CHANGING VARIABLES

The continuing evolution of the triple-play landscape (telecom, cable and broadband connections to the home and business) has now joined the Internet and the cell phone as one of the most exciting communications industry developments of the last 30 years. The rapid growth of Wi-Fi implementations suggests a change in the traditional triple-play language to include a fourth broadband technology available to homes in densely populated areas, and adding voice-over-IP to Wi-Fi produces a potential competitor to the three landline broadband paths.

But there are signs that some of the stakeholders don't realize the true nature of the regulatory challenges ahead. The mantras of “Internet freedom” and “light regulation” voiced by some stakeholders exhibit a combination of exuberance and naiveté not seen since the Telecom Act euphoria of 1996 and 1997. As companies, states, federal agencies, Congress, consumer groups and rural residents rearrange their turfs, there will be extensive activity in the regulatory arena.

Should voice-over-IP carriers be regulated by the states or the FCC — or both? Should VoIP carriers be subjected to CALEA, the FBI's wiretapping rules and procedures? If so, who should pay for the new software systems? The same is true for 911 and location-smart E-911 services. Should public safety requirements be voluntary or mandatory? Are VoIP carriers subject to state taxes, access charges and universal service obligations? Should ISPs have open access to all four physical broadband paths to the home? What universal service efforts do we have to implement to insure that all Americans have access to the broadband Internet? Clearly the price of the VoIP offering to the marketplace will depend on answers to these and other regulatory questions.

The sound justification for the light regulation approach to VoIP and related FCC regulatory dockets is a commitment to avoid perpetuating outdated regulatory requirements onto a nascent industry that needs continued innovation free from the burdens of government rules. Not many observers will disagree with that general principle.

But my goal is not to take sides, but to point out that the issues are far more complex than the knee-jerk reactions of some of the newer observers on the telecom scene. Certainly the FCC's rules must be minimalist, but we have to be realistic as well. Einstein is reported to have said, “Make the problem as simple as possible, but no simpler.” We need to keep this thought in mind as we design effective solutions for the new telecom regulatory terrain.

DOSSIER DAVID RODDY

Occupation: Managing director, telecom practice, FTI Consulting

Location: Cambridge, Mass.

Favorite Web site: www.fcc.gov

Current reading: “The Innovator's Solution” by Clayton Christensen and Michael Raynor

Hobbies: Trying out various VoIP systems

Next Project: Help shape a sensible, realistic and forward-looking 1996 Telecom Act rewrite over the next 12 months.