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News Release
March 8, 2004
CONTACT: David Fish
(202) 289-8928

VoIP: FCC Should Support Level 3 Petition
Peters Urges Agency Not to Apply Legacy Regulation to Internet Voice

WASHINGTON, D.C. - For the sake of promising Internet voice technology, and as an opportunity to begin weaning the telecommunications sector off access charges and universal service payments, the Federal Communications Commission should grant the Level 3 petition and forbear from imposing inter- or intrastate access charges on Voice over Internet Protocol (VoIP) traffic that starts or stops on the telephone network, or is incidental to the network. That is the view of Progress & Freedom Foundation Research Fellow and Regulatory Counsel Adam Peters as expressed in a recent filing with the agency.

“The Commission has permitted VoIP to flourish through regulatory forbearance,” writes Peters. “This course should continue. Keeping VoIP technology from getting dragged back into a decrepit world of legacy regulation should be the Commission’s top priority…The Level 3 petition should be viewed not only as requiring regulatory forbearance, but also providing the Commission with an opportunity to complete intercarrier compensation reform on an accelerated timetable.”

The filing sounds a note of caution on allowing regulatory arbitrage under the guise of VoIP: “…some service providers are framing predominantly circuit-switched calls as VoIP to exploit the deregulatory void.” In particular, AT&T has filed a petition for an FCC ruling on ‘phone-to-phone’ VoIP calls to be exempt from access charges. “Unlike PSTN [public switched telephone network] to IP or IP-PSTN calls, which undergo net protocol conversion along a significant portion of the calling path, a PSTN-PSTN call that is routed over IP transport is a distinction without a difference.

“Like the access charge dilemma, the issues surrounding the ‘metaphysics’ of VoIP imply that intercarrier compensation reform should be the Commission’s imperative.” Peters continues. “A unified model, properly conceived, will eliminate the incentives for parties to game the system.” Adoption of such a regime should be pursued “at least on a transitional basis.”

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.



The Progress & Freedom Foundation