VoIP SHOULDN'T BE REGULATED, INDUSTRY EXECS SAY

Whitt said the solutions included: (1) Revamping the intercarrier compensation regime. (2) Regulating first-mile bottleneck facilities, rather than individual services. (3) Reforming the universal service fund (USF) contribution methods. “Meanwhile, allow VoIP and other innovative technologies to be born, develop and grow outside the constraints of unnecessary and counterproductive regulation,” he said.

While disparate intercarrier rates differ significantly, “most of the charges have no basis in actual economic cost,” Whitt said. For example, he said, MCI estimated that the intrastate access charges assessed by larger ILECs exceeded actual costs by at least $4 billion: “This perverse situation is greatly exacerbated by the fact that the BOCs now are in the interLATA market and are able to levy above- cost intercarrier compensation charges on their competitors while enjoying cost-based access themselves.” “Bypass” and “arbitrage” should be seen as useful tools to identify and root out irrational pricing anomalies, especially where they serve only to perpetuate unearned and inequitable cost advantages for incumbents, he said: “The arbitrage ultimately is a good thing.”

The best solution is to “discard this system in favor of a simple, rational, cost-causative, technologically neutral and jurisdictionally agnostic approach,” Whitt said. He said there no longer existed any rational, economic justification for different carrier rates based merely on the jurisdiction, market sector or underlying technology of the traffic. More important, he said, with the bundling of different types of “all-distance” services and the increasing use of jurisdictionally challenged information services, disparate rates based on outmoded definitions would become impossible to maintain.

Whitt said a unified compensation regime that would encapsulate the central concept that “a bit is a bit” and wouldn’t attempt to distinguish between audio, video and data bits, could be a solution. He said creation of a uniform intercarrier compensation regime could take one of 3 approaches: (1) Single cost-based charge per min. (2) Single cost-based flat-rated charge. (3) Bill and keep, which he said was “the best solution.”

Dorothy Attwood, SBC senior vp-federal regulatory strategy & integration, said SBC wanted “to see IP services unregulated. The legal framework that the Commission had in place has been extremely helpful, but it needs a little bit of” adjustment. She said the FCC should “take a leadership role here. We need to see some clarifications of the law. In particular, the FCC [needs to] step in and exert its interstate federal jurisdiction.” Attwood urged the industry to start an “open dialog” to assist the FCC in addressing some public policy concerns such as public safety issues, E911 and universal service.

Marilyn Cade, AT&T dir.-Internet & e-commerce, said the U.S. was “behind” in growth of VoIP internationally “because we haven’t yet made some critical decisions.” For example, she said, while Japan has 5.2 million users, primarily driven by Yahoo broadband business strategy, the U.S. has fewer than 200,000 subscribers to VoIP. She estimated VoIP would be “fully developed” in the 2020s: “It could develop much more rapidly, but it depends on regulatory environment.” Cade said in 2000, voice telecom services revenue was $856 billion and it was expected to reach $1.4 trillion by 2005, compared with less than $7 billion for VoIP. She said contributions to the U.S. economic growth would be driven by business users of VoIP, “even though consumer minutes lead today.”