Friday, May 21, 2004 - The Progress & Freedom Foundation Blog

Building an Empire: The Vonage Vote

Wednesday the New York PSC determined that Vonage is a "telephone corporation." The result: more regulation. Vonage will be classified as a competitive provider and must apply for a certificate to authorize their services. As a condition of certification, Vonage is required file a schedule of its rates.

A few comments about this development: First, the PSC took action in response to a complaint lodged by a regulated competitor. When a firm cannot do something in the marketplace to improve its position, the political arena is a very enticing way to hurt the other guy. Second, the Commission took pains to forebear from extensive economic regulation and "to defer any regulatory requirements for a reasonable period to permit Vonage to apply for a CPCN and file rate schedules." During this 45-day period Vonage can apply for waivers from their regulatory obligation. This begs the question: why regulate Vonage today if waivers are possible tomorrow? (Empire building, perhaps.)

My third reaction is actually a prediction. In the rhetorical debate between the "Must Regulate Now" and "Don't Regulate the Internet" crowds, memory of the relatively light regulatory touch applied by the NY PSC will quickly fade and the decision will become a rhetorical feather to the cap of the pro-regulation folks.

Finally, the Chairman's reference (page two) to the terrorism attacks on September 11, 2001 is tone deaf. The same day that former Mayor Guiliani testified on national television about New York's state of preparedness and emergency responders, the Chairman cited network reliability as a reason to expand the reach of his agency. Perhaps the comment had nothing to do with Guiliani. Perhaps it had nothing to do with Tuesday's release of a staff report from the 9/11 Commission that alleged evidence of communications foul-ups in the city's immediate response to the attacks. Regardless, the circumstances create the impression of bureaucratic opportunism. This is unfortunate for everyone.

In a less emotionally charged atmosphere it is easy to see the difference between sustaining reliable networks and how emergency responders use a network and organize their activities. But in light of this week's events, the network reliability comments were either ill timed and unfortunate or they were an attempt to score political points while building a regulatory empire. I assume it was the former. had the story on the Vonage vote and Pulver has a post as well.

posted by @ 12:38 PM | General