April 09, 2004

How much to regulate?

I have written earlier on what aspects of VoIP must be, needs to be and could be regulated. Recently this topic is again in the news. CRTC has issued their preliminary ruling; there are stories about FCC may be getting ready to announce their decision on AT&T petition; bills have been introduced both in the Senate and the Congress regarding VoIP. This entry is an analysis of these developments.

It is interesting to compare and contrast the “preliminary view” from CRTC and the NPRM from FCC. Whereas the NPRM is lengthy and has posed many open questions explicitly soliciting opinions from the public, CRTC is very concise and states pointed conclusions. But there is a remarkable agreement (there are other opinions) in the philosophical thinking and the anticipated regulation. But in some places, I anticipate CRTC will reverse its position (at least they should do it) and FCC and CRTC will be in total agreement. Let me summarize CRTC ruling and indicate where they should reconsider.

  1. In as far as a VoIP provider uses NANP and/or interwork with PSTN, these service providers will come under voice provider regulations and forbearance. Only these service providers are considered further.
    Here they have to clarify the use of NANP. When my insurance company uses my telephone number as an identifier, are they using NANP? If so, do they need to be regulated as a telephone operator? No. They are using NANP only as an identifier. A VoIP service provider can do the same thing. It might be instructive to take a look at SIPPhone and also Pulver’s application for .tel TLD.
  2. PSTN regulations depend upon the classification of the service provider – ILEC, CLEC and resellers. The classification will be carried over. So an ILEC in PSTN will be an ILEC when they offer VoIP in their own territory.
    This is at odds with their stated goal. A proper analogy will be to decide the classification based on who owns the broadband access facility. So an ILEC for VoIP will be one who owns the access facility and offers the service. For example, Verizon will be an ILEC when they offer their service to their DSL customer; but will be a CLEC when they offer VoIP service to a Comcast customer, even though these two customers happen to be in the same geographical area where Verizon is an ILEC PSTN service provider. I firmly believe that facilities owner will have an advantage; hence the bias against them.
  3. VoIP service providers must support 911, E911, relay and privacy related regulations at their earliest. Till then they must make sure that the customers are fully aware of the deficiency.
  4. They should contribute to the national fund on the “PSTN interconnect portion” of their revenue. I guess Solomon will preside over the apportion meeting.

There are some regulatory requirements that are worth noting:

  1. Service providers must offer call blocking, call trace and other privacy features. Requirements on Call trace and Caller ID blocking will affect the architecture.
  2. It is interesting, at least for me, to note that even the PSTN service providers are not subject to any power requirements.

Now let me give the reasons why CRTC and FCC are closer than others seem to think. With the Pulver decision, FCC has indicated that end-to-end IP is an information service – no interworking with PSTN, no “voice” regulation. There are strong indications that FCC will reject AT&T petition, which suggested that if even one leg is VoIP, then there shouldn’t be access charges. So FCC probably will indicate regulation applicable at the point of interworking will be in effect. FCC also does not want to lose USF and the idea of contributions based on phone number is getting consideration. Of course Powell and others have openly indicated that 911, relay service and wiretapping must be made available in VoIP as well, though they have left the door open on the timeframe. I do not see how much closer two agencies can be on the first round.

On the other hand, I am not as comfortable with the Sununu bill (I have not located the House version). That bill is also very concise and to the point, except that I have a serious reservation.

  1. The bill proposes that VoIP application (will be defined later) will be regulated only by FCC on behalf of the Federal government. FCC can not delegate it to no one else.
  2. VoIP will not be subject to any access charges. Inter-carrier charges could be settled by mutual agreement.
    It is not clear whether one carrier can refuse to peer with another. If they can, then what is the recourse? How do we make sure that there is no balkanization?
  3. VoIP will contribute to USF on a flat rate. But FCC may exempt it.
  4. CALEA will apply at a level comparable to information services.
  5. VoIP shall support 911, E911, disability community. Till they can, VoIP providers should clearly advice the potential customers.
  6. Basic VoIP will be tax free.
  7. The basic transmission facility can be regulated; but the aim should not be to regulate VoIP.
  8. VoIP is meant to apply to an application that provides 2-way or multidirectional real-time voice communication using Internet protocols. It does not matter whether the packetization takes place at the customer premise or at the network; and it does not matter the specific transmission technology that is used. But the clincher is the exclusion that VoIP does not include an application that both originates and terminates on the PSTN.

On the surface it looks like this bill is along the same lines of CRTC and FCC. But items 2 and 8 when taken together essentially kill the whole voice regulatory regime. I do not think that was the intention of the Senator. Firstly, item 8 is inconsistent. If a service provider packetizes the traffic in Class 5 switch, does the call originate in PSTN? If it does, then are we not discriminating against a particular transmission technology? If on the other hand, we allow this, then all PSTN traffic can be artificially declared to be VoIP and use item 2 to undermine the settlement charge system that is in use. We might as well declare that this bill is applicable to all voice applications. So the glaring failure of this bill is to precisely define VoIP application.

Posted by aswath at April 9, 2004 08:29 PM
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