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Vonage In The News
Vonage Holdings Corp. Reports Fourth Quarter and Full Year 2013 Results

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FCC Vote Is Good News For VOIP


Vonage In Print News

FCC Vote Is Good News For Voip

November 10, 2004

By Ellen Muraskin

Tuesday's FCC vote exempting Vonage Holding Corp. from "traditional state public utility regulation" comes as no surprise and gives the Voip (voice over IP) industry cause for celebration. In the decision, the commission stated that it—and not individual states—would decide which regulations apply to VOIP. The official order will be handed down in two weeks.

The FCC's five commissioners voted unanimously in favor of Vonage, with the two Democratic members, Michael Copps and Jonathan Adelstein, "concurring" but expressing some reservations about the regulatory decisions left unmade. These issues, including intercarrier compensation (fees paid between carriers for completing a subscriber's call); universal service fees to subsidize rural carriers, and emergency 911 services, are to be ironed out in the ongoing "IP-Enabled Services Proceeding." No deadline was given.

Even at this point, however, the ruling clears the way for existing Voip service providers to continue their rollout into new markets. It encourages the PSTN (Public Switched Telephone Network) incumbents who've launched Voip services of their own. For business and residential customers, it portends a wide choice of providers and hot competition to differentiate based on customized services.

"If you don't like provider A, it will be very easy to switch," said Robert Jackson, a telecommunications attorney affiliated with the firm of Reed Smith, in Washington. "That's the result of divorcing the service from the facilities." In other words, divorcing the voice service from the broadband service, typically provided by cable companies or telcos, or perhaps, in rural areas down the road, through WiMax wireless broadband access.

"The trick for service providers will be adding value to keep their customers," Jackson said. "I think we'll see an awful lot of new features that will be customized in ways we can't see now. It's got a lot of potential to let customers customize their service to meet their own needs."

And certainly don't count out competition based on price. Zultys Technologies, which is expected to announce next week that it will co-market its IP PBX with interoperability-tested Voip trunking services, predicts a scenario in which enterprise customers can pick and choose multiple Voip providers for outbound calling or inbound 800-number service, based on their best long-distance rates to specific destinations.

While there's relatively recent precedent for choosing providers in the PSTN world, there's nothing close to Voip for ease of setup, said Patrick Ferriter, vice president of product marketing at Zultys. An enterprise plan with a carrier to Brazil, for example, might require that carrier's delivery, installation and configuration of a new T-1 circuit, which could take three to five weeks and incur an $800 setup charge. It would also require an $1800 piece of network interface hardware on the PBX end for 24 ports of calling.

In contrast, a connection from Zultys' SIP PBX out to an SIP-based carrier requires a $30-per-port license fee, said Ferriter. And it can be accomplished—assuming your data pipe is wide enough—just as soon as the provider sets up your account and you configure your PBX and point it at the provider's IP address.

Just because the states' rights to regulate access fees and universal service charges will not apply to Voip doesn't mean these fees can disappear altogether, however. Someone has to pay to keep rural residents and businesses reachable, and their carriers solvent.

"People can forget that universal service has a market value," Jackson said. "I may not want to call rural Nebraska, but I'm not sure I want to buy my service from someone who excludes them. From that standpoint, rural operators should get something."

The FCC will have to tackle a whole host of issues to get this money—or some of it—out of callers, and the cost of Voip service may not be able to stay as low as it is now when they're done. But the amounts required may dwindle as more economic ways are found to tie in rural areas.

"It doesn't follow that we have the same cost structure we have today, especially if you look at things like broadband over power. Maybe some of these rural areas won't have the same costs," Jackson said.

Intercarrier compensation will have to be rethought as well. Now based on paying local carriers per minute for completed or originated calls, it will have to move towards capacity-based compensation, Jackson said, "based on the size of the pipe they provide to other carriers."

And Jackson noted that the Feds will take over for the states in regulating certain basic public interest requirements, which have costs. But the states may be left in the picture in part. "I think they'll work with the states, too, on things like disabled access, law enforcement, Universal Service fees, intercarrier compensation, and emergency wiretap," he said. "I think the FCC will set the broad parameters, and the day-to-day.



 
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†AK and HI residents pay $29.95 shipping. ††Limited time offer. Valid for residents of the United States (&DC), 18 years or older, who open new accounts. Offer good while supplies last and only on new account activations. One kit per account/household. Offer cannot be combined with any other discounts, promotions or plans and is not applicable to past purchases. Good while supplies last. Allow up to 2 weeks for shipping. Other restrictions may apply.

1Unlimited calling and other services for all residential plans are based on normal residential, personal, non-commercial use. A combination of factors is used to determine abnormal use, including but not limited to: the number of unique numbers called, calls forwarded, minutes used and other factors. Subject to our Reasonable Use Policy and Terms of Service.

2Shipping and activation fees waived with 1-year agreement. An Early Termination Fee (with periodic pro-rated reductions) applies if service is terminated before the end of the first 12 months. Additional restrictions may apply. See Terms of Service for details.

HIGH SPEED INTERNET REQUIRED. †VALID FOR NEW LINES ONLY. RATES EXCLUDE INTERNET SERVICE, SURCHARGES, FEES AND TAXES. DEVICE MAY BE REFURBISHED. If you subscribe to plans with monthly minutes allotments, all call minutes placed from both from your home and registered ExtensionsTM phones will count toward your monthly minutes allotment. ExtensionsTM calls made from mobiles use airtime and may incur surcharges, depending on your mobile plan. Alarms, TTY and other systems may not be compatible. Vonage 911 service operates differently than traditional 911. See www.vonage.com/911 for details.

** Certain call types excluded.

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