News Releases
news coverage
News Media
PFF Highlights
News Release
April 5, 2004
CONTACT: David Fish
(202) 289-8928

A Plea to California:
Don't Regulate Internet Voice

Regulators Should Heed FCC Chair's Warning, Experts Contend

WASHINGTON, D.C. - California should heed Federal Communications Commission Chairman Michael Powell's warning and stay out of the regulatory business when it comes to new Internet voice products, which travel on a global network and do not recognize state boundaries. That is the view of Progress & Freedom Foundation experts Adam Peters and Kent Lassman, who say consumers would bear the brunt of misguided regulatory action at the state level. The duo made their comments in an official filing with the Golden State's Public Utilities Commission on Monday.

"The [California] Commission will disserve the public by taking to itself what is in this first instance a federal decision," write Peters and Lassman. "An unwarranted set of economic regulations on VoIP [Voice over Internet Protocol], however minimal, will harm consumers and impede this technological innovation for California. "Voice and/or data packets sent between consumers in California, even over a 'phone-to-phone' IP network, may be routed through any number of other states," reads their filing. "Lacking a sound legal basis to assert state jurisdiction over VoIP, the Commission should therefore defer to the FCC until it has determined whether to 'occupy the field' in its broad VoIP proceeding.[its] analysis that hinges on VoIP providers offering 'local' or 'intrastate' service to consumers for a fee is flawed. VoIP is an interstate service."

Peters and Lassman argue that California's 'tentative conclusion' to consider regulating Internet voice is based on "assumptions and interpretation of statutory provisions once intended for a monopoly telephone service provider" and is "ill-advised." Being a new service, "there is no 'monopoly problem' that would justify economic regulation." Instead, California's PUC should focus on the need for intercarrier compensation and universal service reform, they write.

As a guiding principle, Chairman Powell stated that the "policy environment must begin with the recognition that the Internet is inherently a global network that does not acknowledge narrow, artificial boundaries." While recognizing that the states may have compelling reasons in ensuring that the health, safety and welfare needs of their citizens are met, Powell added that "[e]conomic entirely another matter and we should approach that area with significant skepticism."

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