FCC'S CARLISLE CALLS FOR TELECOM REGULATION RE-EXAMINATION

FCC Wireline Bureau Senior Deputy Chief Jeffrey Carlisle called for using VoIP as an opportunity to reexamine existing telecom regulations. “VoIP provides the last best chance to re-examine the federal and state regulatory structures in place, and we'll be fools if we don’t take this opportunity,” he told a VoIP workshop sponsored by CompTel/Ascent in Washington Tues. “Why do we continue to do the same things over and over again when we know many of the [regulatory] requirements make little sense, at least when applied to the majority of small providers and certainly as applied to innovators who might want to get into the market?” he asked: “Why do we do this when we also know that the primary economic beneficiaries of these activities are lawyers and paper companies?”

“This is about efficiency,” Carlisle said: “Inefficiency kills competitors and delays [innovation]. The efficiency point is particularly important right now that we are talking about investing into telecommunications.”

“Acknowledgment of enforceability” also is important to consider when addressing VoIP, Carlisle said. “That’s the acknowledgment that if you are talking about an environment where the applications can be provided from anywhere in the world, you internationalize voice communications,” he said: “If we are going to talk about regulating VoIP-enabled services, we ought to be very realistic about what that means, otherwise we are just not doing our job.” He stressed it was important to avoid simply applying the old regulatory regime “reflexively” to VoIP, because it could impose “a tremendous transactional costs to the entire industry” in the future and also fail to “work because you can’t enforce it.”

Carlisle said the concept the FCC was developing in its rulemaking on IP-enabled services was that common carrier regulation was “qualitatively different” from social obligation regulation, such as 911, CALEA and access for people with disabilities. “These are social obligations that we've decided we ought to have if we provide some type of services,” he said, adding that “the NPRM draws the distinction between those 2 different types of regulation.”

It’s “possible” the Commission could decide “some of the fundamental jurisdictional questions [in its VoIP rulemaking] this year,” Carlisle told reporters after the lunch. But he said “that really depends on what else the Commission has going on, whether this is a priority.” He said it would be a “surprise” to him “if were to finalize [the order on IP- enabled services] earlier than [2005]. We'll also have to consider the timing of CALEA.”

Carlisle stressed it was important that the industry players “participate as our rulemaking is going down the road… Bringing those aspects of the real world environment is extremely important. Don’t underestimate the power of… a regulator who regrettably may have little experience in the industry” to respond improperly to the industry’s needs.

Asked why the Commission acted on the AT&T petition on phone-to-phone VoIP services before completing the rulemaking, Carlisle said the Commission was responding to requests from “the broad cross sections of the industry,” which sought clarity: “The situation that was continuing as a result of us not saying anything was that AT&T was deriving an unfair competitiveness advantage through self-election… So, at a certain point… the sense within the Commission was ‘yes, we have to do it.'” Asked whether UNE-P was “focusing the mind of the Commission on VoIP” or whether it was a “clouding issue,” Carlisle said UNE-P “right now sort of created its own dimension. It’s hard to relate it to anything going on anywhere else. At this point IP-enabled service is moving forward on its own track -- it’s really much more a question of classification and jurisdiction. And UNE-P… is more of a question of what [Sec.] 251 means.”

Better than expected workshop turnout created the impression the CLEC industry was finally getting serious about VoIP. One industry source speculated CLECs would take their place in the VoIP market as soon as this year. “This year is pretty important, because CLECs are consolidating their network elements, financial assets and products and services to provide over the same infrastructure,” the source told us. The source also speculated IP services “will probably move to a measured price [scheme away from] current flat rate unlimited [scheme] that most IP providers enjoy.” In that case, the source said consumers would probably “enjoy 30% to 50% discounts on IP services over the legacy TDM services.”

Some speakers expressed concern it was hard to control service quality because they don’t own the last mile. “One of the main reasons that we are targeting cable providers is because they own last mile alternative,” said Callipso Product Mgr. Nathan Dominguez: “If you are able to integrate your networks with theirs, you will be able to control the quality of service.” He said the lowest rate “is going to get you the business but bringing a real value to your end- user through an IP-based application is what is going to retain those customers.”