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VoIP Switch - How Much Regulation Does the VoIP Industry Need?

January 07, 2014


There’s cool technology and then there’s essential tech. Mobile Internet is nice, but it isn’t essential. VoIP is nice, but it isn’t essential. Telephone access, on the other hand, is essential infrastructure and needs to be safeguarded. So with the transition from the PSTN phone network to VoIP, an almost inevitable evolution in the next five to 10 years, how much should VoIP be regulated as it moves from cool tech to essential tech?

A law professor of mine once said that laws exist for when ethics fail. In essence, that’s why the FCC (News - Alert) regulates the telephone network—it makes sure that nothing too disruptive happens to the communications infrastructure. In theory, VoIP won’t need to be regulated because stakeholders will ensure that it functions as well or better than what came before. But regulation is necessary to make sure extreme cases never come to pass.

Some of the concerns with the transition to an all-IP calling infrastructure are warranted, and others are pretty safely non-issues.

One concern that might be legitimate, and therefore worth legislating against, is call discrimination. Under current FCC regulations, telephone providers have a legal responsibility to connect calls from other providers. But with VoIP, such safeguards are not in place. Network owners could very easily create a two-tier system that privileges calls from certain providers and not others or even denies access to select providers altogether. Call quality could be reduced or de-prioritized for those who do not pay a little extra.

Another legitimate concern, albeit less likely, is that some VoIP providers will opt not to offer 911 emergency services, creating a situation where 911 is not supported universally.

But, other concerns are even less likely and can probably go without the regulation that currently encumbers the PSTN telephone network.

Regulated installation and restoration requirements, for example, are probably not necessary for VoIP, since competing services can easily take the place of any business that fails its customers when it comes to offering or maintaining service.

Another overblown concern is affordability issues. Currently the FCC regulates certain pricing issues to ensure that consumers are not exploited for basic phone service.  Moreover, while perhaps VoIP would love to have a corner on the market and therefore the ability to charge more for service, functionally this is just not going to happen due to the nature of VoIP and the ability for robust competition. Prices will stay affordable because competition keeps it that way. Unlike the phone network of old, there’s little likelihood that one firm could ever corner the market.

So, some regulation probably is necessary as VoIP begins to replace PSTN phone service for good. But there probably is a need for much less of it.

Edited by Blaise McNamee

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