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Policy

Powell: VoIP Will Pack a Wallop

5/04/2004 10:12 AM Eastern

New Orleans -- Voice-over-Internet-protocol service should terrify local phone incumbents because Web-based VoIP providers have unimpeded access to consumers with none of the network costs, Federal Communications Commission chairman Michael Powell said Tuesday.

"You don't have to own a $1 billion network to offer a service," Powell said. "If you are a big incumbent and you've sort of enjoyed the competitive advantage of being the owner of that content-storage system, you, in my opinion, ought to be terrified."

Powell kicked off National Show events here Tuesday with a sit-down discussion on a range of policy issues with National Cable & Telecommunications Association president Robert Sachs.

VoIP providers such as Vonage Holdings Corp. can access cable-modem and digital-subscriber-line providers without the permission of -- or really even the knowledge of -- the networks’ owners, posing a low-cost threat to local phone markets that have been dominated by the Baby Bells for decades.

"I think it is going to be the very, very best and biggest breakthrough in our ambitions and dreams about competition ever," Powell said. "If consumers respond to it, we will have to be vigilant about not allowing the incumbent, in any anti-competitive way, to choke off that possibility."

Because of court setbacks, the FCC deregulatory approach to broadband regulation is in limbo and could remain that way for several more years. That, Powell said, is a major problem for the rollout on broadband networks upon which services like VoIP are dependent.

"We've made good progress on broadband, but we shouldn't rest on that," Powell said. "I personally believe -- because it's what I know best -- that one of the greatest impediments that remains is that government clarify the legal and regulatory regime."

Companies facing regulatory threats are likely to scale back investment if the rules are not clear.

"It is an enormous risk factor," Powell said. "They don't know whether at any moment, some state or federal regulator or legislator is going to sort of pounce in and declare you something akin to an old telephone company, with all that entails."

September