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Wednesday, February 4, 2004

Straight Talk on VoIP
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I've been a strong proponent of both substantive and procedural modesty when it comes to considering whether and how the emerging VoIP services should be regulated. In my "Metaphysics of VoIP" piece, I concluded, "given the rapidly growing competitiveness of the telecom marketplace, there is no sound rationale for traditional economic regulation of VoIP", including VoIP services provided by the incumbent telcos. As importantly, I suggested "policymakers should use VoIP to seize the opportunity to move quickly to create a uniform deregulatory environment for all the players."

In a new piece published yesterday on CNET, "VoIP Regulation: A Plea for Procedural Modesty," I urge the FCC not to initiate an open-ended VoIP rulemaking proceeding as has intimated it intends to do, but instead to proceed promptly "to create a VoIP policy framework simply by deciding the individual petitions brought before it in the least regulatory way." By adjudicating each petition narrowly on its merits, in other words by employing more of a common law step-by-step approach, "the agency is more likely to avoid regulatory overreaching." The important thing is for the Commission to resolve unsettled issues and to remove uncertainty without the inordinate delay that has typically plagued its typically open-ended generic rulemaking proceedings.

Two recent items illustrate divergent approaches to the public policy discussion regarding VoIP, one filled with straight talk and the other with obfuscation:

The National Cable & Telecommunications Association has just released a thoughtful White Paper entitled, "Responsibilities and Rights: A Regulatory Model for Facilities-Based VoIP Competition." NCTA recognizes that most of the traditional public utility legacy requirements should not be imported into the VoIP world. It eschews the metaphysical "gotcha" arguments that invoke old regulatory classifications in favor of a good-faith effort focused on trying to figure out, as a matter of sound policy, what regulatory obligations (CALEA, 911) make sense going-forward. I commend the paper for its straight talk.

Not so a February 2 piece concerning VoIP that appears on Jim Glassman's Tech Central Station by Duane Freese entitled, "Paradigm Shift or Ancien Regime?" It correctly observes--as have I--that VoIP has the potential to create a paradigm shift in communications policy. That's true. Recall I said, "policymakers should use VoIP to seize the opportunity to move quickly to create a uniform deregulatory environment for all the players."

But then Freese's essay employs some slick sophistry in interest of furthering AT&T's position that it should not have to pay access charges to the local phone companies for using the LECs' circuit-switched lines to originate or terminate long distance calls made using ordinary telephone handsets. AT&T maintains that as long as--get this!--any part of the long-haul backbone facilities that carry the call employ IP technology, then the call should not be subject to same access charges paid by other long distance carriers that use the LEC facilities to complete calls.

In my view, under the FCC's current rules, as they now exist, AT&T's position has little merit. The purpose of the access charges is to compensate the LECs' for the use of their local circuit-switched lines, which AT&T is admittedly using. They have nothing to do with the IP long haul facilities that AT&T says it is using. But here is the real sophistry: Throughout his piece, Freese equates the payment of access charges by AT&T for its phone-to-phone service amounts with "regulation" of VoIP. This is not so, of course. What it amounts to is playing by the rules in place until the rules are changed. And paying for the use of facilities owned by others that AT&T uses to originate and terminate its calls.

Now, I'll be the first to agree--really, for me, re-reiterate--that the FCC needs to move quickly to further reform its access charge regime and morph it into a cost-based inter-carrier compensation regime appropriate for a multi-carrier, multi-service, multi-platform, competitive communications world. Sure, it's not an easy job and there will be political heat. But the task is on the commissioners' job sheets, and it has been hanging fire for too long.

To get from here to there we need straight talk all around.

posted by Randolph May @ 11:34 AM | General

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