1. 9/14/981 Fisher Wayland Cooper Leader & Zaragoza L.L.P. Government Regulation of IP Telephony Bruce D. Jacobs (202) 775-3543 bjacobs@fwclz.com Washington, D.C.

2. 9/14/982 Fisher Wayland Cooper Leader & Zaragoza L.L.P. VON Coalition Cisco SystemsCisco Systems ClarentClarent elemedia/Lucentelemedia/Lucent DialogicDialogic IntelIntel ITXCITXC MicrosoftMicrosoft Natural MicrosystemsNatural Microsystems Netspeak Polycom Pulver.com TeleDenmark USA Global Link Vienna Systems Vocaltec

3. 9/14/983 Fisher Wayland Cooper Leader & Zaragoza L.L.P. Overview Most of VON is alive and well despite government regulationMost of VON is alive and well despite government regulation VON is being driven largely by the increased efficiency and functionality of IP networksVON is being driven largely by the increased efficiency and functionality of IP networks The problem areas involve the use of VON to arbitrage “bad” regulationsThe problem areas involve the use of VON to arbitrage “bad” regulations

4. 9/14/984 Fisher Wayland Cooper Leader & Zaragoza L.L.P. What is VON?

5. 9/14/985 Fisher Wayland Cooper Leader & Zaragoza L.L.P. User equipment PCPC Conventional handsetConventional handset Hybrid devicesHybrid devices

6. 9/14/986 Fisher Wayland Cooper Leader & Zaragoza L.L.P. Network configurations private networksprivate networks cable networkscable networks MANsMANs PSTN (ILEC or CLEC)PSTN (ILEC or CLEC) hybridhybrid

7. 9/14/987 Fisher Wayland Cooper Leader & Zaragoza L.L.P. IP Network Router PC Phone Handset Fax Hybrid Metropolitan Area Network LAN Router Metropolitan Area Network LEC Switch Gateway The Future

8. 9/14/988 Fisher Wayland Cooper Leader & Zaragoza L.L.P. Pricing no marginal cost (flat rate)no marginal cost (flat rate) per-minute chargesper-minute charges

9. 9/14/989 Fisher Wayland Cooper Leader & Zaragoza L.L.P. Key issues for regulators International accounting rates for PSTN trafficInternational accounting rates for PSTN traffic Universal service supportUniversal service support –explicit –implicit Technical issuesTechnical issues –law enforcement access –emergency services

10. 9/14/9810 9/14/98Fisher Wayland Cooper Leader & Zaragoza L.L.P. Status of government regulation Good news:Good news: –private networks remain unregulated –value-added data networks remain unregulated –most governments are reluctant to slow the growth of domestic use of the Internet

11. 9/14/9811 9/14/98Fisher Wayland Cooper Leader & Zaragoza L.L.P. Status of government regulation (cont.) Bad newsBad news –Some governments have sought to ban even PC-based VON »Pakistan »India

12. 9/14/9812 9/14/98Fisher Wayland Cooper Leader & Zaragoza L.L.P. Status of government regulation (cont.) Mixed newsMixed news –Some governments have indicated that they will treat certain kinds of VON as simple resale »Canada –Others have recognized that action is premature »European Commission »U.S. FCC

13. 9/14/9813 9/14/98Fisher Wayland Cooper Leader & Zaragoza L.L.P. VON Coalition perspective cheaper, for people who can really use the savingscheaper, for people who can really use the savings facilitates innovationfacilitates innovation brings the Internet to people without computersbrings the Internet to people without computers

14. 9/14/9814 9/14/98Fisher Wayland Cooper Leader & Zaragoza L.L.P. VON Coalition perspective (cont.) pro-competitive, except to the extent provided by incumbent LECs that may have a bottleneck monopolypro-competitive, except to the extent provided by incumbent LECs that may have a bottleneck monopoly not a near-term threat to traditional PSTN trafficnot a near-term threat to traditional PSTN traffic

15. 9/14/9815 9/14/98Fisher Wayland Cooper Leader & Zaragoza L.L.P. Useful cites FCC Report to CongressFCC Report to Congress –http://www.fcc.gov/Bureaus/Common_Carrier/Reports/fcc98067. html EC DecisionEC Decision –http://europa.eu.int/en/comm/dg04/lawliber/en/voice.htm WTO Agreement on Basic TelecomsWTO Agreement on Basic Telecoms –http://www.wto.org/wto/services/tel.htm VON White PaperVON White Paper –http://www.von.org