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VoIP Bills Get Rolling in Congress

4/18/2004 8:00 PM Eastern

Some in Congress are unwilling to wait for the Federal Communications Commission to decide on regulations for voice-over-Internet protocol (VoIP) telephony, a broadband service that cable operators consider the next big revenue stream to gush from their massive digital upgrades.

In recent weeks, bills were introduced in the House and Senate that would ensure minimal regulation of VoIP service providers while protecting the government’s ability to track criminal activity on the Internet and ensure that all Americans have access to affordable voice communications.

COMMERCE ENTRIES

The House bill was introduced by Rep. Chip Pickering (R-Miss.). A member of the Energy and Commerce Committee, Pickering was an aide to Sen. Trent Lott (R-Miss.) in the mid-1990s and helped craft the Telecommunications Act of 1996.

The Senate bill was drafted by Sen. John Sununu (R-N.H.), a freshman serving on the Commerce Committee. The bills come amid a flurry of activity on the same issue at the FCC, where chairman Michael Powell has staked out a position of giving VoIP a lot of running room before considering regulation an appropriate next step.

The FCC has launched a VoIP rulemaking, but has not announced a date by which rules, if any, might be adopted.

Under pressure from the Justice Department, the FCC is also considering rules that would allow law enforcement to tap the VoIP communications of criminals.

WIRETAP WORRIES

Powell’s effort could encounter legal difficulty because the courts might not support the FCC in classifying VoIP as an unregulated information service. The Justice Department and the FBI are both concerned that an information service classification could impair their tapping authority under the Communications Assistance and Law Enforcement Act.

The U.S. Court of Appeals for the 9th Circuit in San Francisco has rejected the FCC’s classification of cable-modem service — the critical broadband platform underpinning a service like VoIP — as an unregulated information service in a case that the National Cable & Telecommunications Association will appeal to the U.S. Supreme Court later this year.

Comcast Corp., Time Warner Cable, Cox Communications Inc., and Cablevision Systems Corp. are leading cable’s drive into VoIP. The MSOs support a deregulated environment, because such a policy would encourage broadband investment and promote competition to the dominant Baby Bell phone carries from facilities-based VoIP providers, not resellers.

Ned Zachar, director of Telecom Services Research at Thomas Weisel Partners, told a House subcommittee in March that within five years cable companies would be serving about 13 million VoIP customers.

The Sununu-Pickering bills would largely remove the FCC and the courts from the VoIP arena. It’s unlikely the legislation will advance this year. Next year could be another story, as senior House and Senate lawmakers have signaled their interest in rewriting the 1996 law.

LOCAL HOLDS BARRED

The Pickering bill (HR 4129) and the Sununu bill (S. 2281) don’t explicitly declare VoIP an unregulated information service as defined by federal law.

Instead, the bills effectively achieve the same result by barring states and local governments from regulating or taxing VoIP in any fashion.

The FCC would face similar restrictions, except for those actions the agency would be specifically authorized to undertake.

Cutting out the states is controversial, given their long oversight of local telecommunications carriers.

“The premise of these bills is that the states have their knives out for VoIP — and we fundamentally disagree with that premise,” said Stan Wise, president of the National Association of Regulatory Utility Commissioners.

NCTA’S STANCE

In the Sununu bill, the FCC would be required to create rules on compensation for the exchange of VoIP traffic; on developing a scheme for VoIP contributions to universal service; and on determining whether VoIP providers are technically capable of installing the equipment needed to help the FBI track criminals and terrorists on the Internet.

Although NCTA has been reluctant to embrace legislation that would modify the 1996 law, NCTA president Robert Sachs issued a statement indicating that cable wanted to help enact a deregulatory VoIP bill.

“We applaud Sen. Sununu and Rep. Pickering for their leadership in introducing the first VoIP telephony legislation and look forward to working closely with them in the months ahead,” Sachs said April 2.

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