VoIP Will Thrive—If Government Avoids Burdensome Regulations

VoIP Will Thrive—If Government Avoids Burdensome Regulations

When we turn on our televisions, we watch in awe as news anchors conduct on-camera interviews with correspondents covering a disaster half a world away, witness remotely from one city while a rock band plays a concert from another, and watch soldiers on deployment overseas greet their stateside newborn children for the first time. We see these spectacles and we ask ourselves: “When will I be able to do that with my own friends and family?”

The prospect of widely available, live video communications is closer to realization than readers may think, thanks to Voice over Internet Protocol technology. That is, of course, if an overzealous government doesn’t adopt burdensome VoIP regulations.

VoIP enables the transmission of voice and video communications by digitizing and packetizing signals over the Internet rather than the traditional public switched telephone network. Through the technological wonders of Internet transmission protocols, VoIP-enabled phones and computers can handle voice and video simultaneously, and they include many features of traditional telephones such as Caller ID, conferencing, and voicemail.

Significant Improvements
Since the advent of mass-market VoIP services in 2004, the technology has come a long way in terms of its reliability, availability, and capability. New and improved software and hardware have produced better audio and video quality without significant jitter or lag. Technological advances now allow VoIP users to call ordinary telephones and access services such as voicemail, from any computer connected to the Internet.

Most major telecommunications providers, including such national companies as AT&T, Verizon, Comcast, and Time Warner Cable, currently provide VoIP as part of their broadband services. A new survey by Pew’s Internet and American Life Project found a quarter (24 percent) of adult U.S. Internet users have placed calls online. In 2007, Pew, using a differently worded question, reported only 8 percent of Internet users placed calls online.

Increasing Competition, Innovation
VoIP has also given rise to a new breed of telecommunications providers and software applications which have injected more competition into the industry and added technological innovation.

Among the more recognizable VoIP providers are Vonage, which offers local and international telephone service for flat monthly rates, and Skype, a popular software program that offers free peer-to-peer calls. Skype boasted 663 million users in 2010, a number that is expected to grow substantially following the company’s acquisition by Microsoft.

New smartphones such as the iPhone and the Droid are factory-equipped with VoIP capabilities, and some are even preloaded with the software to provide on-the-go VoIP calling through a wi-fi connection.

‘Government-Mandated Roadblocks’
Despite this progress over the last seven years, VoIP remains a nascent technology. Thus far, the quality, availability, and capability of VoIP have improved significantly, much like the Internet itself, thanks to the market, entrepreneurship, and freedom from burdensome government regulation. The only thing that could interrupt this development is government-mandated roadblocks.

One such obstacle is a recent action by the Maine Public Utilities Commission. In October 2008, the MPUC initiated an investigation into whether VoIP services offered by Comcast and Time Warner Cable could be identified technically as a telephone service and, therefore, subject to Maine telephony regulations.

The companies argued, in part, that VoIP was not a regulated telecommunications service because it did not use the telephone system as required by Maine law. However, the MPUC determined that there are “fundamental similarities between traditional telephone services and VoIP” and concluded that VoIP is subject to Maine’s telephone service laws because “the experience of placing or receiving a VoIP call is indistinguishable from that of placing or receiving a circuit-switched call.”

‘Costs of Regulatory Compliance’
The MPUC’s decision is troubling. First, the government is subjecting a 21st century technology to a body of law largely written in the mid-to-late 20th century, long before anyone heard of VoIP or even the Internet.

The costs of regulatory compliance for any company offering a technology under these circumstances would be staggering. First, implementing these requirements will lead most certainly to higher prices for consumers and a concomitant loss of future industry investment.

Second, the government is basing its jurisdiction on experiential similarities, not the underlying technology or even statutory requirements. This spells trouble for other new, innovative technologies that are experientially similar to technologies subject to enormously burdensome regulatory regimes, such as Internet radio and on-demand video.

No other states have followed Maine’s lead—yet. Let’s hope that remains the case.

At press time, the Maine legislature seems poised to undo the MPUC’s decision. With VoIP still in its infancy, it is essential that those who want to see it grow and thrive work to keep it free from government regulation and subject to market forces.

This scenario will happen only if consumers and stakeholders stand firm in their opposition to regulatory intervention of an industry still in its relative infancy. If they are successful, the future of live video for the growing number of Internet users increasingly reliant on this amazing and affordable technology will be ensured.

John Stephenson (jstephenson@alec.org) is director of the Telecommunications and Information Technology Task Force at the American Legislative Exchange Council (http://www.alec.org/)..