Lawmaker Sees VoIP Classified as Telecom Carrier

WASHINGTON — U.S. Rep. John Dingell (D-MI) said Wednesday the Federal
Communications Commission (FCC) should “step back from its apparent rush” to
classify the Voice over Internet Protocol (VoIP) telephone business as an information service.

In a process that is expected to take at least a year, the FCC began
proceedings in December to determine what, if any, telecom taxes and rules
should apply to VoIP. If the FCC determines Internet-based
telephony is an information service, as opposed to a telecommunications
carrier, the emerging technology would be free of many of the myriad rules and
regulations governing traditional telephone companies.

“As the FCC moves forward in this proceeding, there are several economic and
social implications that must be considered. Among the most important are
universal service, law enforcement and 911 services,” Dingell said at a House
Subcommittee on Telecommunications and the Internet. “Based on recent news
reports, I am concerned that the FCC chairman is not sufficiently aware of
these issues.”

Dingell, the ranking member of the Energy and Commerce Committee that oversees
the telecommunications and entertainment industries, said it may be “far
wiser” for the FCC to regulate VoIP as a telecom carrier and then “forbear
where appropriate.”

While VoIP technology clearly provides telephone service, it does it by
turning voice packets into data packets and does so over the virtually
unregulated Internet, both public and private, instead of the heavily taxed
and regulated public switched voice telephone networks (PSTN). The VoIP
industry claims it is not a telecom since it does not deal in voice traffic
and should not be subject to the usual taxes and regulations.

While the FCC has signaled it thinks VoIP should be as regulation-free as
possible, the Department of Justice has already urged the agency to require
VoIP providers to comply with the Communications Assistance for Law
Enforcement Act (CALEA), which mandates telephone companies, at their own
expense, make their systems wiretap friendly.

There are also concerns about the location accuracy of 911 calls and whether
VoIP telephone companies should pay fees into the Universal Service Fund,
which subsidizes telephone service for low income individuals and schools and

Telecom analysts at the hearing, however, said requiring the VoIP telephony
industry to meet the same wiretap availability and 911 mandates of traditional
telephone companies will have little effect on the expected growth
of VoIP.

Even if VoIP providers are required to comply with CALEA and 911 rules, Adam
Quinton, a telecom analyst for Merrill Lynch, told the lawmakers that “VoIP
will still offer cheaper service than traditional telephone companies.”

In fact, Quinton predicted, requiring CALEA and 911 compliance “could actually
accelerate the growth of VoIP, making the service comparable to traditional
telephone services.”

Frank Louthan, an analyst with Raymond James, said “technology will solve
the law enforcement and 911 issues, but the other issue to consider is access
fees. That will be the more difficult issue to get around.”

In addition to issuing its first proposed VoIP regulations next week, the FCC
is expected to rule in March on several claims already on file that VoIP
services should be exempt from federal, state and local fees normally charged
on telephone calls.

Long distance carrier AT&T is challenging the fees it must pay for delivering
calls traveling mostly over the Internet to traditional local carriers. Free
World Dialup, whose calls are routed entirely over the Internet, is seeking a
total exemption from FCC imposed fees since its traffic never touches the
legacy Bell infrastructure system.