Unintended Consequences

VOIP as Reality Revives Call for Regulation

Voice Over Internet Protocol (VOIP) has been around, but "not ready for prime time," for several years. When it was young and clumsy, the "old boys" of telecommunications disregarded it (as Clayton Christensen would predict) as not a threat to their mainstream business. Now, as Bob Dylan writes, "Things Have Changed." The technology is improving and a critical mass of broadband customers has been reached. Suddenly, it is a viable threat to suck away significant shares of voice revenues in an already cut throat market. Can you say "10-10-NET?"

Today's New York Times article Phone Service Over Internet Revives Talk of Regulation voices the same worries we heard when express package services like FedEx began to offer real competition to the U.S.Postal Service for fast, reliable service. Sucking away revenues will leave less to subsidize services that lose money, but are believed essential. Accordingly, demands to regulate (i.e. tax) the disruptive technology to reduce its competitiveness raise their heads.

Recent court decisions denying state P.U.C. authority to regulate VOIP (see, e.g., Fed Court Bars PUC Regulation of VOIP Provider, Unintended Consequences 10/17/03) are likely to support those opposing regulation. Will the cries of pain from large, established telecom "old boys" result in new federal legislation? Time (and politics) will tell.

Your thoughts? Comments and Trackback, please.

DougSimpson.com/blog

Posted by dougsimpson at December 15, 2003 10:46 AM | TrackBack