FCC Weighs Taxing, Regulating VoIP

When the FCC's Internet Policy Working Group begins wheeling into action in January, one of its first items of business will be to determine whether VoIP will seep into the nation's telephone universe quietly over a period of several years or sweep in with a vengeance in a few months.

Indeed, the timetable for IP telephoning will likely dictate the action the IPWG will recommend. FCC Chairman Michael K. Powell announced the establishment of the working group at a meeting Monday that delved into the rapidly-developing VoIP universe.

Several players in the unfolding VoIP drama testified and their opinions were as varied as the many different approaches to the technology. One speaker, Commissioner Carl Wood of California's Public Utilities Commission, believes the recent drive into VoIP by the country's four major telephone carriers -- BellSouth, Qwest, SBC, and Verizon -- will telescope the time telephone users will switch over to VoIP.

"I think they (the phone carriers) have the capacity to migrate the majority of their customers, maybe all of their customers, in a very shot period of time, a year or two perhaps," Wood said in a statement.

On the opposite side of the argument is long-time VoIP advocate Jeff Pulver, whose Free World Dial Up Internet telephone service has some 90,000 subscribers. Pulver cautioned the FCC not to be influenced by "excessive hype" and pushed into premature regulation. Pulver said VoIP could take a decade before it really catches on. "My hope is that (the FCC Commissioners) leave room for IP communications to continue to innovate and experiment."Powell has been unequivocal on VoIP: He doesn't want it regulated.

"As one who believes unflinchingly in maintaining an Internet free from government regulation," Powell told the attendees at the hearing, "I believe that IP-based services such as VoIP should evolve in a regulation-free zone."

California's Wood, whose PUC has been attempting to regulate (and tax) VoIP, countered that the arrival of IP telephoning should not exempt the technology from regulation. VoIP has picked up steam slowly over a decade, its adoption slowed initially by poor fidelity and cumbersome equipment. But in recent months, the clarity of calls is often perfect over broadband connections, and standard telephone handsets can be used with the service.

The major telephone service providers, which initially resisted the service, have begun rushing into VoIP in recent weeks. Major telecomm equipment providers led by Cisco Systems as well as a brace of entrepreneurial start-ups have jumped into the fray. That leaves the cable broadband providers. They, too, have started to offer service led by Adelphia, Time Warner Cable. Comcast has indicated that it is examining the phenomenon and is likely to soon offer it to its customers. The cable firms have spent more than $65 billion refurbishing their equipment for the VoIP market.

It also became evident at the FCC meeting that some sticky issues remain to be solved. The FBI is worried that it may be thwarted from listening in on phone conservations on the Internet, disabled people might not have Internet access, and the 911 emergency system could be in limbo. Rural telephone systems will have to find funds to replace the current $6 billion Universal Service Fund.The FCC's IP Working group is composed of FCC staff and will be directed by Robert Pepper, chief of FCC Policy Development; and Jeff Carlisle, senior deputy chief of the Wireline Competition Bureau.