TCS Daily


"Clear the Air"

By Kevin Werbach - May 13, 2004 12:00 AM

In early April, Senator John Sununu (R-NH), introduced S 2281, the "VoIP Regulatory Freedom Act of 2004." Rep. Chip Pickering (R-MS) introduced a companion bill in the House. The legislation would clarify the legal status of VoIP. Today, with hundreds of thousands of US consumers using voice over broadband services, and leading telecom and cable operators announcing VoIP deployments, a clear and rational legal framework for VoIP is critical.

It shouldn't be surprising that 39-year-old John Sununu, one of the youngest members of the Senate, is taking a leading role in the VoIP debate. VoIP represents a changing of the guard in telecom. Just as dominant technologies and business models are being swept away, so are outmoded regulatory approaches.

I recently interviewed Senator Sununu to hear his perspective on VoIP issues.

Q: Why should the average American care about how VoIP is regulated?

"It's a new technology with a significantly lower infrastructure cost than older technologies. And it has the potential to integrate with other IP-enabled services. [But,] if we want to ensure that consumers have access to these potential benefits -- lower costs, newer services -- then we should take prudent steps to prevent unnecessary regulations from being placed on the system."

Q: Describe what your bill would do.

"The legislation is intended to clear the air, to assert federal jurisdiction, and to prevent the states from moving forward in a way that would stifle innovation and investment of risk capital.... First it's a matter of establishing the right jurisdiction. This is an international telecommunications infrastructure that is going to be used to provide voice and, eventually, video communications. Second, we want to clarify the area where the FCC as the federal regulator can or should take action. By doing that, you create certainty in the marketplace, so that people who are risking capital understand what kind of regulatory and tax environment they are going to face. Certainty itself is of value to the marketplace."

Q: Why is it so important to assert federal jurisdiction?

"We have 50 states that regulate local telephone calling. They look at a new IP-enabled service like VoIP, and contemplate applying their own, in some cases outdated, telecom regulations. That is a recipe for disaster. We risk having multiple sets of regulation on not just a national but a global information system."

Q: Should there still be a role for the FCC in defining VoIP policies?

"I think the bill will help the FCC focus and narrow its objectives. The Notice of Proposed Rulemaking that the FCC put out [on VoIP in February] had 140 questions. It was that long because they were beginning from a framework that assumed there was no legislative guidance on how to approach this. With my legislation, we'll have narrowed down the number of areas where the FCC is expected to take action. We'll give them a very helpful and important set of guideposts."

Q: How do you respond to concerns that VOIP will drain away universal service funding?

"If someone is making that charge, they haven't read the bill. The legislation we've developed calls for VoIP to pay in to universal service; calls on the FCC to reform and revise the universal service system; and presses for a comprehensive, fair, uniform system of inter-carrier compensation. It has VoIP participate in E911 [emergency services] and services for the disabled."

Q: Do you see a connection between VoIP and broadband deployment?

"One generally enables the other. If we have a clear regulatory and tax environment for VoIP, then investors are going to be able to determine the potential returns on a piece of broadband infrastructure. That, in turn, makes broadband more attractive for those deploying the pipes."

Q: But are you concerned that local phone and cable companies will exclude or disadvantage unaffiliated VOIP providers?

"I think that is becoming less and less likely. Deployment of broadband is continuing, and the existence of VoIP -- provided we don't crush it with burdensome state regulations -- gives the deployment of broadband even more potential. If the incumbents don't respond in an open way that allows access and build-out on their broadband networks, people will turn to cable or wireless or powerline to get the broadband service -- and the VoIP service -- that the markets desire. In the long run, it makes the battle or the lawsuits over the last mile of copper or circuit-switched telephone have much less meaning."

Q: The Senate recently passed an extension of the Internet tax moratorium, which you supported. How will that affect the debate over VoIP?

"I think completing work on the tax moratorium helps the VoIP legislation, because you don't have people out there making wild claims about the tax bill undermining the local tax base. People made claims that the tax moratorium prevented taxes on VoIP. It doesn't."

Q: What's the risk if Congress doesn't pass VoIP legislation along the lines you've proposed?

"It becomes an environment where no rational entrepreneur will want to compete because of the regulatory uncertainty. Our telecom system, and our broadband systems, will fall farther and farther behind the rest of the world."


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