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VoiP lobby wins first US legal victory

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As wireless and wired voice over IP become increasingly important in corporate communications strategies, the issue of whether IP telephony operators should be regulated in the same way as conventional carries becomes more critical.

There is also an urgent need for a regulatory framework that will be appropriate to a fourth generation world where all communications are IP-based – whether voice, data, cellular, WiMAX or other broadband wireless. However, the cellular operators are among those most opposed to an unregulated IP market, since they still pay for their licenses and spectrum.

The US Federal Communications Commission has put voice over IP at the top of its agenda for the coming year, but the IP lobby has won a more local, but still significant, legal victory in Minnesota this week.

Federal judge Michael Davis has permanently barred the state from applying traditional telephone regulations to Vonage, a provider of IP telephone services, which can therefore operate without a license and without paying fees to support 911 services. This decision will have broad implications for all operators seeking to offer IP-based voice services – not just the current wired companies, but VoWLan providers and those developing telephony services for 802.16, 802.20 and proprietary IP-based technologies.

The order is the first to address the authority of a state to oversee VoIP providers and is likely to influence similar battles elsewhere. Traditional operators argue that, as VoIP becomes directly competitive to their wired and cellular services, it should be subject to the same rules.

Vonage filed suit against Minnesota’s Public Utilities Commission in August when it claimed authority over VoIP, a claim that Wisconsin and California have since also asserted. State and national regulators need to be cautious in their decisions as rulings over local IP suppliers could, in theory, affect anybody offering communication services over the internet, including Microsoft or Yahoo with their instant messaging offerings.

Last week, US FCC chairman Michael Powell put wireless and mobile firmly at the top of his telecoms regulatory agenda for the coming year (see Wireless Watch issue 31). The biggest issue that needs to be addressed concerns voice over IP, he said, altering how every service is delivered. "It will be 'everything over IP,'" he said, making separate regulations for wireless, wireline, cable and television obsolete.

Powell said the FCC needs to get in front of the technology to help provide a clear vision to regulators, lawmakers and the public and that it will probably initiate a study this autumn into what form of regulation, if any, should apply to VoIP carriers.

"The advanced platforms permit divorcing services and applications from the infrastructure. That's very different from the ancient telephone models, when the application was the same as the distribution," he said in an interview.

"The real question for the country, the market, the innovators, the regulators, the policymakers and the politicians to figure out is: What are we going to do to reach the world we want to see - one in which applications are very separate and can be run over IP?" He added: "Voice communications in the US use the old infrastructure and architecture, which is heavily regulated. If it's a data application over IP, and we let it pass into the deregulated space of the Internet, it basically crumbles the entire regime from the Communications Act of 1934. That may be OK."

An estimated 1m people use VoIP in the United States, employing paid services such as Vonage, Net2Phone and Packet8. Others use free services such as Skype or those from major instant message makers.

© Copyright Rethink Research Associates 2003.

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