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VoIP
and BPL Break Loose
While
Virginia
legislators contend with tax issues, two new technologies are
taking a wrecking ball to the regulatory system
for Virginia telecom.
Technology
continues to break the surly bonds of regulation
in Virginia,
as everywhere else, and even two decisions by the
Federal Communications Commission (FCC) last week
are unlikely to bring a quick consensus on what to
do about it. Voice over Internet Protocol (VoIP)
and Broadband over Power Lines (BPL) are in very
different stages of development and deployment,
but both are driving a wholesale reevaluation of
which networks do what as voice, video and data
converge. And they are roiling tax policy.
First consider VoIP, a computer software application that
utilizes Internet protocol packets and addresses
to deliver digitized voice signals over private
networks or broadband Internet connections. Traditional
electro-mechanical telecommunications, built to
handle continuous, wave-like analog signals,
require dedicated circuits. Computer-driven VoIP,
which digitizes signals into discrete packets of
1s and 0s, flows freely across the Internet.
Although VoIP works best over purposely engineered
intranets -- the Virginia Community College System
has used it to deliver voice, data and
distance-learning video for years -- it is the
clear “wave” of the future.
Familiar names in the private sector, including Verizon,
Comcast Cable, AT&T, Qwest and Time Warner
Cable (in partnership with Sprint and MCI), are
competing vigorously to roll out VoIP for
customers of their traditional telecom, cable
television and digital subscriber line (DSL)
services. As Link Hoewing, assistant vice
president of technology policy at Verizon has
pointed out almost non-stop over the last few
years, Internet telephony yanks voice out of
traditional telecommunications and makes it into
an Internet application, which falls under the
FCC’s definition of information service. Along
with e-mail, mobile telephones, instant messaging
and online chat communications, Internet telephony
has cut traditional landline communications to
only about half of the growing communications pie.
The names associated with BPL are less familiar, but
include Main.net Power Line Communications of
Reston, Current Technologies of Maryland, Amperion
and Ambient. Main.net has partnered with Manassas
to make the municipality
the first city in North
America
to deliver Internet access via
electric outlets.
On
February 12, the FCC proposed technical rules for
the first time allowing broadband services to be
delivered over power lines under an existing
unlicensed standard known as Part 15. The rules
will ensure there is no interference from mobile
phone licensees or ham radio operators.
Manassas
officials are convinced the technology will offer
citizens a low-cost alternative to DSL and cable
modem. Others see particularly great promise for
regions areas underserved by traditional broadband
providers and foresee new revenue streams for
energy companies as they unbundle.
Unfortunately,
state governments have viewed VoIP through the
lenses of regulation and tax revenues. To state
corporation commissioners, VoIP walked and quacked
like the duck of traditional telecommunications.
Some states sought to have VoIP providers register
as telecom companies and, potentially, subject
themselves to regulations on market entry, price
regulation, reporting obligations and terms of
service.
After
months of delay and federal court rulings, the FCC
finally initiated a proceeding February 12 to
examine Internet-enabled communications services,
such as VoIP, more thoroughly. The commission
noted that advantages include more consumer
choices, lower costs, more innovative services and
expanded network redundancy and resilience. But it
also said it would determine which regulatory
requirements, such as E-911, access charges,
universal service and disability accessibility,
should be extended to these Internet services. An
FCC Internet Policy Working Group, for example,
will host a March 18 “Solutions Summit” to
discuss 911 location issues associated with VoIP.
Alternatives
are being discussed at the state level. A Virginia
Senate committee considered a bill -- SB 673
introduced by Northern Virginia Senators Ken
Cuccinelli, R-Centreville, Jeannemarie Devolites,
R-Vienna, and Bill Mims, R-Leesburg -- briefly
this year to set VoIP apart from the complex state
regulatory regime for telecoms. “The terms ‘telecommunications service’ and ‘telephone
service’ shall not include the provision of
Voice-over-
Internet Protocol,” read the bill.
Disagreements among telecom and VoIP providers had
the Senate committee carry the bill over, but also
suggested the SCC should get on with a fresh look
at VoIP.
Simultaneously, both House of Delegates and Senate are
considering another bill -- HB 1174 introduced by
Del.
Preston
Bryant, R-Lynchburg -- to provide a framework for
restructuring state and local telecommunications
taxes, which can add up to 35 percent to basic
telephone bills. The Auditor of Public Accounts is
to conduct a year-long study on possibly
consolidating the local consumer utility taxes, a
portion
of local Business, Professional and
Occupational License (BPOL) taxes, the Virginia
Relay Center Assessment and 911 taxes that local
governments have loaded onto their telephone
bills. And, finally, Republicans in the House are
proposing to eliminate sales and use tax
exemptions for
equipment purchases made by public
service and telecom companies, which, in addition
to boosting state revenues, might help them get
into more competitive shape in converging markets.
Federal
courts have acknowledged that computer-to-
computer
VoIP is not a telecommunications service as
currently defined. But adding a more traditional
telephone handset to one or both ends of the VoIP
connection dissolves the traditional distinctions
among local, toll and long distance services. As data
packets move across private networks or dedicated
backbone, intercarrier access and compensation
issues emerge. Law enforcement, emergency,
universal service and access issues currently
embedded in telecom regulations call for
attention. And most of all, the question of
whether VoIP services should pay for the networks
and public switched telephone network connections
it uses begins to look like regulation of the
Internet.
Deliver
VoIP via BPL and your Internet, power and telecom
provider may be the same company. The wrecking
balls are loose.
--
February 16, 2004
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