Subject: [NEXTEL-1] FCC Delves Into New Rules for Web-Based Calls

From: [email-masked]
Date: Tue, 02 Dec 2003 15:30:22 -0500

http://www.reuters.com/newsArticle.jhtml?type=internetNews&storyID=3918354&src=US_DskTopTkr/GetContent&section=news

FCC Delves Into New Rules for Web-Based Calls
Mon December 01, 2003 02:12 PM ET

By Jeremy Pelofsky

WASHINGTON (Reuters) - Top U.S. communications regulators said on Monday that
Internet-based telephone service probably should face lighter regulation than
traditional land line service -- but were less certain what rules should apply.

"Let no regulatory prescription be ordered without first showing it's needed,"
Federal Communications Commission Chairman Michael Powell told a day-long
Washington forum on regulating the rising number of Internet-based phone
services.

Telephone carriers, like upstarts such as Vonage as well as market leader
Verizon Communications (VZ.N: Quote, Profile, Research) , are rapidly trying to
shift calls to high-speed Internet lines, using so-called Voice over Internet
Protocol (VoIP) technology for a more efficient and cheaper way to route calls.

In addition, technology companies and cable operators like Time Warner Inc.'s
(TWX.N: Quote, Profile, Research) cable operations have begun deploying VoIP
service. Time Warner hopes to offer it to all of its 11 million cable
subscribers by the end of 2004.

The FCC has largely taken a hands-off approach to the Internet but now it is
converging with heavily regulated telephone service.

"We don't come early to this issue and it is increasingly apparent that
commission action is needed soon," said FCC Commissioner Michael Copps, a
sentiment echoed by others at the agency. "It's no slam dunk that the old rules
even apply."

Powell said he had hoped to begin later this month formal proceedings to set an
appropriate regulatory framework for the service, but those will not likely kick
off until January at the earliest.

New policy could take a year or longer to formulate and FCC policies are often
challenged in the courts, which can prolong implementation.

NEW RULES FOR NEW SERVICES?

Telephone service is heavily regulated in the United States since it is seen as
critical for public safety. But some companies have tried to limit some rules
from being applied to new technologies and services.

To promote competition, the four local Bell telephone companies, Verizon,
BellSouth Corp. (BLS.N: Quote, Profile, Research) SBC Communications Inc.
(SBC.N: Quote, Profile, Research) and Qwest Communications International Inc.
(Q.N: Quote, Profile, Research) must share their networks with rivals and offer
reasonable terms and rates.

All telephone companies must pay each other fees for connecting calls and
long-distance calls are assessed a charge for a fund to subsidize service.
Additionally they have public safety obligations, such as providing 911
emergency service and ensuring law enforcement agencies can conduct
surveillance.

VoIP could circumvent all of that.

"We do need to discuss the consequences of the proliferation of VoIP services on
our important statutory obligations," such as universal service and 911
capabilities, among other issues, said Copps.

Some companies offering Internet-based service urged the agency to go light when
applying regulations.

"What you shouldn't do is just dump legacy regulation on what is a fundamentally
different technology," said Jeff Pulver, who runs Free World Dialup. "IP
communications has no bottlenecks."

Time Warner Cable does contribute to the universal service fund which subsidizes
service to rural and high-cost areas.

"Time Warner Cable is committed to supporting important public policies
associated with its delivery of IP voice services," said John Billock, the
company's chief operating officer.

One analyst said that the uncertainty surrounding what regulations may be
adopted for VoIP services was hurting stocks of some smaller companies offering
the service, like Z-Tel Technologies Inc. (ZTEL.O: Quote, Profile, Research) and
8X8 Inc. (EGHT.O: Quote, Profile, Research) , down 18 percent and 22 percent
respectively in afternoon trading on Nasdaq on Monday.