The board of directors for the United States Telecom Association (USTA) in November unanimously endorsed guiding principles for U.S. lawmakers to consider when updating the country’s telecommunications laws. The market has changed dramatically since the passage of the Telecommunications Act in 1996, says Allison Remsen, director of media relations for the Washington, DC-based trade association. “This is an extremely competitive market today. We understand that the market has changed, and we believe the rules need to catch up with the marketplace.”
Emerging technologies like voice over Internet protocol (VoIP) are blurring the lines between traditional telecom services, which are regulated under the ’96 Act, and Internet access services, which are not. The Telecom Act was written expressly for the POTS era; in fact, it makes no mention of the Internet, much less the services that have developed around it. For now, VoIP is not subject to either federal or state taxes, enabling service providers to avoid paying the termination charges imposed on traditional POTS services.
At press time, legislative sessions had closed for 2004, and though no major telecom bills had passed, several important bills were introduced last year, paving the way for an active 2005. For example, U.S. Senator John Sununu (R-NH) introduced “The VoIP Regulatory Freedom Act,” which defined VoIP as an information service and therefore exempt from the regulations and taxes imposed on traditional voice services. House Commerce Committee vice chairman Charles Pickering (R-MS) introduced a similar bill in Congress: “The VoIP Regulatory Freedom Act of 2004.”
Representatives Cliff Stearns (R-FL) and Rick Boucher (D-VA), meanwhile, sponsored a wider-ranging bill, the “Advanced Internet Communications Services Act of 2004,” which advocated a comprehensive rewrite of the Telecom Act to include a new category for all IP services, including voice, video, and emerging services.
In his keynote address at October’s Fiber-to-the-Home Conference in Orlando, FL, Congressman Boucher addressed the need for a new Internet-specific telecom act. According to Boucher, such an act should achieve three goals.
First, because Internet applications are interstate in nature, their jurisdiction should fall to the federal government. “Local governments do not have the right to control VoIP services that are not geographically bound,” he said. “We need to free Internet applications from local regulatory treatment.”
Second, he believes that Internet applications are neither telecom services nor information services. We shouldn’t shoehorn emerging applications into preexisting categories, he said. The FCC should be prohibited from imposing legislation on VoIP, except in four key areas: To provision emergency services such as E-911, for universal service obligations and benefits, for compensation for use of the public switched telephone network (PSTN), and for access for persons with disabilities.
And finally, Boucher contends that all platforms that carry the Internet should receive the same regulatory treatment.
The USTA agrees. “The way it stands today, cable is regulated one way, your traditional telephone services are regulated another way, and wireless services are regulated-or deregulated-yet another way,” explains Remsen. “At this point, consumers see all of these services as interchangeable. For a truly competitive market that is driven by consumers, the rules need to treat all players evenly.”
Companies will not move forward with investments or innovation without a clear understanding of the rules, contends the USTA. “There needs to be rules in place and an environment that encourages companies to go out there and compete for consumers and to deploy new products like VoIP or IP video or whatever the next whiz-bang technology is going to be,” says Remsen.
The act itself is a huge document, so any attempt at a wholesale rewrite would be a daunting task. “If [legislators] take on the whole thing, it gets extremely complicated because you have issues like universal service and intercarrier compensation that would need to be worked out,” admits Derek Khlopin, director of law and public policy for the Telecommunications Industry Association (TIA-Arlington, VA). “You would open up a lot there.”
That said, Khlopin acknowledges that the Telecom Act eventually will need to be rewritten. “As every day passes, it doesn’t make as much sense as it used to,” he reports. “But it may be [revised] on a piecemeal by piecemeal basis rather than trying to create a new structure.”
A possible revision “could be as simple as something like, ‘Where there is contestabilities of markets, there should be no economic regulation,’ ” adds the USTA’s Remsen. “That’s as basic a law as we could ask for. All we’re really asking for is that where consumers have a choice of services, regulations get out of the way.”
Unlike the USTA, the TIA is not actively lobbying for an update of the Telecom Act. The TIA has been active in supporting unbundling relief to stimulate investment in broadband service deployment, and it has supported legislation to preempt states from regulating VoIP service. “These are pieces we would support,” says Khlopin, “but again, we’re not out there calling for a rewrite.”
Of course, if legislators begin to move in that direction, the TIA would have an opinion-“and some high-level concerns,” Khlopin notes. “The ’96 Act took years [to write]. That’s one concern we’d have; do we really need to go through that again, and what happens to the industry in the meantime? Will it create more uncertainty?”
The TIA would also be concerned about the future of the universal service fund. Established by the Telecom Act, the fund is used to deliver telecom services to rural areas, low-income consumers, and schools and libraries, and to improve the quality of health care in rural areas. “Universal service issues will have to be addressed,” says Khlopin. “There are issues-who has to contribute to the fund and how much and whether you change contribution methodologies. This is where a lot of hard work will have to be done for an act to really move,” he says. “You have a lot of rural senators in leadership positions.”
While the specifics of a revised or entirely rewritten Telecom Act remain uncertain at best, there is “broad recognition on Capitol Hill, at the FCC, [and] in the business community that the laws do need to catch up with our lives,” asserts Remsen. “Technology is moving ahead, and Congress really needs to step in here and make sure that our country stays at the forefront of communications policy and innovation.”