REGULATORY UNCERTAINTIES SAID SLOWING NEW TELECOM TECHNOLOGIES

Speakers at a NARUC panel on BPL noted its great promise for expanding high-speed Internet access in rural areas and for creating electric-grid management efficiencies. But Richard Keck of the Power Line Communications Assn. said the regulatory picture is clouded because “competitive BPL providers will be using heavily-regulated monopoly electric lines to reach customers. This interplay between competitive and monopoly markets is a unique development.”

FCC Comr. Abernathy said BPL “came out of nowhere” as a regulatory issue, “but seems like a great way to solve that last-mile problem” for delivery of competitive services. She said BPL offers potential to change the way people live and work, but acknowledged that the FCC, Federal Energy Regulatory Commission (FERC) and state commissions face challenges in dividing up their jurisdiction and developing rules that protect consumers without killing BPL technology. “We are struggling and will continue to struggle with a regulatory framework” for BPL, she said.

“The challenge for states is making sure this new opportunity is implemented fairly across the board,” said Okla. Corporation Commission Chmn. Denise Bode. FERC Comr. Nora Brownell noted BPL will provide the electric industry a new source of revenue as well as a tool to improve management of the electric distribution system: “The worst thing for this new technology would be jurisdictional fragmentation.”

Vonage CEO Jeffrey Citron told NARUC that state and federal regulators don’t have to impose telephone-style regulation on VoIP providers to protect the public interest: “We don’t have to be fit into the common carriage model” for regulators to address 911, CALEA, universal service support, number portability, intercarrier compensation or consumer protection. He said a new national policy framework is needed to address public interest issues for new companies like his that don’t fall within traditional industry classifications. He said VoIP is “inherently interstate” though it may affect state interests. Citron said that while regulators cite consumer protection as grounds for imposing regulation on VoIP, states already have power to act through their attorneys general and consumer protection divisions.

Citron said states have a role to play in protecting VoIP customers from abuses, “but it just shouldn’t be within the telephone rules.” He said Vonage has voluntarily acted to implement basic 911 capability “because our customers expect it” and is working toward an E911 system as well. He said Vonage contributes to the federal universal service fund, works with law enforcement agencies and complies with their subpoenas. He said much of the impetus for regulating VoIP “comes from fear. But putting VoIP into an ill-fitting regulatory model won’t help further social goals.”

Improper regulation of VoIP would harm the public interest by driving up prices and diminishing consumer choice, Citron said. He said the intercarrier compensation system needs to be changed to accommodate technologies like VoIP and wireless that aren’t tied to a physical location. In response to a question, Citron said he'd like to explore with states the possibility of partial jurisdiction by mutual agreement, under which a state commission would have binding power to handle consumer complaints involving Vonage but otherwise would leave the company alone.

NTIA Dir. Michael Gallagher told NARUC that future national prosperity will be affected by how well new telecom technologies and applications are integrated into the industry and the national economy. He said expansion of wireless and broadband markets could play a major role in advancing U.S. prosperity, but only if federal and state regulators refrain from burying innovators under a mountain of new rules: “If we don’t preserve our innovative edge, we'll lose.” He said telecom innovations in wireless and broadband will spur booming growth in the telecom sector that will benefit consumers by creating additional competition that brings better service at lower prices, but only if regulators allow market forces to work.

Gallagher said regulatory policy should foster innovation and investment, while keeping in mind that “markets offer the best path for advancing national goals.” He said regulators should step in only when markets have failed. He cited the wireless industry’s fourfold growth since 1996 and deployment of new wireless technologies such as Wi-Fi as an example of what can happen when markets are allowed to work. He said the nature of telecom is changing and everyone involved with the industry needs to adjust: “Those who don’t adapt to the future will become victims of it.”