FCC takes first step toward VOIP policy

WASHINGTON - The U.S. Federal Communications Commission (FCC) took the first step Thursday toward laying down rules governing voice over Internet Protocol (VOIP) service by approving a proceeding that will solicit comments on how the emerging competitor to traditional voice services should be regulated.

In its notice of proposed rulemaking, the FCC will ask for comments on whether VOIP should be regulated as a substitute for the highly regulated traditional telephone service and whether the VOIP service connects to the public switched telephone network (PSTN), among other issues. But the language in the notice, to be published within weeks, suggests most Internet services should continue to enjoy minimal regulation, according to the FCC.

The rulemaking proceeding was the "curtain going up on a really new era of communications," FCC Chairman Michael Powell said. "This is perhaps the most important item in communications history."

VOIP providers cheered the FCC action, saying the proceeding will provide regulatory certainty to providers and customers. Even though the FCC made no immediate regulatory decisions on most forms of VOIP, VOIP service provider Vonage Holdings Corp. greeted the FCC rulemaking as a step toward creating a national policy on VOIP regulation, as opposed to 50 individual policies from state public utility commissions.

"The FCC is taking a definite step, one way or another," said Brooke Schulz, Vonage's vice president for communications. "It's the first step toward making real decisions."

The rulemaking proceeding is expected to take several months, but commissioners carved out one VOIP offering, the Free World Dialup service offered by Pulver.com Inc., as exempt from most telecommunications regulations. Free World Dialup, a free service, allows members to talk to each other through software installed on their computers. The service does not allow members to place voice calls to nonmembers.

Other forms of VOIP will be addressed in the rulemaking proceeding. Other forms of VOIP include voice calls that start as VOIP but end up on the PSTN -- such as when a Vonage customer dials a customer of a traditional phone service. Some major telephone carriers are also offering a third type of VOIP -- using an IP network to handle traditional phone traffic, with customers never knowing that their phone call was routed to the Internet.

Commissioner Michael Copps questioned the Pulver.com decision, saying the commission was ruling before it worked out many of the regulatory questions on VOIP that will be addressed in the rulemaking proceeding. The U.S. Federal Bureau of Investigation and Department of Justice have raised concerns about their ability to wiretap some VOIP calls without a wiretapping policy in place before the FCC ruled on Pulver.com's petition, he noted.

"This item troubles me, and it troubles me a lot," Copps said. "I think we're looking before we're leaping."

But Pulver's service is obviously an Internet-based service, like e-mail, and not a for-profit telecommunications service, Powell said. The FCC will address concerns with law enforcement agencies to listen to VOIP calls, Powell added.

"I think this is the correct answer, four-square in existing law," he said.