The FCC muddies the VOIP waters. The FCC's decision to reject AT&T's voice over IP petition isn't just a defeat for AT&T. It's a dangerous development. The FCC concluded that AT&T has to pay access charges to local phone companies for VOIP backbone traffic, essentially because the end-user service involved still looks like traditional telephony.
The FCC claimed it had to make this decision to provide certainty to the industry, and to eliminate incentives for regulatory arbitrage. Instead, it has created confusion and even more perverse incentives. The FCC explicitly refused to decide whether AT&T is retroactively liable for some $100 million in access charges it hasn't paid in the past. And it hung its decision on the fact that AT&T offers no “enhanced functionality” to end users. The first is simply an abdication of responsibility; the second reflects an unwillingness to acknowledge the flexible reality of voice as a data application.
These steps are bound to produce the last thing the telecom industry needs right now: more litigation. Instead of keeping the pressure on for what's really essential — broad-based reform of inter-carrier compensation — the FCC has ensured that companies will pour more resources into court battles, which will ultimately kick the issues back to the Commission.
I understand where the FCC was coming from. They see AT&T trying to game the system. So they put their fingers in the dike to stop further leakage from the access charge reservoir. But the pressure for a VOIP transition will only increase. If it's just a matter of time before the current system collapses, the FCC should put its energy into figuring out the new system. Rear-guard actions like this one will only make the transition more painful. [Werblog]