Internet Phone Cos Argue Against Regulation At FCC Forum
By ELLEN SHENG
Of DOW JONES NEWSWIRES
(This article was originally published Monday)
NEW YORK -- The Internet telephony industry argued against regulation of their nascent industry as regulators convened Monday at a Federal Communications Commission forum in Washington.
Though Internet telephony is still emerging - the industry has only 100,000 customers - its growing popularity has drawn the attention of lawmakers worried about losing billions in tax revenue. Internet telephony bypasses traditional phone networks and taxes by converting voice signals into digital packets which are carried through the Internet. In addition to lost tax revenue, there is also concern that widespread use of Internet telephony could someday undermine social services such as emergency 911 calling, universal service subsidies which help subsidize rural phone service, and access for the disabled. To figure out how to deal with the emerging technology, the FCC held a forum Monday to discuss the issues.
Edison, N.J.-based Vonage Holdings Corp., which has been vocal in its opposition to regulation, was among the companies represented at the FCC forum Monday. The company's chief executive, Jeffrey Citron, argued that any regulation would be "problematic." Speaking in a teleconference with journalists and Wall Street analysts earlier Monday, Citron said regulation should have a purpose to accomplish a specific goal, he said. Citron said he urged regulators to consider the goals for regulation rather than the regulations themselves.
Many regulations that apply to traditional phone companies, for example, cannot be applied to Internet phone companies because the technology and business models are so different, he argued. Internet phone companies don't have the same kind of physical presence, he noted, making access fees - which apply fees based on where a call originates and terminates - irrelevant and nearly impossible to apply to an Internet-based model. Citron noted that Vonage pays universal service charges and does not receive any subsidies.
Regulations should come in response to the market, said Citron, arguing for a "hands-off" approach until the market is established.
Similarly, Jeff Pulver, founder of Free World Dialup who also testified at the forum, said regulators should not "just dump legacy regulation on what is a fundamentally different technology."
He added that continued popularity of voice over IP depends on broadband adoption and consumers' comfort level, and should be given room to "innovate and experiment."
During the day's proceedings, many seemed to agree that regulation to preserve emergency services and other social services should be preserved through regulations.
But Internet phone companies argued that they are already offering forms of emergency service. Regulators would do better by allowing Internet phone companies to develop new emergency services, said Vonage's Citron. Internet calling uses broadband networks, which can allow for many new services, such as activating emergency services by PDAs, or allowing the deaf to communicate using sign language over video, he said.
Also present at the forum Monday was Time Warner Cable, which offers VOIP in the Portland, Maine area at present. John Billock, Time Warner Cable's chief operating officer, discussed the company's phone service, but stayed mum on the topic of regulation during his presentation. Time Warner Cable is a unit of Time Warner Inc. (TWX).
Vonage and other Internet phone companies 8x8 Inc. (EGHT ), Net2Phone Inc. (NTOP) and others recently made their case in San Francisco, Calif., before the state's public utilities commission. The Golden State was among several states that have tried to regulate Internet phone companies as traditional phone companies.
Despite efforts by Vonage and others to stave off regulation, industry insiders believe some form of regulation is probably coming soon.
-By Ellen Sheng, Dow Jones Newswires; 201-938-5863; ellen.sheng@dowjones.com
Updated December 2, 2003 7:32 a.m |
