NCTA Weighs In on IP Telephony

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The cable industry has quietly started to stake out a regulatory position on Internet-protocol telephony. For now, it's urging federal regulators to refrain from classifying the service.

As far as the Federal Communications Commission is concerned, a service's classification within the meaning of telecommunications law can result in forced compliance with pages and pages of regulations, or with total deregulation.

In the case of IP telephony, the service could be called a telecommunications service that faces retail rate regulation, access charges and universal service payments — or called an information service, which would luxuriate in a regulatory state of nature.

In a recent filing, the National Cable & Telecommunications Association urged the FCC to postpone classifying IP telephony at its present stage, at which service providers are attempting to cement their place in the market.

"Given the nascency of the services at issue," it was "premature" to decide whether IP telephony is a telecommunications service or an information service, the NCTA told the FCC.

Comcast Corp. and Cox Communications Inc. provide local telephony as a circuit-switched telecommunications service, while Comcast, Time Warner Cable, and Charter Communications Inc. are experimenting with voice-over-IP in various market trials.

As of June 2002, cable companies had 2.6 million local phone customers, according to FCC data.

Debated by FCC

IP telephony — which sends voice communications around the globe in packets, just like electronic mail — could revolutionize the local and long-distance phone markets as a cost-efficient alternative to present technologies.

The extent to which IP telephony will enjoy regulatory freedom is an ongoing battle at the FCC. Last week, an agency spokesman said the commission planned to address the issue later in the year.

AT&T Corp., which offers IP telephony in a manner that critics claim is something less than pure VoIP, late last year asked the FCC to exempt IP-based calls from the access-charge regime.

Access charges are mandatory payments — billions of dollars on an annual basis — that long-distance carriers like AT&T and WorldCom Inc. pay to incumbent local-exchange carriers like Verizon Communications Inc. and BellSouth Corp. to originate and terminate calls on the ILEC networks.

With a source of revenue at risk, Verizon and BellSouth oppose AT&T's request. BellSouth, for example, accused AT&T of doing an "end run of access charges" by claiming it is providing pure IP telephony when only a portion of the call "may traverse the Internet."

In its comments, the NCTA did not take a position on AT&T's request.

Verizon also opposes AT&T's request. But last week, a company official opined that IP telephony — in the sense of phone-to-phone voice communication bundled with other broadband services — should not be regulated at all.

"In simple terms, our position is that if AT&T or Microsoft [Corp.] or EarthLink [Inc.] or anybody else is delivering IP telephony as part of their broadband package, we don't believe it should regulated as telephony," said Tom Tauke, Verizon's senior vice president for public policy and external affairs.

None of the traditional regulatory obligations should apply to the form of IP telephony he described, Tauke added, even if that means regulatory disparity between his company and the IP-telephony upstarts.

"We're maybe going to have to use IP telephony, too. I would expect that as we move to a broadband network, traditional telephony is going to gradually fade away," Tauke said. "This is down the road."

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