Regulatory Status of VoIP in the Post-Brand X World

Abstract

During the past several years, the Federal Communications Commission (FCC) has engaged in a series of rulemakings to determine the regulatory status of Voice over Internet Protocol (VoIP). The Supreme Court's recent decision in the consolidated cases of National Cable and Telecommunications Ass'n v. Brand X and FCC v. Brand X clarifies that even if the FCC's determination conflicts with that of a court, the FCC's judgment holds sway as long as the decision is reasonable. We believe that VoIP should be classified as an information service, rather than a telecommunications service, for several reasons. First, the Internet Protocol nature of VoIP technology means that it functions like an information service, rather than a telecommunications service. Second, in the Telecommunications Act of 1996, Congress clearly sought to bring competition to all communications markets; encouraging the development of VoIP by classifying it as an information service comports with congressional intent. Third, economic analysis demonstrates that subjecting VoIP to the full panoply of regulation under Title II of the Telecommunications Act would significantly reduce consumer welfare. Fourth, the FCC's own experience shows that, if the FCC believes that some selective regulation is necessary, it has ample authority to impose targeted regulation without subjecting VoIP to all regulations that affect telecommunications services.

Keywords: Internet, telephone, telecommuncations, universal service, VoIP

JEL Classification: D61, D62, K23, L51, L96