VON Keynote: The FCC Enters the Year of VoIP

"If last year was the year of spectrum, this is the year of VoIP," said Robert Pepper, Chief of Policy Development at the FCC. In the first three months of this year, the FCC has issued an historic declaratory ruling on VoIP (the Pulver.com petition), initiated a Communications Assistance for Law Enforcement (CALEA) rulemaking proceeding on VoIP, and launched a far-ranging Notice of Proposed Rule Making (NPRM) concerning "Everything over IP" (EoIP). In addition to the Pulver.com petition (now resolved), there are also at least five other declaratory rulings still pending on critical VoIP questions (AT&T, Level 3, Inflexion, Vonage and SBC).



This burst of regulatory action is not unexpected. Pepper said the FCC had been watching VoIP with interest for years but had decided not to jump into action in order to give the technology time to evolve. Its hand was forced however, when the state of Minnesota and others began their own regulatory actions against Vonage and other nascent VoIP providers.



Pepper said the policy basis for the current "light touch" regulatory approach rests on the strict legal definitions of "telecommunications," "telecommunications service" and "information service". But, as he pointed out, the really big questions remain. Who regulates the new broadband enabled IP world? What, if anything, gets regulated? How much should a local carrier be paid for terminating a call? How can the long standing social goals supported by past policies be preserved? What about the legacy economic model and cash flows? What implications are there for broadcasting rules or cable TV rules? What about rural issues? What about international jurisdiction?



Every year, the nation's universal service fund (USF) pays out approximately $673 million for low-income programs and about $3.0 billion to support high-cost rural services. There are additional programs to provide Internet access to schools and libraries, as well as to support rural health initiatives. The USF is paid for by taxes to interstate switched access minutes, which are now in rapid decline. Pepper said the old model is clearly not sustainable -- however, by his measure, VoIP is not principally to blame. Wireless substitution is having the largest effect. "Why would anyone pay for residential long distance service when you can make the call for 'free' using your mobile phone?"



"What we need now is to separate economic regulation and social policy," said Pepper, "and to find new ways to fund the social programs." A second critical policy step, he added, is to reform/rationalize the many regulated economic relationships between carriers.