Lawmaker Sees VoIP Classified as Telecom Carrier

By Roy Mark

(Back to article)

WASHINGTON -- U.S. Rep. John Dingell (D-MI) said Wednesday the Federal Communications Commission (FCC) should "step back from its apparent rush" to classify the Voice over Internet Protocol (VoIP) telephone business as an information service.

In a process that is expected to take at least a year, the FCC began proceedings in December to determine what, if any, telecom taxes and rules should apply to VoIP. If the FCC determines Internet-based telephony is an information service, as opposed to a telecommunications carrier, the emerging technology would be free of many of the myriad rules and regulations governing traditional telephone companies.

"As the FCC moves forward in this proceeding, there are several economic and social implications that must be considered. Among the most important are universal service, law enforcement and 911 services," Dingell said at a House Subcommittee on Telecommunications and the Internet. "Based on recent news reports, I am concerned that the FCC chairman is not sufficiently aware of these issues."

Dingell, the ranking member of the Energy and Commerce Committee that oversees the telecommunications and entertainment industries, said it may be "far wiser" for the FCC to regulate VoIP as a telecom carrier and then "forbear where appropriate."

While VoIP technology 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 VoIP industry claims it is not a telecom since it does not deal in voice traffic and should not be subject to the usual taxes and regulations.

While the FCC has signaled it thinks VoIP should be as regulation-free as possible, the Department of Justice has already urged the agency to require VoIP providers to comply with the Communications Assistance for Law Enforcement Act (CALEA), which mandates telephone companies, at their own expense, make their systems wiretap friendly.

There are also concerns about the location accuracy of 911 calls and whether VoIP telephone companies should pay fees into the Universal Service Fund, which subsidizes telephone service for low income individuals and schools and libraries.

Telecom analysts at the hearing, however, said requiring the VoIP telephony industry to meet the same wiretap availability and 911 mandates of traditional telephone companies will have little effect on the expected growth of VoIP.

Even if VoIP providers are required to comply with CALEA and 911 rules, Adam Quinton, a telecom analyst for Merrill Lynch, told the lawmakers that "VoIP will still offer cheaper service than traditional telephone companies."

In fact, Quinton predicted, requiring CALEA and 911 compliance "could actually accelerate the growth of VoIP, making the service comparable to traditional telephone services."

Frank Louthan, an analyst with Raymond James, said "technology will solve the law enforcement and 911 issues, but the other issue to consider is access fees. That will be the more difficult issue to get around."

In addition to issuing its first proposed VoIP regulations next week, the FCC is expected to rule in March on several claims already on file that VoIP services should be exempt from federal, state and local fees normally charged on telephone calls.

Long distance carrier AT&T is challenging the fees it must pay for delivering calls traveling mostly over the Internet to traditional local carriers. Free World Dialup, whose calls are routed entirely over the Internet, is seeking a total exemption from FCC imposed fees since its traffic never touches the legacy Bell infrastructure system.