FCC chief plans no Internet phone regulation – VOIP is coming. Are you ready?

The top U.S. telecom regulator said Thursday he had no intention of setting rules for Internet telephony, which he said could have a dramatic impact on voice communications.

Companies offering Voice over Internet Protocol (VoIP), the official name of the new service, have seen rapid growth in recent months as people embrace lower-cost communications online with quality comparable to traditional phones.

http://www.usatoday.com/tech/news/techpolicy/2004-01-22-voip-no-regs_x.htm

"It’s probably the most significant paradigm shift in the entire history of modern communications, since the invention of the telephone," Michael Powell, chairman of the U.S. Federal Communications Commission, told journalists at the World Economic Forum.

He said VoIP, which transforms voice into packets of data that are transported over the Web, should not be confused with a normal telephone service.

"It is not a telephone service, it is a voice application, completely indistinguishable from any other kind of application that can run on an IP network," he said.

"If you’re going to say to me that Voice over IP is something that needs regulation, then you’re going to have to explain to me why e-mail isn’t also, or streaming video or instant messaging is not also," Powell added.

VoIP has recently attracted the attention of large telecommunications providers, including AT&T, which also intend to provide Internet telephony.

Info vs telecom

Last year, the state of Minnesota tried to impose telephone regulations on Vonage, a leader in the VoIP business that lets a user hook up a regular telephone to a special adapter and, in some cases, even keep their traditional phone number.

But a federal judge ruled in October that Vonage was an information service rather than a telecommunications service, and that state regulation would run counter to congressional intent to keep the Internet free of regulation.

Powell supported this view, stressing he did not plan to regulate before someone proved he needed to.

"What’s my approach? The most important thing is that the burden should rest on government to prove why it needs a similar regulatory environment, and not on innovators to prove why not," he said.

"This is one area where we as regulators should wait for real demonstrable evidence of harm before accepting an invitation to intervene," Powell said.

The FCC is expected to launch next month a review of what regulations, if any, should be applied to the service. The agency could at that time give some early guidance of whether there should be, among other things, connection fees.

Some argue that if the call is carried entirely over the Internet, the customer should not be charged any connection fees, while AT&T contends that calls that touch the Internet Protocol network should be subject to cheaper fees.

"The present uncertainty may be distorting competition and the flow of capital," FCC Commissioner Kathleen Abernathy said in a speech in Washington.

"I, therefore, hope that the Commission will clarify the applicability of its existing rules, in addition to proposing a new regulatory framework for VoIP services," she said.

At a forum last month, FCC commissioners said they needed to weigh the potential impact of consumers moving to Internet telephone service on 911 service and the multibillion-dollar fund that helps subsidize telephone service to rural areas and those who cannot afford it.

Copyright 2004 Reuters Limited.