Sununu Drafting VoIP Bill

U.S. Sen. John E. Sununu says he is drafting a bill to keep Internet telephony beyond the reach of state and federal regulations that govern traditional telecoms.

The Federal Communications Commission (FCC) began proceedings in December to determine what, if any, telecom taxes and rules should apply to the quickly emerging Internet telephone business built on Voice over IP (VoIP) > technology.

“Congress must establish pre-eminence of federal authority in this area and provide major direction for any action by the FCC,” the New Hampshire Republican said late last week at the CES show in Las Vegas. “I’m afraid the benefits of VoIP will be smothered by state and federal regulators. A clear pre-emptive remedy is needed now.”

VoIP technology presents problems for regulators because the new industry doesn’t fit traditional telecom regulatory models. While it clearly provides telephone service, it does it by turning voice packets into data packets and does so over the virtually unregulated Internet, both public and private, instead of the heavily taxed and regulated public switched voice telephone networks (PSTN).

The Internet telephone industry claims it is not a telecom since it does not deal in voice traffic. As the major telecoms and cable companies join start-up VoIP ventures in moving voice traffic over the Internet, the issue becomes critical for cash-starved states that raise hundreds of millions in revenues by taxing traditional telephone services.

California says since VoIP providers use conventional telephone lines to connect their calls, they are a telephone company and is seeking to collect access fees. Washington, Oregon and Florida are also skirmishing with Internet phone companies on the same issue.

In the only court decision, however, a federal judge spiked Minnesota’s attempt to regulate and tax telephone service offered by Edison, N.J.-based Vonage, ruling the company does not have to register as a telephone company in order to conduct business in Minnesota.

“Voice communications are at a watershed moment. The adoption and deployment of VoIP applications allow providers to completely reject old ideas and limitations over voice communications,” Sununu said in his official Las Vegas statement. “Beyond improving productivity and creating valuable new service features, the innovation created by VoIP applications forces a complete shift in the way traditional voice communications are viewed.”

At the Dec. 1 opening hearing on VoIP, FCC commissioners and a wide range of VoIP experts, including some state regulatory officials, agreed that only a light regulatory touch, mainly involving public safety (911 availability), law enforcement (legal wiretap accessibility) and disability issues (equipment), should be brought to bear on the nascent industry.

FCC Chairman Michael K. Powell said at the hearing he “unflinchingly (believes) in maintaining an Internet free from government regulation” and firmly supports the idea that the Internet telephony industry should “evolve in a regulation-free zone.”

The FCC will now gather additional information and public comment about the issue. The process is expected to take at least a year.

“VoIP providers should be free from state regulation, free from the complexity of FCC regulations, free to develop new solutions to address social needs, and free to amaze consumers,” Sununu, a member of the Senate Commerce, Science, and Transportation Committee, said.

Details of Sununu’s proposed legislation were unavailable as of Tuesday morning.

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