Following the lead of Minnesota and Wisconsin, the state of California is reportedly going to regulate voice over IP (VoIP) services, according to CNET.
"They sure look like a phone company in nearly every regard," said John Leutza, director of the California Public Utilities Commission's telecommunications division. "This will be California's policy going forward."
This would be a good example of why California is having trouble cultivating new innovative technology industries; the urgency to collect irrational regulatory fees drives away innovators.
What was the reason for regulating telephony? For almost a century, voice services were delivered on lines owned exclusively by one company whose rates had to be controlled in the public interest, later that had to be forced open to competitors. But VoIP is just another kind of data, even if the companies providing interconnections to the plain old telephone system do issue a bill that looks like a phone bill (VoIP services might have a number associated with them or they may not, but numeric services are certainly what will succeed, because there are a lot of old numeric phones around). Imposing an old model on a service that is indistinguishable from other data carried on an IP network does not make sense, since you should have to regulate all the data services in order to treat telephony equally. But we don't regulate streaming content, nor Excel files sent between coworkers. For some reason, VoIP traffic on the network is "different." Vonage may connect calls to the switched network, but it doesn't hold any monopoly position in the market and its user interface on the Web is oriented toward message management, just like email. So, what is the rational explanation for regulating VoIP other than "it looks like voice telephony"?
It seems that all California is doing is looking for state revenues to solve its budget crisis. There is no monopoly and prices for these services are already falling as new competitors bring VoIP applications and services to market.
By contrast, California does need to reregulate its energy industry in order to avoid collusion among competitors who are, in fact, not competitors, but who work together to keep the prices of electricity artificially high, which led to the California budget crisis in the first place. How about a little more success in that market before inflicting this stupidity on VoIP.
Posted by Mitch Ratcliffe at September 30, 2003 08:38 PM | TrackBack