FCC Holds Hearing On Internet Telephony
By MARK WIGFIELD
DOW JONES NEWSWIRES
WASHINGTON -- Federal Communications Commissioner Michael Copps says his agency is getting a late start grappling with the latest innovation in delivering telephone service: the Internet.
"We don't come to this issue early and it is increasingly apparent that action is needed soon," said Mr. Copps, a Democrat, in remarks prefacing a four-hour hearing examining Internet telephony Monday.
Internet telephony sidesteps many elements of the traditional telephone network -- as well as its many expensive regulations. Using the same communications protocols that deliver e-mail and Web sites, the service is touted as a potent new source of competition to the bottleneck local networks controlled by the regional Bell companies and other dominant local phone companies.
But the service has serious implications for the regulatory structure that delivers rural phone subsidies, emergency 911 services, wiretaps by law enforcement, and mandates for phone service to the disabled. By avoiding many of the toll gates that support elements of the telephone network owned by traditional local and long-distance companies, so-called voice-over-internet-protocol, or VOIP, could also have financial implications for the very network it uses.
"This has significant implications for investment in the telecommunications network," said John Hodulik, managing director for the communications group of UBS, who was a witness during Monday's hearing.
Perhaps sparking Mr. Copps's concern was the May deployment of Internet telephony by Time Warner Cable in Portland, Maine. Time Warner, a unit of Time Warner Inc., hopes to offer the service over the company's entire footprint by the end of 2004, said the company's chief operating officer, John Billock.
Also testifying were VOIP upstarts like Vonage Holdings Corp. and Pulver.com. Pulver offers a telephone service between its subscribers for free.
Pulver's president, Jeff Pulver, said the VOIP industry could accommodate many of the public interest concerns through voluntary standards. But he urged the agency not to be swayed into regulation by "excessive hype" over a service that could take a decade to really catch on.
"It won't take over tomorrow," he said.
Indeed, FCC Chairman Michael Powell, along with his two fellow Republicans, said the agency should be cautious about extending traditional telephone regulations to Internet telephony entrepreneurs.
The burden for imposing rules on the nascent industry "should be on those who want regulations extended," Mr. Powell said. The FCC's policy should be "do no harm." Regulations "can be poison" to innovation, Mr. Powell added.
Mr. Copps said he was there to "listen and learn," adding that the FCC should not "shoehorn VOIP into ... regulatory pigeonholes without adequate justification. It's no slam-dunk that the old rules even apply."
But contending that the technology may have moved beyond the nascent phase, he said the FCC needs to ensure that VOIP succeeds on its merits, not just because it avoids expensive regulations.
Witnesses seemed to agree that the FCC should take action to ensure that key social concerns -- emergency 911 calls, universal service subsidies, national security and access for the disabled -- be preserved as Internet telephony becomes more popular. But while several industry witnesses said it's more important that the FCC act correctly rather than quickly, a state regulator said a transition to VOIP may happen sooner than expected.
That's because the incumbent Bell companies "are involved in this and will have perhaps a strong incentive to become more involved," said Carl Wood, commissioner with the California Public Utilities Commission. "I think they have the capacity to migrate the majority of their customers, maybe all of their customers, in a very short period of time, a year or two perhaps."
Such a migration could "mean a very sudden collapse of the systems we have to support universal service and various other social programs," Mr. Wood said.
Indeed, Michael Gallagher, the acting head of the Commerce Department's National Telecommunications and Information Administration, said the cable industry spent $65 billion to upgrade its networks for the digital age, and could quickly begin offering Internet telephony on a broad basis.
Mr. Powell said the industry and regulators "are well on our way in trying to develop a national consensus on the path we ought to be taking."
Later, responding to reporters' questions, he said that while Internet telephony is advancing quickly, "it is still quite nascent. At 100,000 customers out of 70 million access lines, it's not like it's tomorrow that people don't have [emergency 911 service]."
But the agency has stepped up its pace, he said, "so that we would be in a striking position" to act. |
