Why Does The FCC Treat VoIP As The Ugly Duckling?

from the seems-a-bit-unfair dept

Tue, Jul 25th 2006 12:16pm — Mike Masnick

For years, when it came to regulating VoIP the FCC would pull out the "like a duck" test. That is, if it looks like a duck and quacks like a duck, it's a duck. If it looks like a telephone service and acts like a telephone service, it's a telephone service. Of course, this basically punished any new communications service that tried to be backwards compatible with traditional phone service by including them under complex regulatory controls that served no real purpose other than to "level the playing field." This usually came after complaints from incumbents that it was unfair to make them compete against these new players that didn't have those regulations (of course, ignoring why most of those regulations were put in place in the first place). However, what's beginning to become clear is that the "like a duck" test isn't actually being applied equally. If anything, VoIP is being treated as the ugly duckling that gets kicked around.

When it comes to the new Universal Service Fund requirements (yes, the same ones that waste money and actually hold back VoIP service that could help achieve universal service), the VoIP providers were given almost no time to get up to speed on rules that telcos have had years to understand. This may sound familiar. After all, it was just last year that the FCC gave a ridiculously short deadline of 120 days for VoIP providers to be E911 compliant -- when they had given mobile phone operators many years. Eventually, the FCC did back down on the deadline, but apparently the FCC didn't learn anything from that experience. As Jeff Pulver points out, they've done the same thing over and over and over again with all sorts of regulations. The FCC claims VoIP needs to be treated as a telco service, since it "acts" like a telco service, but then holds VoIP providers to much higher standards and provides none of the benefits that the traditional telcos get.

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19 Comments

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Anonymous Coward, 25 Jul 2006 @ 12:23pm

If VoIP companies have a problem with the duck test, then maybe they shouldn't have marketed their product as a duck. They do not sell internet phone service, they sell phone service.

If I am a newly minted doctor, should I expect a break just because I am new to my practice?
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Mike (profile), 25 Jul 2006 @ 12:52pm

Re:
If VoIP companies have a problem with the duck test, then maybe they shouldn't have marketed their product as a duck. They do not sell internet phone service, they sell phone service.

That really misses the point. The point of the original regulations were based on the fact that the telcos were given their networks.

If I am a newly minted doctor, should I expect a break just because I am new to my practice?

The VoIP providers were not "given a break." They simply provided an application on a network... and are then tied down because that application happens to be similar to telephone service.

If you want to use your doctor analogy, it would be more like if you came up with a new way to heal a disease using some new technology. However, then the gov't came along and told you that you needed to successfully compete medical school in some shortened period of time (one year?) in order to even offer your new technology on the market.

It's not about giving the new guys "a break." It's about tying them down with regulations that may have made sense for the last technology, but don't for the new one.
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NSMike, 25 Jul 2006 @ 1:25pm

Let's see...
1. The FCC is already in the major telcos' pockets.

2. The telcos know that their service is slowly becoming obsolete. Hence their jump into the ISP market. Hence their need to regulate the internet. They want to make the internet THEIR network. Nevermind that it's OURS.

3. The teclos see a major threat in the internet in general, because the internet provides a largely unregulated, free (not in cost, but in activity) network capable of much more than their tightly controlled network. VoIP is a major threat to their business because it offers a low-cost, high-quality solution to their otherwise monopolized telecommunications business. It also, in one fell swoop, with the inevitable adoption of wireless networks blanketing towns, cities, and eventually, states and nations, is a major threat to their cell phone telecom business, as VoIP is viable wirelessly as well.

The first item is the keystone to the whole arch of the telecom/VoIP war.
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oldphoneguy, 25 Jul 2006 @ 1:43pm

Exactly as NSMike has stated. I will add the FCC Chairman, Kevin Martin is nothing less than a criminal with no thought and no support except for the incumbent, large telephone companies that direct his actions in total.
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Anonymous Coward, 25 Jul 2006 @ 2:07pm

from the seems-a-bit-unfair dept
you tech guys always seem shocked when you look at how government works. it is not ment to be fair. it is ment to reward campaign contributors. and to lock in power.

why do you think that most politicians get re-elected? because people think they are good? it is the rules they make to draw district lines, and to give tax money to the campaigns with the biggest campaign contributibutors. they also make it almost impossible for any new organization to challenge the the shared power that the entranched two parties have had for over 150 years. doesn't matter if you are a libertarian, green, etc. the rules are to make you spend all your funds on getting signatures whereas they get to spend them on campaigns and get tax payer money to amplify their margin over challengers.

no you tell my voip should not follow the same rules???
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Anonymous Coward, 25 Jul 2006 @ 2:08pm

Lets be fair here, the FCC didn't do anything about e911 until there were headlines in the Wall Street Journal about people not being able to reach help when needed.

VoIP companies sold it as a widespread replacement of phone service, is it any surprise that the govt. moved in to ensure it offered all of the safety features that the PSTN has offered for years?
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Anonymous Coward, 25 Jul 2006 @ 2:20pm

Re: Re:MIKE
"If you want to use your doctor analogy, it would be more like if you came up with a new way to heal a disease using some new technology. However, then the gov't came along and told you that you needed to successfully compete medical school in some shortened period of time (one year?) in order to even offer your new technology on the market."

Come up with a new technology, and then force the inventor to go through years of clinical trials to ensure the safety of your invention? Is that unreasonable?

Maybe the VoIP providers should have thought about safety when they came up with their services, or at least marketed it that way. What, they didn't see that problem coming? Speed to market is really not a very good excuse.
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chris (profile), 25 Jul 2006 @ 2:45pm

pluver's response was weak
i posted this to pulver's blog, tho i doubt it will see the light of day:

let me start by saying that i am a huge fan of VOIP and your efforts in telecom reform and net neutrality.

with that said, i don't think that this is the right way to argue back at the incumbent telcos.

yes it is totally unfair that their lobbyists get to mold the rules in their favor. that is not surprising in the least and is pretty much standard operating procedure for verizon and at&t.

we all hear your side, and we all want voip to win this fight, but this response is weak.

the way to really get to the big telcos is to beat them at thier own game. VOIP networks are simpler, more flexible, and easier to upgrade than the aging krufty PSTN that the telcos needed government cheese to build. if anyone can live up to these contradictory regulations, it's the guys with the cost effective networks.

if you claim that you are better at playing the telco game than the telcos themselves, then you need to go out there and play a better game. if they still aren't e911 and calea compliant, then achieve compliance before they do. do it faster and for far less, and then demand your share of the universal service fund as the spoils of war. do it right, and they will start complaining about how you have an unfair advantage because you can make changes faster than they can.

show us how slow moving and dull witted the telcos are. demonstrate to us how corrupt the telco lobbies are. work with your competitors in the VOIP space to come up with an elegant method of achieving complaince. show the telco establishment that you have what it takes to deliver more features for less money.

don't back down and admit that VOIP is not a substitute for "real" telephone service. step up and become not just a substitute, but a superior offering.

do it, not just for us, not just for your work, do it because the united states will still need to make 911 calls long after the telcos have put themselves out of business.
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Anonymous Coward, 25 Jul 2006 @ 2:58pm

Chris, lets not lose perspective here, the telco's and cable companies all or will offer VoIP, that is where the battle will be fought, not with pure-play companies.

You want to really pick a battle, consider this. Vonage always complained that they couldn't get access to e911 because the RBOC's wouldn't give it to them. What was AT&T & Verizons excuse for not providing it with their VoIP offering?
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Me, 25 Jul 2006 @ 4:22pm

Re:
I have been a subscriber of several different VOIP Solutions over the years. Every one of them explains what you are getting in regards to 911. It is very clear and concise since being an INTERNET connected device it is VERY difficult to pinpoint the location. If you are going to rely on it to make 911 calls and have no ability to tell them where you are then you should stick with a conventional phone line.

The TELCOS are finding out that they are going to have to change their long distance billing practices and they don't like it.
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Martin Tibbitts, 25 Jul 2006 @ 5:57pm

FCC and VOIP
Guys, many of you are missing the point here. The crucial factor here is access to the PSTN. Computer to computer VOIP is free and will continue to be...but can you call someone that you do not know using it? Not likely. There is a club that you need to belong to, and that is the PSTN. That in the end is what makes the differences between the current offerings of VOIP and POTS (plain old telephone service) neglible.

Martin Tibbitts
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OmniPresent Systems LLC, 25 Jul 2006 @ 6:45pm

VoIP as a Service
There is no doubt that the incumbent Telco’s and associated political connections will do anything possible to stay in control of revenue streams and market share. The Open Source model has proven itself to be more efficient then any commercial operation.

Public interest in developing open source VoIP software will increase as bandwidth options become available to support multiple low latency high-def audio and video streams. HDTV Streaming is possible on home LAN's today with inexpensive 1Gb Routers, but they are all copper cat-6 based networks. However, most residential uplink connections are less then 1Mb, just enough for a highly compressed video connection.

So long as the Telco’s own the WAN Network Infrastructure, they will charge us for its use. Bandwidth is expensive in terms of upfront hardware costs and exponential growth curves.

Network neutrality is an issue of ownership and sustainable growth. The Telco networks were built with tax-payers money, and so it shall forever be under our democratic ownership. Investments must continuously be made into expansion and development and that is where the Telco companies take risk. VoIP threatens the profitability of Telco operations. If we put the Telco’s out of business, where will the money come from to cover these costs?

Hardware is never free. But one wireless node in every home, car, cell phone, boat, etc... across America is an affordable vision. Private companies will compete to offer the newest mesh-networking products and service-oriented applications while turning a profit.

Is there really a need for a USF anymore? Let's all just go to our favorite electronics dealer and order a mesh-node.

VoIP's day will come as communities come together and share what they have and keep what they need. It is already starting with smaller mesh-networks popping up in apartment buildings and condo associations across America. (I am currently installing a 24 Node Network, shared by 140 condo-owners)

The cost-benefit model is there, but interoperability issues make nation-wide adoption impossible. Open Standards must be established before anyone will be willing to make a risk by investing into wireless-mesh networking.

Essentially this conflict of interest over VoIP only goes to show that government stifles innovation. I'd like to see more money going towards the next-generation of publicly shared data networks.
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Dr. Mesh, 25 Jul 2006 @ 9:53pm

IEEE 802.11s
Hey OmniPresent Systems LLC, I totally agree with you. Add other communications channels, like 27 MHz, for low-bandwidth long-distance connections to jumper over holes, real or regulatory holes, and we have an overarching net worldwide for voice and data, without a single phone company or ISP involved. Personally I expect that this happens in Japan first, then in the EU, then in China, and last but not least in the US. Companies like AT&T will fight it to the death, until they become obsolete and drag a lot of small businesses with them into whatever tar residue will be left of them. I do not need to point out that there are a lot of figures in DC who have personal interest in undermining such progress.
Eventually peer-to-peer networks will get larger, at an exponential rate, IEEE 802.11s emerges as a standard, USB dongles will allow your granny to add her fine computer at home, new cars already come with wireless devices, truckers will love it too and share, of course. To the naysayers, I just to point out that cell phones were a myth until towers popped up all over the world. To build the mesh we won't need big towers.
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Tek'a, 25 Jul 2006 @ 11:57pm

democratic ownership
"The Telco networks were built with tax-payers money, and so it shall forever be under our democratic ownership"

dont let those telco network owners catch ya talkin about how we are democraticly controlling the system.. the laughter might just echo nationwide.
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Ralph, 26 Jul 2006 @ 4:51am

It continues to amaze me that people come and defend voIP when it comes to regulation. Phone service is phone service. It doesnt matter its over an analog signal or data packets. One should not be taxed to death while the other is not. Either drop the fee's or have them on both.

VoIP comapnies dont want to play by traditional telecom rules but offer telecom. How did it ever come about that 10 digit #'s were released to these companies to use? I mean, shouldnt they be calling IP addresses !!? My point it, they were granted the right to exist, now the crying should stop when put on level playing grounds.
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chris (profile), 26 Jul 2006 @ 5:42am

when the telco's fail
"Vonage always complained that they couldn't get access to e911 because the RBOC's wouldn't give it to them. What was AT&T & Verizons excuse for not providing it with their VoIP offering?"

i had no idea you couldn't get 911 with verizon's service. that's ass-tastic.

"If we put the Telco’s out of business, where will the money come from to cover these costs?

sooner or later everyone who benefits from taxes will realize that cheap internet access will foster more business transactions than any other economic growth progam ever conceived. business means taxes and taxes are what makes all governments great and small go around.
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Anonymous Coward, 26 Jul 2006 @ 8:18am

Re: Re: Re:MIKE
Maybe the VoIP providers should have thought about safety when they came up with their services, or at least marketed it that way. What, they didn't see that problem coming? Speed to market is really not a very good excuse.
The issue is the double standard. Why are VoIP providers treated more strictly then cell providers?
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Anonymous Coward, 26 Jul 2006 @ 8:21am

But I already pay the USF!
I have to pay to the USF for my DSL service. Why am I being double billed when I use VoIP over the same connection?
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Anonymous Coward, 26 Jul 2006 @ 8:22am

Chris, when the FCC mandated e911 service for VoIP, Voicewing didn't offer e911. There is a difference between e911 and 911, as the woman in Florida learned via Vonage.

I think others are right though, lets turn telecom into a public utility. I mean, the power companies are doing such a great job during the heat in Queens, St. Louis and California. Yeah, that sounds like a good idea.

We can make it like the power grid, because thats perfect, right?
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