A Leap Forward? A Closer Look At the FCC's
Rulemaking on the Internet Communications Services
BY WILLIAM B. WILHELM
The Federal Communications Commission (FCC)
is now accepting comments in its long-awaited Notice of Proposed Rulemaking
(NPRM) concerning the regulatory treatment of IP-enabled services. While
much of current policy debate revolves around the regulation of so-called
Voice over Internet Protocol (VoIP) ï¿½ the FCC proceeding is much broader in
scope, potentially affecting regulation of all forms of communications
services, including private IP networks, computer-to-PSTN services, and
video over IP networks. There is little question that the FCCï¿½s rulemaking
is one of the most significant in its history. This article explores some of
the fundamental questions the FCC is considering.
How Should IP-Enabled Services Be
The most fundamental question before the FCC is how IP services should be
categorized for regulatory purposes. Specifically, the FCC will examine
whether certain categories of IP-enabled services meet the definition of
ï¿½telecommunications serviceï¿½ or ï¿½information servicesï¿½ under the Act. In
considering how to classify and regulate services, the FCC has suggested
that services might be distinguished using any of the following approaches:
ï¿½ Functional equivalence: Services can be categorized depending upon their
functional equivalence. For example, some VoIP services (phone-to-phone or
computer-to-phone) might function closely enough to PSTN services to
regulate them in a similar fashion.
ï¿½ Substitutability: The FCC seeks comment on whether regulation should be
aimed at those services that are used in lieu of, rather than in addition
to, traditional telephony. For example a service that is a substitute for
phone services might be regulated as a phone service ï¿½ a voice service used
for interactive gaming would not be considered a substitute. The FCC seeks
comment on how to define substitutability and whether it should matter if
the service is provided to mass market or to enterprise customers.
ï¿½ Interconnection with the PSTN: The NPRM suggests that another alternative
way to distinguish services is to differentiate between those that utilize
the PSTN and/or the North American Numbering Plan and those that do not.
ï¿½ Facility Layer versus Application Layer: Under a layered approach,
applications would be treated differently than regulated transport services.
Regulation would apply to networks, but not applications.
ï¿½ Peer-to-Peer Communications versus Network Services: Finally, the FCC
suggests that it could differentiate based on whether a network architecture
or an intermediaryï¿½s centralized servers are used as opposed to merely
facilitating peer-to-peer communication without an intermediary.
Jurisdictional Issues: State Regulation?
The FCC requested comments on the jurisdictional nature of IP-enabled
services. The FCC specifically asked for input on whether all IP enabled
services are subject to exclusive federal jurisdiction or whether states
have concurrent regulatory authority. While the separate statements of
Chairman Powell and Commissioner Abernathy suggested that federal preemption
may be necessary to avoid a labyrinth of state regulations and fees that
apply to the Internet and Internet-based services, a majority of the
Commissioners have not weighed in on this matter.
How Should Carrier Compensation Be Applied to IP-Enabled Services?
The FCC suggested that any service provider that sends traffic to the PSTN
should be subject to compensation obligations, regardless of whether the
traffic originates on the PSTN, on an IP network, or on a cable network.
However, the FCC requests comments on how such obligations may be computed
and assessed and seeks comment on whether the FCC should forbear from
applying access charges to VoIP services and under what authority can it
impose a compensation mechanism for IP-enabled services.
How Can the FCC Advance Social Policy Goals Such as 911, Disability
Access, Universal Service?
The FCC expressly states that certain public policy goals should continue to
have relevance as communications move to IP-enabled services. Disability
access, consumer protection, emergency 911 service, law enforcement access,
and consumer privacy are all policies that the FCCï¿½s believes should not be
abandoned with the advent of IP-enabled service. The FCC seeks comment on
how such goals should be weighed against the risk that regulation could slow
development of VoIP and other services.
The FCC notes that it is possible that VoIP services may enhance the
capabilities of emergency responders by providing them information that
could not be transmitted on non-IP-enabled systems. The FCC seeks comment on
whether regulation is necessary, or if arrangements between industry
associations and public safety associations can adequately address emergency
service issues. The FCC acknowledges that development of VoIP services is in
its early stages, and is likely to evolve and change over time. The FCC
questions how VoIP initiated 911 calls should be routed, and if there are
multiple ways to route such calls.
The FCC also asks whether IP-enabled services might improve upon traditional
services designed to ensure access by persons with disabilities, and how the
FCC should apply the disability accessibility rules in the Act to VoIP
The NPRM suggests that the FCC may need to fundamentally reexamine the
universal service system. The FCC seeks comments on how the regulatory
classification of IP-enabled services could affect the Universal Service
Fund Program, and if both facilities-based and non-facilities-based
providers of IP-enabled services should be assessed Universal Service Fund
contributions. More broadly, the FCC seeks comments on how migration to
IP-based systems will affect universal service generally.
The Road Ahead
While the FCC is to be commended for pushing forward its NPRM, considerably
more needs to be done in the near term to provide regulatory certainty to
the innovative companies developing new Internet communications
applications, products, and services. In the upcoming months weï¿½ll look at
some of the recent legislative proposals. Companies interested in
participating in the FCC proceeding and commenting on these issues should
file their comments in FCC docket 04-36.
William B. Wilhelm is a Partner in the
firm of Swidler Berlin Shereff Friedman, LLP, a law firm with nearly 300
lawyers in offices in Washington, D.C. and New York City. The firm has more
than twenty different practice areas, including antitrust, corporate,
litigation, telecommunications, and government affairs. For more
information, please visit www.swidlaw.com.
The preceding represents the views of the author only and does not
necessarily represent the views of Swidler Berlin Shereff Friedman, LLP or
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