Implications of VoIP TC 310 May 28, 2008

Questions from Reviews Duty to Interconnect Reciprocal compensation Line of business v statutory line of business UNE-P v UNE-L Which is best, ISP, Net Neutral, Physical Bell break up effective? Regulate Internet? Authority?

Why VoIP matters Broadband capacity makes viable Undercuts PSTN access/toll charges Voice dominated by cable?  “Triple Play” Physical layer leverage  Bye bye Vonage Asking to be regulated

Why Regulate? 1996 Act mandates competition  Internet untouchable Why VoIP breaks this  Telecommunication Service  Information Service Regulation helps build infrastructure

IP-to-IP VoIP Voice calls to other IP users only  Pulver's Free World Dialup  Basic Skype FCC Preemption and Forbearance  Computer III Legacy Geography concerns  Can't tell where even if wanted  Difficult to regulate

PSTN-to-PSTN VoIP for transmission only Originates/terminates on PSTN For LD, translated into packets  Prioritized over backbone  Customers do not know AT&T asks for access charge exemption because using Internet  FCC rules is telecommunication service  No application change or new service

IP-to-PSTN Customer has own broadband connection Can reach and be reached by anyone within PSTN network Actual substitution for traditional service Causes real regulatory concern  Information v Telecommunication service  Vonage files FCC petition to remain information service

Basics of IP-to-PSTN Conventional Phone to adapter Adapter to Broadband Call same service subscriber IP-to-IP Call PSTN, terminates at PSTN Associate with area code, can do so with multiple numbers  Only so many numbers!  Cross-subsidizations  Infrastructure

Jurisdiction Concerns IP-to-PSTN federal or shared?  IP-to-IP too difficult to tell  PSTN well established Minnesota PUC  Demands Vonage file tariffs, etc.  FCC rules it is impossible to bifurcate, therefore preempts States – Vonage Order

Classification Information or Telecommunication?  Title II v. Title I  Vonage wants Title I  PSTN industry wants Title II Vonage Order does not state, but implies, information Easier when VoIP does more than voice  Translation, text conversion, replay

Congressional Action Seeking to help FCC with jurisdiction and classification IP-Enabled Voice Communications and Public Safety Act of 2007  Bill before both houses, different versions  FCC Jurisdiction  VoIP as information Service  Voice will need 911, USF, Compensation to PSTN

FCC Action Deregulation  Preemption and Forbearance again  IP-to-PSTN is Title I, but if told Title II can forbear  States want to regulate, FCC says no Regulation  Title I ancillary authority back door power  911 requirements- similar but different  Communications Assistance in Law Enforcement Act (CALEA) requirements

Continuing Problems Proposed legislation and actions of FCC are still “hindered” by legacy classifications  Title based on technology, not service  Not designed for convergence  Everyone wants to be Title I Horizontal regulation potential to get beyond this, but we are far from that

Importance Reevaluate regulation of PSTN Creative Destruction as reasonable? Complications of Convergence Getting social good out of competition Title system in jeopardy Emergence of Cable as dominant Monopoly concerns