FCC Hearings on VoIP


The FCC is holding hearings on how much it should regulate VoIP telephony providers. This came to a head when a federal court declared that the Minnesota Public Utilities Commission had no jurisdiction to regulate a VoIP carrier, largely on the basis that it was a data carrier.

The problem with this discussion is two fold:

  1. Trying to base regulation on the basis of technical differences is always a bad idea. We're trying to maintain the status quo in the face of changing technologies. As Jon Udell points out putting services into buckets is a hopeless exercise. I wish more regulators would just decide to stop regulating on the basis of technology.
  2. Business is trying to use regulation to maintain their profit margins.

To that point, read this quote:

In November, SBC's senior vice president and chief financial officer called VoIP a "threat" to his company's residential phone service offerings, and at Monday's forum, John Hodulik, wireline telecommunications analyst at UBS Securities, predicted VoIP would "significantly" cut into the regional Bells' profit margins in the next five years. No direct representative of a regional Bell spoke at the forum, but Hodulik predicted the Bells would shift traffic to IP networks without an FCC decision on VoIP.

This is no different than RIAA using copyright to try to maintain a business model that technology has obsoleted.

There are some important public policy questions like how to make up for the universal service fee and the services it provides if states can't collect it. Universal service pays for telephone service in rural area, service to disadvantaged populations, school connectivity and so forth. I don't think its a bad thing for society to do, but I believe we have to find another way to fund it since I agree that states have a tough time justifying jurisdiction for VoIP.

Kevin Werbach testified at the FCC hearing and has posted a link to the streaming video from the CSPAN coverage.

For what its worth, in my opinion, the FCC ought to take a hands-off approach to VoIP and data services in general. Regulation will limit competition and innovation to be sure and there's simply no compelling reason to regulate it. There may be compelling reasons for the Universal Service Fund, but that tax ought to be applied fairly, not on the basis that these bits are encoding someone's voice and these bits aren't.