August 23, 2004 3:03 PM PDT

FCC chairman calls for new telecom laws

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Parsing with Powell

October 1, 2003
ASPEN, Colo.--The head of the Federal Communications Commission said on Monday that the nation's telecommunications laws, written before the rise of the Internet, are "broken" and need to be fixed by Congress.

"Is the current law broken and we need a new one? Of course," said FCC Chairman Michael Powell. The law is "dated--it does not match reality anymore."

Powell's comments at a Progress and Freedom Foundation conference here mark his strongest criticism yet of the 1934 and 1996 telecommunications acts, which created arcane regulatory categories that do not clearly include the Internet. That lack of clarity has bedeviled regulators and left entrepreneurs puzzled about what laws might eventually apply to their businesses.

Powell singled out voice over Internet Protocol (VoIP) as a "killer app for legal policy change" because it pits two different regulatory models against each other and forces governments to choose which will prevail. The two models: a highly-regulated "common carrier" environment of cable TV and telephone service, and the lightly-regulated world of the Internet.

Key politicians already have said they intend to revisit the 1996 Telecommunications Act starting next year. Powell's criticisms seem designed to influence the direction of the debate: "Just giving (Internet Protocol) and Internet communications a category of its own would be a good start."

"VoIP is a great thing to be forcing the conversations," Powell said. "I'd like to see (the law) modified, rewritten, scrapped or something... I think the statute is written (with categories) that don't make sense" in today's world of VoIP, broadband and wireless technologies.

Complaints about the 1996 law have existed for years, of course, but it has remained intact so far. But VoIP is catalyzing a legislative response: at a hearing on the topic early this year, for instance, Sen. John McCain, R-Ariz., said "the 1996 Act is a fundamentally flawed piece of legislation. (Now) some of my colleagues have joined me in expressing the need for Congress to take a serious look at reforming the act."

Powell also discussed his Web log, which he launched in July. "It's a refreshing place to talk about difficult topics in a nontraditional way," Powell said. "Nobody ever explains where the indecency laws come from, just that you're enforcing them."

6 comments

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The solution is simple.
The FCC should simply get the h* out of regulating things it has no right to.

With the airwaves, regulation is a necessity due to the naturally shared nature of the media - regulating transmission is necessary for efficiency.

With traditional telephony, there was historically a case that a natural monopoly was formed by the cost of wiring a nation. That monopoly no longer exists, so there's a good argument that regulation other than that dealing with cost sharing of the infrastructure isn't legitimate.

The FCC has no business regulating the Internet. First, the Internet isn't a "thing," like the telephone system. It's a concept - just a bunch of private networks which have agreed to interconnect using a commonly accepted set of standards. Since it's just a bunch of private networks, free speech trumps any government desire toward regulation.
Posted by (13 comments )
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IT'S A REVENUE GENERATOR
Unfortunately, you don't see it the way it really is. The network has been used as a huge revenue generator of taxes and surcharges for many state and federal bureaucracies to live on. You just can't turn it off. Where would all the government jobs go? VoIP will be taxed, See my comments.
Posted by (3 comments )
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Agreed.
Government has proven itself inept once again. Monopolies have abused the powers given to them by the people (gesh, I sound like a socialist).

Unfortunately, it is true the monopolies have abused their power and the FCC has handed the world to them. SBC lawsuits by the state of Illinois, poor service, 10,000% markup on caller ID, failure to provide network services in a manner consistent with current regulations to CLECs... it's a shame the FCC hasn't performed when needed. They get an F.

Now they want to regulate the Internet using VoIP as an excuse. The knuckleheads running the FCC should stay away from regulating VoIP. Leave it be and we'll have an open system with competition.

Or, you can give teh FCC the reigns and watch another service die like broadband development. It's sad South Korea has better broadband services than the US. I guess that's what you get when the FCC has it's way.
Posted by EngineeringOps (16 comments )
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TAXES ON VoIP
All that bought off on VoIP circuits being "free" will stunned when taxes and surcharges come out as a result of states getting the ability to tax these services. If your strategy to switch was based on huge cost savings - guess again.

VoIP will not be free.
Posted by (3 comments )
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CHECK OUT SENATE BILL S.8821
In doing some research all of this popped up in the last couple of weeks. There was a Bill from Sununu (R-NH) that was going to keep VoIP at a federal level but some democrat added an amendment on it which virtually let's the states determine what taxes they want to tack on to VoIP. There are too many politicians and agencies that are funded by the surcharges to let it all go free. So much for "cost-cutting" as a strategic initiative - it is neither.
Posted by (3 comments )
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VoIP isn't free.
VoIP isn't free right now.

Nevertheless, in my opinion, it will still be cheaper than running services through the public switched telephone network like the incumbents do (SBC, Verizon, etc).

VoIP companies do not have to operate copper and fiber connections to the last mile. They, in essence, are working on top of a pre-existing (and paid for) network connection; therefore, their value added service is simply a dial tone and connection to the PSTN -- it is not the network itself. As such, their costs will be much lower than the monopolies.

In addition, you can bet your bottom dollar the number of competitors in the VoIP industry will be great (unlike monopolies). This will bring about innovation and subsequent service offerings once the price reaches its equilibrium. You WILL get more for your money with VoIP than the current PSTN as competitors duke it out to get consumers online.

In fact, monopolies are beginning to feel the pinch and are beginning to position themselves against VoIP rollouts. One-size fits all packages are more common than ever. As the VoIP numbers reach a million mark my words, the monopolies will begin to take notice. And that's a good thing... it's about high time monopolies had a little competition.

Yes, I agree. VoIP will ultimately be taxed just like the PSTN (it already is being taxed -- I have it and love it). However, it will still be cheaper than what the monopolies can afford to price.
Posted by EngineeringOps (16 comments )
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