FAST TRACK SEEN FOR PARTS OF FCC VOIP RULEMAKING

An omnibus order may not get out within 2 years, he replied to a question, but meanwhile the Commission will likely pick off key issues to address. The FCC is mindful of how widespread state activity on reciprocal compensation narrowed the Commission’s scope of action after it had “waited and dithered… We're very aware of that precedent and are trying to avoid it.”

The rulemaking text (CD March 11 p1), released Wed., has the FCC posing the question: “Are we still relevant in this environment?” Carlisle said: “This entire regulatory structure we've built up over time to protect the consumer against a monopoly provider comes into question… Your entire concept of regulation has to change.” Most questionable are regulations covering tariffs, market entry, accounting and such, he said.

It’s not clear exactly how regulation will shake out, but it’s beyond question “the provision of voice telephony has become internationalized,” Carlisle said. When a provider can move to Scandinavia and serve customers around the globe, “it kind of throws that [conventional regulatory] model out the window,” he said. It’s fruitless to “try to cram technology into an environment [meant] for a totally different environment,” he said: “The internationalization of this service makes it virtually impossible to be an enforceable regime if you try to throw the whole kitchen sink at it.”

Regulation probably isn’t dead altogether, Carlisle said, but the technology dictates an evolution toward something “much more like a standardization process… to enforce social obligations.” Any more-extensive regime would be worse than no regulation at all, he said. What’s appropriate is “minimal regulation,” in specific areas like law enforcement and affordability, that makes good citizens of VoIP providers without totally changing their business models. “We're thinking of it much more along those lines,” Carlisle said. It would be “just crazy” for Silicon Valley entrepreneurs to have to send lawyers to every state just because their business, unlike eBay’s or Amazon’s, happened to involve voice, he said.

The rulemaking approaches VoIP with “a broad scope,” Carlisle said. The concern was that if the FCC looked at it narrowly, it could create policy that wouldn’t be helpful in addressing follow-on issues such as video over the Internet, and then “we're not setting up something that will last over time, or at least as long as the [1998] Stevens Report” on VoIP, he said. Contrary to any spin, the rulemaking only poses questions about the extent of FCC authority and doesn’t imply answers, Carlisle said: “I think it is a remarkable document for the FCC to release. It sets up a constructive approach for addressing the problems.”

With the NPRM out, Chmn. Powell’s marching orders are to make intercarrier compensation a top priority, Carlisle said. The FCC has held off pending interindustry negotiations, from which he expects a report out the next few weeks, he said. Commission action should be forthcoming this spring, Carlisle said, followed by activity on USF reform later spring or summer. “We're moving forward on all these parallel tracks,” he said.

On CALEA’s application to VoIP, Carlisle said the “issue gets demagogued” by those who contend the FCC isn’t concerned enough about national security. The question will be approached like any other, with the Commission determining whether the statute intended to cover the communications and if not whether the law needs amending, he said. It’s not clear VoIP providers need to be subject to local number portability, since they're permitting it through CLEC partners already, he said.

“We probably are living through developments in communications technology that really only come around once in a generation,” Carlisle said. He said VoIP wasn’t definitely an innovation on the order of traditional telephony, undersea cable, electromagnetic switches and fiber-optic communications, but “the evidence is pointing in that direction.”

Adding a customer typically costs a conventional carrier $600-$1,200 in capital spending; Vonage’s CFO recently told an analyst conference his company had invested $12 million for 100,000 customers -- $120 each -- and the system is scalable, Carlisle said. He said the expenses of a pure Internet provider like Skype or Free World Dialup were “essentially negligible,” mainly the costs of a server, coding and an Internet connection. Businesses are buying gear and doing their own internal communications, Carlisle said. Voice is becoming “essentially an add-on to data services that people are already buying.”