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Can VoIP survive Congress?

By Declan McCullagh http://news.com.com/2010-1028-5256334.html

Story last modified July 5, 2004, 4:00 AM PDT

Washington politicos are about to kick off what will be a long and exhausting process aimed at deciding the future of phone calls made over the Internet.

On Wednesday, a House of Representatives panel will convene its first hearing devoted to considering how much of the thousands of pages of weighty telecommunications regulations should be imported to cover voice-over-Internet Protocol (VoIP) services. The apt title of the hearing: "VoIP: Will the Technology Disrupt the Industry or Will Regulation Disrupt the Technology?"

This is a process fraught with problems. For all the hype surrounding VoIP, it remains a fledgling industry that could be severely--perhaps even permanently--harmed if Congress veers in the wrong direction.

For all the hype surrounding VoIP, it remains a fledgling industry that could be severely--perhaps even permanently--harmed if Congress veers in the wrong direction. Early signals from Congress are mildly encouraging. Rep. Charles Pickering, R-Miss., has introduced a bill prohibiting state regulators from seizing control of VoIP services, which is a welcome first step. But the measure also would impose a hefty stack of regulations, including ones related to wiretapping and universal service, on "connected" VoIP systems that offer the choice of calling people on the existing telephone network.

Rick Boucher, D-Va., and Cliff Stearns, R-Fla., are planning a press conference on Tuesday afternoon to announce a second House bill on VoIP. Boucher told me that while the legislation won't be finalized until the event, it has two major components: Blocking states from regulating VoIP is one. The other is encouraging the Federal Communications Commission to consider what 911, universal service, and access charges requirements will apply.

In the Senate as well, politicians are divided on how to react to VoIP. At a hearing last month, senators were skeptical of the Justice Department's requests for broad new VoIP wiretapping powers. Others insisted that the FCC must levy universal service taxes on VoIP calls, with proceeds going to fund discounted analog phone service for low-income and rural American households.

That's a big concern of state regulators, who say they fear losing tens of millions of dollars--from fees and subsidies provided by telephone companies--if more calls flow away from traditional phone networks and onto the Internet. States such as Minnesota and New York already are active in trying to seize authority over VoIP companies.

Recipe for disaster? This is a classic Washington scenario that often heralds bad legislation. When just about everyone wants something, they tend to be willing to trade political favors for it. The Justice Department conceivably could ink a deal to back universal service taxes on VoIP--on the condition that certain senators drop their opposition to new wiretapping requirements, and so on.

This is a classic Washington scenario that often heralds bad legislation. The danger is that either through ignorance or malice, politicians will impose 20th century regulations on a 21st century technology. A debate expected in the next year over revising the Telecommunications Act offers a convenient opportunity to do just that. Some of the leading candidates for regulatory shoehorning are wiretapping requirements, 911 emergency service, disability access, universal service, and "access fee" taxes.

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