December 3, 2003
Mission creep in VOIP
Sonia Arrison covers a clear example of mission creep in this piece on the effort to regulate cheap Internet telephony. This is a classic problem: even when regulations are initially well-intended, they take on lives of their own and forget their initial rationality. Regulating VOIP will only help aggrandize regulators, and will hurt innovation and consumers. Excerpt:
By using the Internet's infrastructure, VOIP makes calls much cheaper than traditional phone companies can provide. This is great news for consumers and bad news for traditional phone companies. But many regulators don't welcome it either.
Public Utility Commissions (PUCs) in a number of states including California, Wisconsin, and Minnesota are working to strangle VOIP with mammoth regulations that were crafted for the outdated infrastructure of the old phone companies. In one of those states, Minnesota, the issue recently went before a federal court.
Fortunately for consumers, Judge Michael Davis of the district of Minnesota ruled that VOIP cannot legally be regulated like the old telecom dinosaurs because VOIP is a data-based information service not a telephone service, and thus not subject to the same telecommunications rules. This ruling is a win for innovation, but unfortunately the battle is not over. For instance, California's PUC maintains that VOIP providers must submit to state regulation or face disciplinary action.
That pioneers of this revolutionary technology are forced to defend themselves against public servants who are supposed to have the consumer's interest in mind is disturbing. This is one more reason why the entire convoluted telecommunications regulatory machine should be dismantled. The 1996 Telecommunications Act was enacted to create a "pro-competitive, deregulatory national policy framework," but instead the last seven years have been filled with regulatory wrangling and burdensome lawsuits.