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Individual states don't have the power to regulate Voice over IP telephony, the US federal communications regulator decided today. Minnesota's public utilities commission had asked Vonage, a VoIP provider, to abide by the same requirements as a regular telephone company. But the FCC today decided state requirements were "inconsistent with the FCC's "deregulatory policies".

The FCC had to decide whether VoIP was a phone service, which states can regulate, or a computer service, which only it can regulate. It plumped for the latter in a unanimous decision. However, VoIP supporter Commissioner Copps, in a typically no-nonsense opinion, blasted his fellow commissioners for approaching VoIP regulation in a piecemeal fashion, and ducking the important questions of consumer protection and public safety. He also warned against reading too much into what he characterized as a "narrow jurisdictional finding." The hard work remains ahead, he warned.

The FCC said that states shouldn't use regulation to prevent new entrants entering the telephony market. VoIP providers, however, still need to meet the social obligations of a traditional phone provider: guaranteeing quick and reliable access to emergency services.

Vonage hailed the unanimous decision: three commissioners voting for the proposal and two concurring.

"Today’s decision finds that VoIP services like Vonage’s DigitalVoice have an undeniably interstate character," wrote Copps. "That’s fine as far as it goes—but it doesn’t go very far. Proclaiming the service 'interstate' does not mean that everything magically falls into place, the curtains are raised, the technology is liberated, and all questions are answered. There are, in fact, difficult and urgent questions flowing from our jurisdictional conclusion and they are no closer to an answer after we act today than they were before we walked in here.

"So rather than sailing boldly into a revolutionary new Voice Over communications era, we are, I think, still lying at anchor," he said. The FCC must develop coherent frameworks for public safety, protecting consumers from Savings and Loan-type scamsters, and working out fair compensation to the incumbents whose networks the VoIP providers access for free, rather than just bumbling along.

"The Commission moves bit-by-bit through individual company petitions, in effect checking off business plans as they walk through the door. This is not the way we should be proceeding," wrote Copps.

Copps raises important questions about what the role of a regulator should be, and admits that he's baffled about where the FCC is going with VoIP. He's clearly concerned that the nods and winks that FCC chief Michael Powell gives to the deregulation lobby don't add up to a coherent policy. And he's right. ®

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