New-age failure

The FCC last week decided to impose Universal Service Fund fees on voice-over-IP providers and raise current fees on wireless service to make up the funding lost when it decided that DSL service providers should not have to make USF contributions.

On the face of it, the decision is straightforward — VoIP is a voice service and those that provide VoIP should have to pay to support buildout of basic infrastructure to high-cost and rural areas, as well as schools and libraries. Fair is fair. But that argument breaks down when one considers VoIP a data service. Bits are bits, whether they carry voice or data.

This is the kind of conundrum regulators face when trying to impose old-world rules on new-age technology. While the FCC acted to avoid an immediate shortfall in USF funding, its latest action highlights what happens when short-term thinking must be applied to long-term problems.

VoIP providers will take a hit, just as many are getting off the ground, and USF critics will have a field day, pointing to fund misuses still possible under old funding rules.

Despite the complexity of the myriad telecom issues facing Washington, there seems little logic to the languid pace at which change is taking place. Calls for reform have been present for years. The FCC indecision on competitive issues helped prolong telecom's nuclear winter by creating unnecessary uncertainty. Now a new batch of unresolved issues could threaten a healthy recovery on Wall Street again.

A vital telecom industry is critical to this nation's economic development, and sound regulatory policy is the least the industry deserves, especially when U.S. service providers and equipment providers must compete in a global market, occupied by competitors whose home governments are more certain — and more supportive — of telecom priorities.