Earlier this week, Jeff Pulver posted an analysis of two vastly opposite approaches to the regulation of VoIP on the state level. I’m including a few short excerpts below, but you really should go read the full article:
Last week two states – New Jersey and Missouri — took radically different approaches to VoIP regulation that could have far reaching consequences for the future of Internet communication.
New Jersey – helping consumers take advantage of new technologies. On the one hand, New Jersey’s Governor Jon Corzine (D) — joining a number of other forward looking states – signed into law new legislation prohibiting state regulation of many aspects of VoIP.
Missouri – stuffing tomorrow’s technologies into yesterday’s regulatory boxes. But last week the Missouri Public Service Commission (PSC) took a starkly different approach. After a year-long proceeding, the PSC found that Comcast’s fixed VoIP service, unlike Vonage’s service, is offering a telecommunications service in Missouri and therefore it is requiring Comcast to get certified by December 10th, or stop offering their VoIP service. …..
Implications: This decision is likely to set off a chain of reactions including a possible appeal, and if left in place, unleash a number of other state actions similarly adopting state regulation of fixed VoIP. These actions are like to raise rates for consumers and slow innovation as state seek to require Internet technologies to subsidize the 100 year old phone network through the application of state universal service contributions, and the application of state access charges. It would be like having the first automobiles subsidize horse and buggy’s, or e-mail subsidize postal mail, or PCs subsidize mainframes.
I again urge you to read Jeff’s complete post:
The Jeff Pulver Blog: VoIP in America: A Tale of Two States
The strange thing to me about this is that although the big phone companies often have their way with state legislators (because legislators sell their votes like cheap prostitutes, though often in non-obvious ways so they don’t run afoul of the poorly-enforced ethics rules), most of the larger phone companies are smart enough to realize that regulation on VoIP isn’t even in their best interest. The reason is that the vast majority of customers ditching landlines are going to cell phone service, not VoIP, and the day may come (and for some companies, already has come) when they will want to offer their own VoIP service.
My point is that I don’t think that the Missouri PSC type of regulation is something that the big phone companies have been pushing hard for – even if there might be a slight short-term gain (by making it more costly for the cable competitors to do business), in the long term it will hurt the phone companies as much as the cable companies. But I may be wrong – nobody ever said the big phone company executives were the brightest bulbs on the tree, and it’s not beyond the realm of possibility that they would go for the short-term gain, and leave it to their successors to deal with the resulting mess.
So far, Michigan has taken a “hands off” approach to VoIP, but that’s consistent with their growing reluctance to regulate any aspect of the telephone industry except for “PBLES” (the “Primary Basic Local Exchange Service” that few customers are aware exists, and that even fewer actually subscribe to). So the fact that Michigan doesn’t seem to want to regulate much of anything having to do with telephone service anymore probably works in the favor of fixed VoIP providers.
The interesting thing is, the cable companies in Missouri could probably avoid regulation altogether by offering an associated “nomadic” VoIP service (the type where you have a VoIP adapter that you can take with you and use anywhere you have a broadband connection). If, for example, they were to develop a VoIP adapter and system that incorporates the best of both worlds – the reliability of fixed service combined with the portability of nomadic service, that might put them into the realm of providers that the states are unable to regulate.
(How would such a system work? Perhaps something like this: Normally, it detects that you are at home, and uses the “reserved” VoIP bandwidth of your local cable company – in other words, it bypasses the public Internet and essentially uses the frequencies reserved for local phone service. Should you unplug the adapter and take it to another location served by the same cable company – for example, you take it to a neighbor’s home and plug it in there – it will still attempt to use the reserved VoIP bandwidth, if technically feasible. If for some reason it can’t use the reserved bandwidth, or if you take it to a place served by another provider, it falls back and uses the public Internet to connect you to your cable company’s switch. Oh, and to make it a true “nomadic” service, the cable company would have to offer the ability to get a number from a ratecenter of the customer’s choice, rather than one dictated by the geographic location of their home. It seems to me that if that type of system were used, there would then be no functional difference, at least from the customer’s perspective, between the cable company’s service and the “nomadic” VoIP service offered by other VoIP companies).
Somehow, I doubt the cable companies will develop and use an entirely new type of technology just to bypass the backward-thinking regulators in a particular state. It’s probably a lot cheaper for them to lobby the Missouri legislature to get a VoIP-friendly law passed.