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October 21, 2003

More on the Minnesota Vonage ruling

My law-school classmate Andrew McLaughlin writes that:

"The forces set in motion by Judge Davis's ruling will, I predict, impel Congress and/or the FCC to (attempt to) craft a rational nationwide regulatory regime that fits the all-IP future."

Welcome to the blogosphere, Andrew! To your point, we can only hope. I actually think the Minnesota decision could lessen the immediate pressure to adopt a rational framework at the federal level. Judge Davis effectively preserved the status quo, in which VOIP services are de facto unregulated. The ones upset about that situation are the square-state Senators worried about universal service funds, but they haven't made much noise since the FCC turned back their challenge in 1998. What's much more likely to provoke FCC action is a patchwork of states attempting to regulate VOIP. Partly because it puts in place an outcome contrary to the one the FCC generally supports, and partly because it's state regulators stepping into what the FCC feels is its turf. Don't underestimate the power of that second factor.

Meanwhile, my friend and sometime business partner Jeff Pulver is advocating a
five-year moratorium on VOIP regulation, analogous to the moratorium on
Internet-specific taxes. Sorry Jeff. The FCC gave you your
moratorium when it released the "Stevens Report" in 1998. There
are plenty of good reasons not to require VOIP providers to contribute
to universal service subsidies, or to keep them out of the ball of
twine that is traditional telecom regulation. None of them are
reasons to put off the question for half a decade.

I fear that if a moratorium such as Jeff proposes were adopted, we'd
have much more regulation of VOIP at the end of the five years.
At that point, incumbent telcos are likely to be on or over the verge
of bankruptcy, blaming VOIP all the way down. They would have
five years to get those square-state Senators and their constituents
chomping at the bit to end the evil VOIP "subsidy." And I have to
tell you -- whomever is running the FCC in five years won't be more
favorable to VOIP than Michael Powell.

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Posted by Kevin Werbach at October 21, 2003 11:28 AM

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