VOIP providers: Regulation hampers growth

WASHINGTON - U.S. regulators can play an important role in the spread of voice over Internet Protocol (VOIP) services by showing the rest of the world that the best way to encourage growth is by limiting regulation, said vendors of VOIP service and equipment Friday.

A consistent "light touch" approach on regulation throughout the U.S., European Union (EU) and other countries will also help VOIP grow, said vendors of VOIP-related products, speaking at a U.S. Federal Communications Commission (FCC) forum on global IP regulation in Washington, D.C.

Regulators in many nations still question how to regulate VOIP services, said Jonathan Draluck, vice president of business affairs and general counsel for iBasis Inc., a VOIP service provider. "Nothing has been a clearer beacon and signal for these countries and these regulators than to hold up the United States as an example," Draluck said. "The United States has had a light regulatory touch, and this has fueled, more than anything, the innovation and the growth of this industry."

The six vendors represented at Friday's forum seemed united in their call for a largely hands-off approach to regulating VOIP, as opposed to the heavy regulations that traditional telephone carriers still face from the FCC. But asked if regulation might be needed if competitors such as cable companies give priority to their own VOIP products, at least one panelist advocated that kind of regulation.

If cable companies gave priority to their own VOIP packets over competitors' products, VOIP providers may petition the FCC to step in, said Jeff Pulver, president and chief executive officer of Pulver.com, provider of the Free World Dialup VOIP service. "If cable operators or other operators are discriminating against traffic, such that not every packet is the same type of packet ... if that could be proven, that's a problem," Pulver said. "I do think commercially around the world, we need to have equal and fair access. Right now it's not regulated, it's just assumed that everybody plays fair."

But Pulver also criticized amendments to a U.S. Senate bill intended to keep VOIP free of most regulation. In July, the Senate Commerce, Science and Transportation Committee approved the VOIP Regulatory Freedom Act, but amended it to allow states to require VOIP applications to provide 911 services and to require VOIP providers to contribute to state universal service programs and to pay intrastate access charges to other telecom providers.

The amendment allowing states to collect universal service fees and access charges on voice services over IP networks could allow states to collect fees on online chat features in console-based gaming systems, such as Microsoft Corp.'s Xbox Live. Pulver said he's worried that the committee's action, along with debates in the EU and elsewhere, may open VOIP up to "arcane telecom regulations."

In February, Pulver won an FCC order that designated his computer-to-computer Free World Dialup service as an unregulated information service. But Pulver said he'd oppose the VOIP Regulatory Freedom Act because the added amendments run counter to the FCC's Pulver order. He predicted the next two years would be a "pivotal" time for the future of VOIP as U.S. regulators decide what rules apply to the service.