Subject: [NEXTEL-1] FCC Plans To Look Before It Takes Any VoIP Leap

From: [email-masked]
Date: Wed, 26 Nov 2003 12:00:31 -0500

FCC Plans To Look Before It Takes Any VoIP Leap

Nov 24, 2003

Joining religion and politics, there now is a third topic you just can't mention
in polite company: Voice over Internet Protocol (VoIP). Depending on what kind
of service provider you are, you either are welcoming this new,
as-yet-unregulated technology with open arms or you want to see it bombed - or
regulated - into submission. Next week, the FCC will kick off an open forum to
take the industry's temperature on the subject, and its staffers are putting
together a NPRM that could be introduced during one of the next two open
meetings to gather information on VoIP and its future as it pertains to
universal service, E911, homeland security and other traditional telephony
concerns.

According to some industry insiders, FCC Chairman Michael Powell, who has
claimed for months to be one of competition's - which would include VoIP - major
cheerleaders may now be swaying a bit more in favor of at least some form of
VoIP regulation. Powell, who has not yet publicly signaled his stance
specifically on VoIP, was once believed to have favored a "hands-off" approach
regarding regulation of Internet-related technologies. However, sources inside
the FCC and elsewhere say Powell has had a change-of-heart on VoIP, a
development that is being viewed by proponents of the technology with a great
deal of concern, if not downright trepidation.

Inside the FCC, some say that while it may be true Powell loathes the prospect
voting new rules that possibly could expose the Internet itself to full-blown
regulatory treatment - something many in Congress will do more than just raise
an eyebrow -- he has been watching the Universal Service Fund (USF) dwindling
away.

And at the recent winter meeting of the National Association of Regulatory
Utility Commissioners (NARUC), members voted a formal "Resolution Relating To
Voice Over The Internet Telecommunications." The resolution said in part "the
FCC should confirm its tentative decision that certain phone-to-phone calls over
IP networks are telecommunications services," and "a decision by the FCC...to
declare all phone-to-phone calls over IP networks to be information services by
virtue of the technology could have negative effects on various
telecommunications policies, including universal service." It also posited that
"VoIP and intercarrier compensation issues are inextricably linked, and a
significant portion of the nation's total voice traffic could be transported on
IP networks within a few years."

Rest assured the FCC has been grappling with the impact of VoIP and its effect
on "the way we've always done it" for at least the past six years. Robert
Pepper, chief of the commission's Policy Development division of the Office of
Strategic Planning and Policy Analysis. "Back in 1997, Congress asked the FCC to
look at [VoIP] and in April of 1998, the commission issued a report to Congress.
It basically said that computer-to-computer VoIP wasn't viewed as a
telecommunications service," he says. "We saw it the same way as we did computer
games: that we were playing with each other. We saw it as collaborative
computing and sharing files."

Having said that, Pepper says the commission didn't believe the time was right
to issue any kind of ruling, and staffers waited for the deluge of petitions to
be considered on a case-by-case basis. It never came.
" We received two informal letters of complaint that were resolved informally,"
he remembers. "We did receive one formal complaint from U S West against Qwest,
and that's now become moot. So what has happened is that it's not only new
entrants that have gotten into this space, but also incumbents, which are
experimenting with the technology in order to provide more services. ILECs have
been experimenting with IP Centrex in order to compete with IP PBXs. So I go
back to our report in 1998 that said when you're running an application on your
PC that lets you communicate with others, it's not a telecom service. There are
other applications, however, that may be telecom services but we aren't ready to
reach that [conclusion] on a declaratory basis."

With VoIP still in its infancy and with only one really recognizable name -
Vonage - should the commission even consider regulation, especially as Congress
continues to debate keeping the Internet free from rules that could hinder its
continued growth? Says Pepper, "The chairman has been very articulate regarding
what we should and should not regulate, and we don't want to regulate VoIP 'by
accident.' We look at some of the decisions now being made at the state level,
which are well-intentioned but may not be well-informed. We could end up with
regulation that could be quite counterproductive. It's clear that as we
introduce more competition -- and we learned this from the Internet with
Computer II and Computer III rules -- is don't impose legacy regulation on new
entrants. There is no point in imposing regulation on nondominant new entrants.
They have no market power. We want to encourage new competition because then we
can deregulate." Pepper adds all commissioners, for once, are aligned on this
issue.
Most of the pending state initiatives regarding VoIP regulation centers on
intrastate fees, and while the commission doesn't want to see 49 different sets
of rules (Florida has a signed law that states VoIP will not be regulated), it
won't step in at this time. Instead, it is focusing on interstate charges.

"The FCC isn't going to tell the states they don't have jurisdiction inside
their states," Pepper says. However, the traditional access-charge regime is
going to have to change, and it's already done that at the state level.

Yet there continues to be concern that VoIP carriers are failing to hold up
their share of universal service, E911, backup power and other kinds of mandates
to which ILECs and CLECs are subject. Not true, says Pepper, who says VoIP
players are backing all the social goals traditional telephony providers have
embraced for years. The way such social goals are managed needs to change,
however.
"Universal-service contributions and intercarrier compensation need to be
changed because we are coming into a more competitive environment, and not just
from VoIP," Pepper says. "We have to continue to support these policy goals, but
for a variety of reasons, we're going to have to think about fulfilling them in
different ways."

Universal-service reform is an open proceeding at the FCC right now, including
how to maintain the fund, how to rethink the ways contributions are made and how
to move to a connections-based format. Added to that are E911 issues, now that
broadband telephony is being added to the mix.

"We are working on location-based services based on voice and on a single point
of contact," he says. "In the IP world, it's not just a question of getting
location-based information. You can go beyond to a better, non-voice way to get
information. If someone from California were in Washington, D.C., and this
person had a pacemaker with a monitor, and this person started having an
irregular heartbeat or some other event, this person would have to dial 911 for
an ambulance. In an IP world, the pacemaker could contact the doctor in
California; the hospital that put in the pacemaker; and a hospital in
Washington, D.C., that could adjust the pacemaker; The PSAP also could be
contacted. We need to be thinking not only about how to replicate the things we
used to do, but how these newer technologies can add to these capabilities and
give people even better services."

And about that backup power? Harking back to the recent East Coast grid failure,
which pretty much wiped out wireline telephony and wireless phones when their
batteries ran out, there can be no consumer guarantee that all phones will work
24/7 under any circumstances. "This already has arisen in the context of
wireless and those who have decided they want to get rid of their wireline
service," he says, perhaps hinting at what consumers may do now that wireless
local number portability is a reality, up to and including switching their
wireline phone numbers to a wireless service. "We can't tell them they can't do
this because their battery may run out."

>>Robert Pepper, 202/418-2030<<
Who Will Make The First VoIP Move In 2004?
Corporate Networks
55 percent
Long-Distance Carriers
18 percent
Cable Providers
13 percent
ILECs
4 percent
Source: ChangeWave Research

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