TCS Daily

Hail to the VOIP?

By Kevin Werbach - October 29, 2004 12:00 AM

Next week, as you might have heard, Americans will go to the polls. Voice over IP hasn't exactly been a major wedge issue in the Presidential campaign. Nonetheless, the election could have a significant impact on the future of VOIP in the United States.

Neither candidate has emphasized technology policy during the campaign. Both George Bush and John Kerry have issued position papers and given a few speeches on tech issues, but in contrast to the gap between their views on most topics, it's hard to find much substantive disagreement. Both want to see more broadband deployment; both want to make more wireless spectrum available; both oppose excessive regulation of dynamic and nascent industries.

As one might expect, there are differences in emphasis. President Bush focuses on keeping broadband access tax-free, while Senator Kerry talks more about tax credits and subsidies to spur broadband deployment. Bush's people talk up the gains in broadband deployment over the past four years, while Kerry's advisors point out that the US has sunk to 13th in the world in broadband penetration. Still, it's hard to find a major policy choice on broadband or VOIP where the candidates differ sharply.

The fact of the matter is that most of the decisions regarding VOIP happen at the Federal Communications Commission and on Capitol Hill, rather than in the White House. The machinery of the bureaucracy and Congress chugs on largely independent of which party controls the Presidency. There is strong sentiment in Congress, among leaders of both parties, for initiating significant reform of the 1996 Telecommunications Act next year. The FCC has open proceedings on IP-enabled services and law-enforcement access to VOIP communications that should come to fruition next year as well.

Where the President can make a difference is in emphasis. The Clinton Administration, and particularly Vice President Al Gore, made technology policy a high priority, and saw it as a significant element of America's late-1990s economic boom. Today's post-9/11, post-bubble world is very different. Still, a President Gore would have given tech policy a higher profile, for better or worse, than President Bush has. John Kerry isn't a technocrat like Gore, but many of the leading tech policy-makers from the Clinton Administration are advising his campaign, and would likely play a role in a Kerry White House. President Bush has received endorsements from a majority of top Silicon Valley CEOs, who can be expected to push their agenda if he is re-elected. Then again, VOIP isn't just a high-tech issue; it concerns the future of the entire telecommunications sector and has major ramifications for other sectors that depend on it.

Telecom Act reform will be a significant test for the next President. The incumbent Bell Companies are pushing to eliminate the law's pro-competitive safeguards, as a means to further cement their market power. There are good reasons to update the current law, which barely takes data networks and new VOIP applications into account. Any changes, though, should free VOIP rather than crushing it.

Perhaps the biggest tech policy choice facing the next President will be the makeup of the FCC. Current Chairman Michael Powell gets kudos for talking up VOIP and beating back efforts to pull it into the legacy regulatory structure. On the other hand, the FCC's policies on inter-carrier compensation, broadband classification, and local competition have opened the door for regulation of VOIP applications and roadblocks by incumbents fearing VOIP competition. The major VOIP rulemaking proceedings won't be completed this year, leaving significant uncertainty for entrepreneurs and companies.

A majority of the FCC could well turn over soon. Word on the street in Washington is the Powell will leave early next year, regardless of who wins the election. Two other Commissioners, Democrat Jonathan Adelstein and Republican Kathleen Abernathy, have terms that have either already expired or will in a matter of months. And the up-and-coming Kevin Martin, a former Bush-Cheney transition advisor and husband of a top aide to Vice President Cheney, may be destined for bigger and better things in a second Bush Administration or uncomfortable sticking around in a Kerry Administration.

That means the new Administration will likely name a majority of the FCC, including the Chairman. Given the level of partisanship in Washington, the confirmation process could be drawn out and subject to horse trading. It is critical that whoever occupies the White House on January 21, 2005, put into place as quickly as possible an FCC that understands technologies like VOIP. 2005 could well be the year major players including cable operators and AT&T step on the gas pedal to make VOIP a real alternative to traditional circuit-switched phone service. That could be jeopardized with either a caretaker FCC or a Commission that doesn't get the importance of the technological revolution now underway.

Your vote on November 2nd will make a difference to the future of VOIP. It just remains to be seen what that difference will be.


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