FCC Seeking ‘Pragmatic’ VoIP Solutions

The Federal Communications Commission wants your input about possible regulation of Voice over IP services.

As part of its just-released Notice of Proposed Rulemaking (NPRM) for IP-enabled services, the FCC said it is looking for “specific, pragmatic proposals” for the possible regulation of the technology, including VoIP.

Since announcing in December that it would launch an inquiry into the possible need of regulations for the quickly emerging VoIP sector, the FCC has said it plans to initiate the rule-making process with a light regulatory touch.

Last week, the FCC published the actual NPRM, a 56-page document that asks broad questions covering a number of areas. They include proper classification of IP-enabled services, jurisdictional issues between the federal government and states, and the appropriate legal and regulatory framework for the new services.

“Most of our clients view the NPRM as a positive development,” said Bill Wilhelm, a partner at the telecom law firm of Swidler, Berlin, Shereff, Friedman that represents a number VoIP companies. “The FCC kept its promise to release it [NPRM] on a expeditious basis.”

Most importantly, Wilhelm said, the FCC kept the topics focused on a federal level.

Wilhelm said most VoIP companies’ most immediate concern is to keep the service classified as interstate commerce and out of the hands of state and local regulators.

In its only VoIP decision to date, the FCC ruled VoIP pioneer Jeff Pulver’s Free World Dialup (FWD) business does not meet the definition of a telecommunications service and is free from FCC telecom carrier regulations. Pulver’s VoIP venture requires members to buy special equipment and have a broadband connection to talk with each other computer-to-computer. Beyond the equipment, there are no fees and the free calls are routed entirely over the Internet.

The FCC did note that FWD may be subject to certain obligations to public safety and law enforcement agencies in addition to the Universal Service Fund.

“One of the key questions the FCC asks is whether similar services [to Pulver] can be handled on a federal level,” Wilhelm said. “This debate needs to take place on a national level.”

Wilhelm said the issue of VoIP companies paying access fees to connect to the public switched telephone network (PSTN) may be overrated.

Unlike Pulver’s FWD, most VoIP providers route calls from leased local telephone lines to a gateway server that converts analog voice into data packets. From there, the data packets move over the public Internet or a private backbone to its destination, where it goes through another gateway, rolling over to a local line.

Although VoIP is clearly a phone service, providers say they shouldn’t be regulated in the same manner as publicly-switched traditional telephone carriers since they don’t traffic in voice packets.

“I think there is some perception that VoIP companies don’t pay access fees,” Wilhelm added. “Companies like Vonage have been paying access fees. The more relevant issue is just what fee to apply? Most everyone wants the access fee system to be reformed.”

Currently, the FCC mandates access fees be paid to incumbent carriers for use of their systems.

“It costs me a lot more to make a call intrastate than it does an international call,” Wilhelm said. “That’s why there needs to be reform of access fees.”

Nor does Wilhelm think the FCC intends to charge access fees to Internet service providers (ISPs), as suggested by the Washington office of Chadbourne & Parke, an international corporate law firm that is also reviewing the complex set of questions and statements that comprise the NPRM.

“No, I don’t think people are expecting ISPs to pay access fees,” Wilhelm said.

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