Speaking to a standing-room-only crowd during INTERNET TELEPHONY Conference & EXPO EAST, Packet 8 (News - Alert) CEO Bryan Martin began his keynote address with a composed analysis of the state of the telecommunications market.

We have all likely noticed the pace of change in the market has accelerated, and that increase in the rate of technological development bodes well for the industry, predicted Martin. On the other hand, the AT&T (News - Alert) monopoly is rapidly becoming a reality again.

One thing Martin noticed during the recent collegiate football bowl season was the disproportionate number of AT&T ads seen during the games, and one that stood out, in particular was one in which the telecom giant claimed that, every 11 seconds, a customer goes back to AT&T after having tried another provider. He also did some simple research and found that AT&T reported it had lost 3.1 million access lines between September 2005 and September 2006. There are 31.5 million seconds in a year, which means that 2.8 million customer returned to AT&T — which also means that a total of 5.9 million had left. So, concluded Martin, every 5.26 seconds, a customer leaves AT&T.

While Martin may have been using some creative assumptions in his equation, the underlying fact remains: The VoIP industry is doing a great job of injecting true competition into the phone industry. But, Martin continued that, while customer retention and attraction data are important, with the traction that VoIP has gained, the larger issue has become content and applications. Broadband adoption — which is required for VoIP — is stuck in 35-45 percent range, despite costs having dipped and the numbers of homes passed by high speed networks having grown. Clearly, speed and cost alone are not enough, and service providers need to roll out more applications to convince the rest of the country to adopt broadband.

Here, Martin turned his attention from the industry participants to the industry regulators, and the FCC (News - Alert), in particular. And this is where his presentation became more turbulent.

While the hastened pace of technological development is a boon, the resultant increase in the introduction of new regulations has become a hindrance, particularly with respect to much of the FCC’s body of work.

Decisions like the Pulver.com decision, whereby then FCC chairman Michael Powell said that e-mail and other peer to peer applications “have never been held to be telecom services.” Significantly, the decision left open where VoIP services that connect to the circuit-switched world at some point.

Martin also noted the Vonage (News - Alert) decision, which essentially stated that the FCC has sole jurisdiction and states have no say, as well as the new E-911 requirements, the CALEA Act, and the Universal Services Decision put in place under new Chairman Kevin Martin.

The problem with these and other regulations being considered by the FCC, argued Bryan Martin, is that they are nothing more than a replication of old policies by new leadership. In Kansas and Connecticut, arguments are being made for revisiting previously decided issues as a result of indecisive FCC policy regarding things like intrastate policy.

In addition, E (News - Alert)-911 regulations have caused service providers to have to add additional taxes and fee to their customers’ monthly bills. In some cases, Packet8 customers have witnessed 25 increases. “If the states get their way,” lamented Martin, “these bills are going to continue to go up, because I have to pass these new costs along to my customers.”

The FCC, of course, claims these measures are necessary for maintaining a level playing field, and the reason it established a safe harbor in VoIP Universal Service was to ensure competitive neutrality.

Martin did acknowledge that one state, California, has bested the rest of the country with Governor Schwarzenneger’s Broadband Task Force, which seeks not only to increase broadband adoption in California, but also to discover regulations that hinder the evolution of telecommunications and the Internet as a whole.

The difficulties caused by the FCC aside, Martin asserted that broadband is good, and the first wave of easy broadband adoption has passed, and that video is “the low hanging fruit that will drive the next wave in both communications and entertainment.” The technology, he says, will evolve to meet demands, and regardless of what regulators erect in the way, the telecommunications community will find a way to make things work.

The bottom line, according to Martin, is that regulators cannot simply take legacy policies and reuse them. They must take the time to analyze and think about them, and then do what is in the best interest of the industry as a whole — like California.

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Erik Linask is Associate Editor of INTERNET TELEPHONY. Prior to joining TMC (News - Alert), he was Managing Editor at Global Custodian, an international securities services publication. To see more of his articles, please visit Erik Linask’s columnist page.