Subject: [NEXTEL-1] FCC PROPOSAL ON VoIP ISSUES COULD FACE HIGH TECH REVOLT

From: Marcelrf <[email-masked]>
Date: Thu, 11 Mar 2004 21:06:27 -0500

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TELECOM REGULATION
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3/11/04

FCC PROPOSAL ON VoIP ISSUES COULD FACE HIGH TECH REVOLT

Dana Frix, an attorney with Chadbourne & Parke LLP, predicted today that
Internet companies will be stunned by the sweep of the FCC's assertion
of jurisdiction over what it terms "Internet-protocol - enabled
applications" in its notice of proposed rulemaking on voice-over-
Internet protocol issues released late Wednesday. Mr. Frix referred
specifically to the first footnote of the NPRM in illustrating the scope
of the proceeding. "The FCC has in this and in the Free World Dial-Up
order [Pulver.com] very clearly asserted jurisdiction over Internet
applications," he said, "They are asserting they have unfettered
jurisdiction over Internet applications. It should make Silicon Valley
tremble." Mr. Frix expects much more reaction to the NPRM, especially as
lawyers for the high tech sector look at it more closely in coming days.
"I don't think it has dawned on people that the FCC has asserted
jurisdiction over Internet applications in this rulemaking," he said.
"It may regulate them hard or it may regulate them soft." "I think
people are still looking at this and don't know quite yet how to react,"
a second source said. "Some people are saying it's just a proposal. It's
hard to know how to read the NPRM." The NPRM poses a series of questions
on the topic that will give most industry segments plenty to digest and
discuss in the coming months.

So far, reaction has been muted, but sources said they were still
sorting through the language of the NPRM. The NPRM acknowledges that the
rise of VoIP promises to bring "revolutionary" changes. "These
developments are expected to reduce the cost of communication and to
spur innovation and individualization, giving rise to a communications
environment in which offerings are designed not to fit within the
limitations of a legacy network but rather to provide each end-user a
highly customized, low-cost suite of services delivered in the manner of
his or her choosing," the NPRM said. But at the same time, the NPRM says
such issues as how VoIP calls will pay into the Universal Service Fund
or how and whether access charges will apply are tricky issues that may
require a new approach from regulators. The FCC said it was seeking
"specific, pragmatic proposals that account for the technical, market,
or other features that characterize IP- enabled services and that
address the interrelationship between those features, the statutory
text, and our policy goals." Kathleen Grillo, vice president-federal
regulatory advocacy with Verizon Communications, Inc., said she was
still looking at the NPRM in more depth but her initial reaction was
positive. "We're encouraged the NPRM suggests that the Commission is
considering this light-handed approach to regulating VoIP," she said.
"We strongly support the view that VoIP should be free from rate
regulation . . . and other economic regulation."

Dorothy Atwood, senior vice president- federal regulatory strategy &
integration at SBC Communications, Inc., also approved of the FCC's
general direction on some critical questions. "SBC applauds the FCC for
recognizing that the Internet and IP- enabled services should be free
from unnecessary legacy regulations designed for the circuit-switched
world of the past," Ms. Atwood said. "We also wholeheartedly agree with
the FCC that all communications providers should be subject to similar
and equitable compensation obligations when they send traffic to local
telephone networks." On the issue of "911" and enhanced 911 (E911) in a
VoIP world, the NPRM picks up on a theme advanced by Chairman Michael K.
Powell - that technological enhancements could mean improvements in
emergency communications.

The FCC says it is still looking at what requirements it could impose
and on a possible timeframe. "How should we weigh the potential public
benefits of requiring emergency calling and other public safety
capabilities against the risk that regulation could slow technical and
market development?" the NPRM posits. "We seek comment on whether the
natural evolution of IP-enabled services over the course of the next few
years will lead to technological improvements and cost savings in the
transmittal of and response to emergency information, interoperability
among public safety entities, and other elements of critical
infrastructure needed to provide for public safety and homeland security
in accordance with the Commission's statutory obligations and regulatory
objectives." The FCC also sought comments on whether VoIP services "are
technically and operationally capable of complying with the Commission's
basic 911 service rules to ensure that calls are directed to the
appropriate" public safety answering point. The Commission asked
specifically about the "potential for IP-enabled services to provide a
viable and cost-effective alternative to the dedicated 911- trunking
facilities in use today." Public safety and other "social" issues got
some of the most attention when the Commission approved the NPRM last
month. Stephen Seitz, director-governmental affairs for the National
Emergency Number Association (NENA), said the NPRM contained few
surprises from his point of view. "They're asking the right questions,"
Mr. Seitz told TRDaily. "I really didn't expect much more. The issue is
what's possible and what set of principles and guidelines should we work
under." He added, "What's important to keep on the ball is 911 should be
a priority in any item moving forward. . . . It seems pretty clear if
you're going to do VoIP you have to be working on 911. I'm not saying
there's not a need for regulation, but let's ask the right questions" On
USF, the FCC said it was seeking broad comment on "how the regulatory
classification of IP-enabled services, including VoIP, would affect the
Commission's ability to fund universal service."

The FCC noted that it may require payment into the USF even if a type of
VoIP call is classified as an "information" service not subject to
telecommunications regulation. "If certain classes of IP-enabled
services are determined to be information services, could or should the
Commission require non- facilities-based providers of such services to
contribute to universal service pursuant to its permissive authority,"
FCC asks in the NPRM. "Would such providers `provide'
telecommunications? If the Commission were to exercise its permissive
authority over facilities- based and non-facilities-based providers of
IP-enabled services, how could it do so in an equitable and
nondiscriminatory fashion?" The FCC is probing a number of other issues
as well. For example, should VoIP be subject to such consumer
protections as customer proprietary network information requirements?
Should VoIP services found to fall under Title II be subject to
"economic" regulation, such as a requirement to offer "just and
reasonable" rates? "Are there special rural considerations that need to
be taken into account," the agency asked.

- Howard Buskirk, [email-masked]

http://www.tr.com/online/trd/2004/td031104/index.htm

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