FCC reviewing calls made over Internet

The Federal Communications Commission discussed yesterday the future of Internet telephony, a technology that allows household phones to make and receive calls via the Internet.

The FCC will look into the technology during the next year to determine whether the service should be regulated like a traditional wireline phone service. Should the FCC decide to regulate the service, it will become the first area of the Internet to face such regulations.

With Voice over Internet Protocol, or VoIP, voice calls are broken down into digital packets and sent to other phones over the Internet. Calls bypass traditional phone lines and make long distance as cheap as a local call. Since it runs through the Internet, it has remained unregulated since its introduction with dial-up service.

“Today, we begin an important process which should have as its goal the empowerment of consumers and entrepreneurs,” FCC Chairman Michael K. Powell said yesterday. “As one who believes unflinchingly in maintaining an Internet free from government regulation, I believe that IP-based services such as VoIP should evolve in a regulation-free zone.”

Powell also announced yesterday the formation of the FCC’s Internet Policy Working Group, an organization that will address issues that arise from telecommunications moving to an Internet- based platform.

There are roughly 100,000 VoIP customers using the high-speed Internet service in the United States. By comparison, 187.5 million wireline numbers exist, along with 148 million wireless numbers.

“Everyone knows that ultimately VoIP is the future of telephony,” said John Rego, chief financial officer of Vonage Holdings Corp. While Rego said that his company is working with other VoIP companies, “the competition right now [is] Verizon and BellSouth.”

Vonage, an Edison, N.J.-based Internet phone-service company, has 70,000 customers in North America paying anywhere from $25 for a basic plan to $50 for unlimited local and long-distance calls.

The company provides a small box that can be plugged into any computer with high-speed Internet service. A traditional phone can be plugged into the box, and calls can be made as usual. The portable box allows users to keep a single area code no matter the location.

“The simple idea [of the company] was to see if you could take packetized voice and bring it into people’s homes,” Rego said.

In November, Vonage extended service to Richmond’s high-speed Internet subscribers.

Although the service has improved in recent years, it does not come problem-free. Power and Internet outages will cause the phone system to shut down.

One of the biggest setbacks to Internet telephony is 911 dialing. Because 911 numbers are sent to a local answering point, the adapter boxes from Vonage must be kept in the original area for 911 service to work properly.

There is differing opinion over whether Vonage is an information provider or a phone company.

In October, a Minnesota district court judge ruled that Vonage was not a phone company but rather provided transportation of data. Information providers can waive service fees, taxes and other costs that traditional phone companies must charge.

However, Harry J. Mitchell, director of media relations for the mid-Atlantic bureau of Verizon, said: “Our view is that access charges should apply when a phone call is transferred for completion across our switched telephone network, regardless of the technology used to originate the call.”

Yesterday’s hearing also touched on issues that concern the Commission on Accreditation for Law Enforcement Agencies Inc. CALEA formed to develop standards to improve law enforcement, and it’s feared by the FBI and other agencies that VoIP could jeopardize their ability to protect public safety and national security.

Cavalier Telephone of Richmond is looking into VoIP technologies as a way to provide more value to its customers but has not yet introduced the service here.

Verizon Communications has said that it will start VoIP programs for high-speed Internet users as early as the second quarter of next year.

“We began offering VoIP services to large business enterprises four years ago,” Mitchell said.

Verizon is the largest provider of wireline and wireless services in the United States with more than 139 million lines and 36 million wireless customers. It is the nation’s third-largest long-distance carrier and the largest local phone company in Virginia.

BellSouth Corp. announced in October that it would provide small and mid-sized businesses with VoIP, helping them to migrate toward the future of Internet telephony.

“Businesses are seeking to maximize voice and data investments, converge networks and reduce total communication costs,” said Dick Anderson, president of customer markets for BellSouth, which has 44 million phone customers.

Contact Jeffrey G. Kelley at (804) 649-6495 or jkelleytimesdispatch.com

Story Filed By The Richmond Times Dispatch, Richmond, VA