History voip

Byline: Donny Jackson

In expected actions regarding the classification of voice-over-IP technology, FCC commissioners made strong remarks in a recent meeting that portend state commissions eventually losing rate-making authority on voice calls. The comments were made as commissioners hailed VoIP as the future of voice calling in the U.S.

In the Feb. 13 meeting, the commission declared Pulver.com's Free World Dialup service, which allows users to make IP-to-IP calls, an information service, and issued a notice of proposed rulemaking (NPRM) for IP services, including VoIP.

"This NPRM is really the curtain going up on a new era of communications," FCC Chairman Michael Powell said. "This is the most important item in communications history, in some ways."

One possible outcome is overhauling the traditional regulatory structure for voice providers. Because VoIP is based on IP, packets carrying voice calls theoretically can be routed throughout the world. With this in mind, FCC Commissioner Kathleen Abernathy expressed her belief that VoIP calls are interstate in nature and stated that differentiating between interstate and intrastate traffic "simply doesn't work anymore."

Interstate traffic historically has been regulated by the FCC, which has state commissions questioning what role they will have in future voice-calling regulations, according to Brad Ramsay, general counsel for the National Association for Regulatory Utility Commissioners.

"State regulators have to be concerned," Ramsay said. "If [VoIP calls] are held as interstate across the board, their access charge regimes will be bypassed."

It also would represent a remarkable turnaround for state commissions, which last fall were delegated primary responsibility for unbundled network element decisions with the passage of the Triennial Review Order. However, recent oral arguments before the U.S. Court of Appeals for the District of Columbia Circuit indicate it is likely that decision-making authority will be taken from the states.

While acknowledging the possibility that states could lose their primary regulatory role, Ramsay emphasized it is too early to jump to conclusions. And a statement by Powell offered encouragement to state commissions, he said.

"The chairman said he was interested in working with the states on this, and I can guarantee you the states are interested in working with him," Ramsay said.

If the FCC assumes regulatory control, though, it would be typical of several efforts to centralize regulation of several industries, Ramsay said. That's also the dominant practice in the rest of the world, according to Steve Parsons, president of Parsons Applied Economics, a telecom consultant company.

"The U.S. is unusual because it's one of the few jurisdictions that has significant bifurcated regulation," Parsons said. "I tend to believe in states' rights, but telecom policy probably is much better set at a national level rather than by 50 states."

Many argue that such statements are especially true as U.S. carriers try to compete in global markets against companies not encumbered by a patchwork of state regulations. While theoretically true, many industry officials believe the FCC lacks the manpower needed to do a thorough job.

"The states are always going to have a role," Legg Mason telecom analyst Blair Levin said. "It may not be traditional retail rate regulation, but it will still have oversight on things like service-quality complaints and universal service."

Exactly how quickly VoIP will become the mainstream technology for voice calls is debatable. At a Precursor Group conference this month, Vonage CFO John Rego said he believes the public network will be displaced within 20 years.

However, cost factors may speed that up. IP platforms enable network providers to take advantage of the remarkably decreasing costs associated with computers, said Tom Rutledge, president of cable and communications for Cablevision.

"I can't budget low enough," Rutledge said at the Precursor event. "I'm shocked by how the costs ... go down."

While the cost of building an IP network from scratch is 50% to 70% less than a circuit-switched network, the immediate hidden costs are associated with paying for customer support as users learn the capabilities of the new technology, according to Paul Lacouture, Verizon's president of network services. And the savings cited by so many are more significant to providers that have not invested heavily into an embedded voice network, he said.

"There's nothing cheaper than something you've already paid for," Lacouture said at the same event. "Carriers are not going to rip out the legacy network for the foreseeable future."

But MCI Chairman and CEO Michael Capellas said he believes the transition to VoIP will happen sooner than most people think, especially when Microsoft decides to play a significant role.

"When Mr. [Bill] Gates completely enables telephony into the Windows operating system, then everything will change - and it's going to happen," Capellas said.

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For a story on why Net2Phone's recent deal with TSTT is just the start of several unusual alliances that will hit the VoIP market, see Online Exclusives on our Web site. WWW.TELEPHONYONLINE.COM