Federal Communications Commission Chairman Michael K. Powell made his case on Capitol Hill yesterday for why a light touch is needed for regulating voice communications over the Internet, arguing that too many rules for the new technology will send jobs overseas.
"While Internet voice services offer great potential, they are also extremely easy to establish abroad," Powell said, according to remarks prepared for delivery before the Senate Commerce Committee. "If we do not create the proper regulatory climate in the United States, it is quite possible our local calls will be routed through Canada and Mexico at cheaper rates, rather than through Kansas and Montana."
Powell spoke as the debate heats up over how the technology -- known as voice-over-Internet protocol, or VoIP -- should be treated by policymakers. Numerous companies in the past year have begun offering the service, often at rates below those set for traditional telephone service. The question is whether calls placed over the Internet should be subject to some of the same fees and restrictions that have governed basic telephone service for a century.
The FCC began formal consideration of the issue earlier this month and has already exempted one company, Pulver.com Inc., from regulation for a service that allows users to call one another from computers without using the conventional telephone network.
Although some states have initiated regulation, the FCC has shown signs of late that it intends to take the lead in determining how VoIP is handled, according to industry analyst Scott C. Cleland, chief executive of the Precursor Group. "The FCC has thrown some elbows and said, 'This is our turf,' " Cleland said.
In his remarks yesterday, Powell said that as they move ahead, policymakers "should begin with the nonregulation of the Internet as the first article of faith because limiting government intrusions -- both at the federal and state level -- maximizes the potential for innovation and increases opportunity for the nation as a whole."
He allowed, however, that there are certain areas in which the government has a role in ensuring that Internet phone service doesn't undermine existing programs and services. He specifically cited the 911 emergency system, law enforcement's wiretapping capability, telecommunications access for people with disabilities and a universal service fund that helps make telephone service available in poor and rural areas.
According to a transcript of the hearing, Sen. John E. Sununu (R-N.H.) said he plans to introduce legislation that will treat voice communications over the Internet in the same way as other kinds of data transmissions.
"These are bits and bytes of data that are packetized and sent using the IP protocol, and if we try to regulate or legislate -- discriminating on the type of data that is being sent over a broadband network or cable network or fiber-optic network or wireless network -- then I think we are headed down the wrong path," Sununu said.
Powell later said in a question-and-answer session with senators that the pace of technological innovation will soon make it necessary to update the Telecommunications Act of 1996.
