Back Off the Rules, Say VoIP Providers

WASHINGTON -- U.S. regulators can best support Voice over Internet Protocol (VoIP) services by keeping hands off, and encouraging other countries to do the same, vendors suggest.

A consistent "light touch" approach to regulation throughout the U.S., European Union, and elsewhere will help VoIP grow, vendors said at a recent Federal Communications Commission on global IP regulation here.

New Territory

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 United States as an example," Draluck said. "The United States 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 the 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 at least one conceded that regulation might be needed if competitors such as cable companies give priority to their own VoIP products.

If cable firms gave priority to transmitting their own VoIP packets over competitors, the FCC may need 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 ... that's a problem," Pulver said. "Right now it's not regulated, it's just assumed that everybody plays fair."

Other Proposals

But Pulver also criticized amendments to a 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 so states could require VoIP providers to support 911 services, contribute to state universal service programs, and 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 be interpreted broadly to tax a number of other services, the vendors suggested. For example, states might try to collect fees on online chat features in console-based gaming systems, such as Microsoft Xbox Live. Pulver said he's worried such action will open VoIP up to "arcane telecom regulations."

In February, Pulver won an FCC order designating his computer-to-computer Free World Dialup service 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 are 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 Department of Justice, are urging some VoIP regulation. Some lawmakers want VoIP vendors to contribute to the Universal Service Fund, which helps fund telecom services in rural and poor areas. 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 regulations 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 could break down not only national boundaries but boundaries among devices such as PCs, personal digital assistants, and telephones, and traditional regulations no longer apply, says Al Safarikas, vice president of wireline networks for Nortel Networks.

"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."

Global Consistency

VoIP providers are looking for consistent regulations around the world, and certainty about those regulations, added Kristen Neller Verderame, vice president for U.S. regulation and government relations at British Telecom Americas. She said nations should "regulate where it's necessary, and only when it's necessary."

But U.S. debates over regulations such as access costs (the price competitors must pay to get access to U.S. broadband providers' networks) are a major concern to British Telecom, she added. Verderame urged the FCC to give VoIP "reasonable access costs," even as the FCC has moved away from requiring incumbent telecommunications networks to share their pipes with competitors. The FCC has been working on a policy for VoIP regulation since early this year.

"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."