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Regulation Time

Here we go again. This time, it's New York state officials who have weighed in on VoIP (voice over Internet protocol), and they seem to think -- much as California originally did -- that VoIP service is a competitive telecom business.

It should, therefore, they think, be subject to at least some of the regulations that apply to traditional telcos. Amusingly, the New York State Public Service Commission's decision also suggested that VoIP should be subject to minimal regulation so that the industry would be free to grow, while still balancing the needs of the public in terms of safety and network reliability.

The market's reaction is increasingly "whatever." It doesn't seem to be worrying about regulation, whether in the enterprise or consumer spheres. Sales of IP-based PBX systems, targeted mainly at the enterprise, are expected to rise nearly 30 percent per year, largely at the expense of traditional PBX growth. Large companies, such as BellSouth, continue to pursue the enterprise market; IBM and Cisco have just announced a deal to merge key services in pursuit of VoIP business; and VoIP pioneer Vonage (the subject of New York's decision) cut its consumer rates to help grow its market and fend off the increasing competition. Clearly, nobody's waiting around for the final decisions of the Federal Communications Commission (FCC) and the various states weighing the merits of VoIP regulation.

Still, New York is a significant market, and, thus, its ruling is nothing to ignore. A group of both large and small VoIP providers has banded together -- calling itself the VON Coalition -- to push for less regulation in the VoIP sector. Further, lobbying efforts in Washington are growing in strength and intensity to preserve the FCC's perceived tilt toward an unfettered VoIP market. But New York's move is a reminder that much remains to be seen.

New York Defines Vonage as Telco Provider
A state regulatory agency in New York ruled that Vonage Holdings is a telco provider, a significant classification that has important ramifications for the ongoing debate over government regulation of the emerging technology.

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