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FCC chief warns on Net phone regulations

Voice over Internet phone service should be protected from excessive government regulation, FCC chairman Michael Powell said Friday.
/ Source: Reuters

Rapidly expanding voice communications over the Internet should be protected from excessive government regulation and from being pigeonholed as traditional phone service, the top U.S. telecommunications regulator said Friday.

Harm from misregulation of Internet phone service could take “decades to fix,” said Federal Communications Commission Chairman Michael Powell, speaking at the Consumer Electronics Show here. “You (can) create a very hostile regulatory environment for voice-over-IP providers in the United States,” Powell said.

Powell’s comments were welcomed by the largest provider of Internet-based phone service, Vonage Holdings Corp., which has 92,000 customers and is expecting 250,000 customers by the end of the year.

“One thing you don’t want to do is accelerate the movement of technology, jobs and infrastructure away from the United States, and outside the reach of the government if they ever want to reach into it,” Vonage Chief Executive Jeffrey Citron said in an interview with Reuters.

Companies like privately held Vonage have seen rapid growth in recent months as people embrace lower-cost communications online with quality comparable to traditional phone service. The technology has recently attracted the attention of large telecommunications providers including AT&T Corp., which also intend to provide Internet phone service.

In other comments, Powell said his commission needs to do more work this year on promoting and expanding high-speed communications over the Internet, which he said is crucial to the economy’s future.

“I think it is the most dramatic and meaningful stimulus to our economic productivity and growth,” he said. “I think it is the most promising development for job creation.”

Powell, however, was most vocal about the technology known as voice over Internet protocol, or VoIP.

He added “there is nothing to stop” the companies from moving to other countries and setting up computer systems to serve U.S. customers.

A major danger, he said, is people saying “‘Oh VoIP, it’s just telephony. It looks like a duck; it quacks like a duck; regulate it like a duck.’”

Grappling with regulations
Last year, the state of Minnesota tried to impose telephone regulations on Vonage, a leader in the VoIP business that lets a user hook up a regular telephone to a special adapter and in some cases even keep their traditional phone number.

But a federal judge ruled in October that Vonage was an information service rather than a telecommunications service, and that state regulation of it would run counter to congressional intent to keep the Internet free of regulation.

“We should be starting on the cleanest slate possible,” Powell said. “I don’t think you should ask a Vonage ... to hire an 80-person lobbying staff and legal staff.”

Indeed, Vonage’s Citron said the Minnesota case was very costly to the Edison, New Jersey-based company, even though it prevailed in the case, which he called a “travesty.”

“It’s very expensive to fight the government,” he said.