Internet phone calls that are free to the consumer and don't come in contact with the traditional telephone network won't be regulated by any level of government, the Federal Communications Commission ruled Thursday.
The 3-2 vote marked the agency's first attempt to come to grips with the Internet's capability to complete phone calls the same way it routes e-mail and instant messages around the global computer network.
Last year, a company called Pulver.com — better known as a sponsor of Internet-related business conferences — asked the FCC to declare its Internet-based phone service, called Free World Dialup (FWD), exempt from regulation.
More precisely, Pulver.com requested a ruling that FWD was neither a telecommunications nor a telecommunication service as those terms are defined in federal telecom law.
The FCC not only granted Pulver.com's request but went one better: It affirmatively ruled that FWD was an unregulated "information service" within the FCC's jurisdiction only.
The distinction between information service and telecommunications service is critical, because the FCC does not regulate the former and heavily regulates the latter.
The FCC's ruling did not mean that VoIP services provided by cable companies would automatically be accorded the same hands-off treatment.
In a separate ruling, the agency unanimously agreed to launch a rulemaking on regulations that would apply to VoIP providers like cable companies and Vonage Holdings Inc. that charge a fee to route calls over IP networks and exchange traffic with traditional phone carriers. Two weeks ago, the National Cable & Telecommunications Association issued a white paper in which the industry volunteered to comply with certain traditional phone regulations in exchange for certain benefits not normally granted information service providers, such as compulsory access to telephone poles and utility conduits.
The FCC is under pressure to adopt rules that ensure VoIP providers can't use their deregulated status to disrupt programs designed to protect public safety and guarantee affordable nationwide phone service. Sen. Ted Stevens (R-Alaska) is planning to push legislation that would require cable companies to contribute broadband revenue — and, presumably, VoIP revenues — to the telephone-subsidy program called universal service.
As a computer-to-computer service, Pulver.com's FWD is free to consumers, who must become FWD members and obtain FWD-issued five- or six-digit ID numbers, instead of a normal seven-digit phone number. A FWD user may call only other FWD users, meaning a FWD-initiated phone call is unable reach a cell phone, a pay phone or a traditional landline phone.
FCC chairman Michael Powell, who wants VoIP services to incubate without regulation, called FWD an information application, just like e-mail or instant messaging.
"Such services have never been held to be telecom services," Powell said. "I think this is the correct answer four square on existing law."
COPPS URGES CAUTION
FCC Commissioner Michael Copps, who issued a dissent, complained that the agency deregulated FWD before deciding critical matters related to law enforcement, universal service, federal-state relations, and emergency 911 service.
"I'm afraid we are leaping before we're looking," Copps said.
The Justice Department and the FBI have argued that they don't have authority under the Communications Assistance and Law Enforcement Act (CALEA) to monitor Internet phone calls that have been classified as information services, hampering their ability to track scheming criminals and terrorists.
Powell said the FCC and the Justice Department reached an agreement that the FCC would launch a rulemaking soon regarding VoIP providers obligations under CALEA.