ACADEMICS CALL FOR CLEAR NATIONAL REGULATORY STRUCTURE ON VoIP

The report estimated VoIP technologies could account for up to 40% of all U.S. phone calls by 2009 “if clear regulatory directives are provided in the near future.” While many businesses already use VoIP, Syracuse U. Assoc. Prof. Lee McKnight projected that most residential users would “be aware” of VoIP technology in the next 5-10 years “because all 3rd-generation cellphones will be IP phones.” Syracuse U. School of Information Studies Asst. Prof. Martha Garcia-Murillo said some telecom carriers already might be routing calls through Internet while charging for them as for circuit-based: “You may actually be making a packet-switched call without knowing.” She said that by 2007, 8% of primary (residential) lines would be IP-based. McKnight said data traffic topped voice traffic around 2000 and more than 50% of the calls were data traffic, including VoIP. On the international backbone, Center for Research on Telecom Policy Exec. Dir. Glenn Woroch said 11% of current traffic was VoIP.

U.S. Internet Industry Assn. (USIIA) Pres. David McClure argued that it was “critical” that regulators not attempt to transfer existing telecom regulations, which he said were “designed for a different technology in a different century,” to advanced IP networks. “No regulation should be adopted for VoIP unless it is first proven to be necessary -- and in fact, proven to be the best and only solution to a specific and quantifiable problem,” he said. The authors agreed that VoIP occupied a “middle ground” between traditional telephone service and newer data services to which some, but not all, practices and regulations should apply to encourage VoIP growth without undermining the building blocks of the telecom industry.

Most of the authors agreed VoIP providers should be exempted from the full weight of state and federal regulation, saying full compliance with every federal, state and local telecom regulation would be likely to slow VoIP’s entry into the consumer market. McKnight and Garcia-Murillo wrote in the report that trying to maintain a distinction between state and national communications would lead to the establishment of “artificial, and, in our opinion, arbitrary mechanisms to determine whether or not a voice or data transmission was intra- or inter-state.” They said a national policy should be considered not just for VoIP technology, but “ideally in the long term for the regulation of all ICT-related services.” McClure agreed, saying it was impossible to treat the network as “a small and isolated set of circuits over which any single city, county or state holds jurisdiction -- particularly when the network is designed to route packets across whatever portion of the network is most favorable, regardless of its geography.” CWA research economist Debbie Goldman urged the FCC and states to work together “to hash out the jurisdictional issues” related to VoIP services.

Woroch said that while it was important to figure out how to regulate VoIP, “the greater opportunity really is in the possibilities for this new technology to deregulate existing policy toward traditional services.” He suggested that VoIP could be used to “drive out the inefficiencies that are currently embedded in the regulatory structure.” Woroch stressed that in the last 4 years, VoIP had gone to 11% from 0% of the international traffic and was “headed in the upward direction. This technology has assisted in reforming the international settlement process.” He said it had a potential of doing the same domestically, “if we reframe the issues [by] not asking how we regulate VoIP but how can we use VoIP to deregulate the current system?” He said one example where the technology was moving faster than regulators was impairment procedures going on in states: “That question looks very different when VoIP is available to competitors.”

McClure said he expected the FCC to move “very rapidly” on VoIP. He said while the Commission had indicated it would like to wrap up its inquiry in the coming year, “the problem with this is that we are already there.” McKnight said he expected “some report or action out of the FCC,” but he would be “surprised if it goes really far toward defining more intervention of rules. I expect them to continue the basic policy.” Meantime, he said he expected some states would try to “slow the tide,” while others would “recognize the benefits of getting ahead of the curve and trying to adopt a more forward-looking state-centric model to gain a competitive advantage for their state.”

On the future of access charges, McClure said that was part of a bigger debate on intercarrier compensation. “There has to be some level of intercarrier compensation if there are costs incurred by any of the parties to transfer” traffic on their networks, but he said he was in “favor of the parties’ sitting down and working out for themselves what those compensation levels should be and when they should apply,” without subjecting them to regulations. Garcia said the problem with intercarrier compensation was “how do you determine where the call was routed to… how do you know which carrier to compensate?” McKnight said that was one of the points that legislation might be required to address because “access charge revenue is going to go away.”

The portability of VoIP technology underscores the need for parity in treatment across services, platforms and networks, Woroch wrote in the report: “'Regulatory parity’ has become a common refrain in today’s increasingly crowded telecommunications marketplace. It is especially critical in the case of VoIP, however, since its deployment is so elastic and the technology holds so much promise of long-run consumer benefits.”