COLUMNS
VOIP of the People
By John Sununu
Source: The Wall Street Journal Date: February 24, 2004 Page: A18
Should local governments have an inherent right to regulate and
tax any communication between two individuals that utilizes a human
voice? Should we discourage the use of broadband networks for fast,
reliable and cheap communications simply because a new technology
doesn't fit neatly into an existing regulatory slot? Should regulations
discriminate between two data files simply because one carries instant
messaging and the other someone's voice?
Until quite recently, these questions were relegated to circles
of academics, techies or regulation junkies (yes, they do exist)
speculating about how the Internet might affect entrenched telephony
providers. Today, these issues have become practical, substantive
questions that will make or break the implementation of Voice Over
Internet Protocol (VOIP) -- a new technology that utilizes the packet-based
method of Internet communications and, in some instances, the architecture
of the Internet to bring new voice applications to consumers. VOIP
generates significant network efficiencies, reduces capital expenditures
and produces considerable cost savings. Moreover, the innovative
features and robust functions underscore that VOIP is not just a
fancy phone network and must not be treated as such.
The debate has just begun, but the wagons are already being circled
by those determined to protect a regulatory scheme based on the
copper wire telephone system invented by Alexander Graham Bell.
Our goal should be to allow this new technology to evolve, which
will dramatically reduce the cost of voice communication to a level
commensurate with that of any other bit of data transmitted over
the Internet. To ensure that a misguided approach does not develop
and to provide certainty to the marketplace, I will introduce VOIP
legislation in the coming weeks to establish several key protections
for this new technology.
-- First, my legislation will treat VOIP as an information service.
The broadband cable, DSL or high-speed line you are using does not
care whether data packaged using the Internet Protocol is a spread
sheet, e-mail, instant message or voice traffic. Recognizing this
simple fact helps establish a level playing field for all forms
of data in order to fit a regulatory system designed five, 10, 20,
30, 50 or 100 years ago. Conversely, there exists no sound basis
for discriminating among different types of data. Would anyone argue
that taxes for e-mail should be different from those imposed for
transmitting financial spreadsheets or power point presentations?
The same principle should extend to an Internet voice call as well.
-- Second, we should establish federal jurisdiction over VOIP applications.
Internet packet switching routes data across a global network requiring
a national framework and treatment. Allowing thousands of state
and local regulators to wrap their tentacles around VOIP will place
costly and unnecessary burdens on a growing interstate communications
network. What would happen to e-mail or instant messaging if states
imposed regulations on those applications? The role of the federal
government should be to establish a clear and efficient regulatory
structure that will not discourage investment in the development
of these new systems.
-- Third, my bill will protect this data service from taxation.
The Internet-access tax-moratorium debate has highlighted the need
to prevent tax commissioners from imposing oppressive tax treatment
for telecommunication on VOIP. Those who believe that e-mail should
be taxed will disagree on principle. All others place themselves
in the awkward position of trying to differentiate different sets
of ones and zeros in binary code in order to protect tax collections
or corporate revenues. Both attempts are signs of short-sightedness
-- one on the part of big government, the other on the part of big
business.
Since our nation's founding, legislators have justified regulations
on the basis that they serve the public interest. A regulatory framework
may be advanced to improve public safety, inform consumers or protect
public health. In fact, public-interest concerns such as enhanced
911, disability access, and interaction with law enforcement will
be among those considered by comprehensive legislation. But extending
these obligations must be done with an understanding of the unique
architecture and technical aspects of this new application. Unfortunately,
within the developing VOIP debate, this governing principle of public
interest has been turned on its head. The defenders of the existing
regulatory scheme seek to protect the existing tax, distribution
of revenues, or other vested interests, at the expense of sound
public policy.
If there is one thing we have learned about the information economy,
it is that innovation circumvents a flawed regulatory regime. Let's
get this one right from the start.
---
Mr. Sununu is a Republican senator for New Hampshire.
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