow, to help push those entrepreneurs toward the corporate graveyards that claimed early DSL providers, many CLECs, and now SunRocket and perhaps before long, Vonage.

McDowell ends his bit with the peace-and-love thought of “Belief in entrepreneurs and a light regulatory touch is the right broadband policy for America.” For VoIP and P2P providers — or anyone else challenging the incumbents — if it could only be so.

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