October  2000

Regulatory Stance

BY JIM MACHI

Universal Service
The U.S. government began taking a stance on Internet telephony with the April 10, 1998, report of the Federal Communications Commission (FCC) to Congress regarding universal service. Levied on all phone calls, universal service fees accomplish several goals -- among them ensuring that low-income and rural telephony customers have access to affordable telephone service. In effect, a universal service fee is a tax to help smooth out supply-and-demand economics for telephone access. The FCC report did not issue any definitive findings on universal service fees for Internet telephony, postponing a decision until more information is available. The report paid special attention to phone-to-phone IP telephony, which is where the infrastructure uses IP but covers the last mile with the type of equipment in use today (in other words, not phone-to-computer or computer-to-computer calls). The upshot is that right now, there is no universal service fee in the U.S. for Internet telephony phone calls.

HR 1291
The next major governmental involvement occurred in May 2000. That was when the U.S. House of Representatives passed HR 1291, the Internet Access Charge Prohibition Act. The name of the act says it all. The bill's supporters want to ensure there are no government per-minute access charges levied on Internet service providers (ISPs). Such access charges are where the funding for universal service would come from. If you belong to the No Regulation for Internet Telephony Party, this probably sounds good. But HR 1291 also includes an amendment that specifically exempts Internet telephony providers from protection. Right now, the bill is in the Senate for approval. The Internet telephony industry has lobbied hard to ensure it will not pass.

As Internet telephony gains acceptance, there will surely be more attempts to regulate it. We will also likely see more HR 1291-type rebuttals. But think about it. Because a phone call is made over a data packet, should the laws applying to circuit-switched telephony no longer apply? Right now there's at least one simple reason not to regulate phone calls made using data packets: You can't tell whether a data packet is an e-mail message, an http session, an ftp file transfer, or a phone call. I'm sure there's a technical way to solve this problem -- after all, the naysayers told us voice over IP wouldn't work and look where it is today. So it will surely be possible to heap on more regulations saying, for example, that bit XYZ of the packet header must identify the type of packet.

...Come Again?
By now you may have come to the same interesting conclusion I reached while preparing for this column. If the universal service fund is intended to ensure, for example, that rural areas have low fees -- and if Internet telephony over many outlets is already free or almost so (from Dialpad.com, PhoneFree.com, and many others) -- then regulating VoIP calls to get funding to provide low-cost service is a complicated solution to a problem that isn't really there.

But before you entirely dismiss the idea of regulation for Internet telephony, consider the 1994 Communications Assistance for Law Enforcement Act, which decreed that telephone companies must submit to law enforcement wiretaps. Certainly no VoIP companies will garner sympathy in Washington by rallying against it. (If they do, they'll need to change their marketing tag line to Calling All Sopranos.) Eventually, VoIP calls will need to adhere to some kind of standards to enable compliance with this law and others. But telephony laws like the wiretap law presumably exist to make the U.S. a safer place for its citizens. And arguing against them probably won't get you very far.

Now what about the presidential election? I can't say who will win. But deep in my heart, I know it should be the New York Mets. 

Jim Machi is director, product management, CT Server and IPT Products, for Dialogic Corporation (an Intel company). Dialogic is a leading manufacturer of high-performance, standards-based computer telephony components. Dialogic products are used in fax, data, voice recognition, speech synthesis, and call center management CT applications. 

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