title: It's for our own good

What are they good for?

By Scott Bradner

Local and federal telcom regulators sure want to be helpful. On U.S. the federal side the FCC is assuming that the only reason that anyone would want to buy a computer is to steal movies and, at the same time, trying to help the incumbent carriers rid themselves of the pesky requirement to share the infrastructures they installed while they were legally empowered monopolies. On the state level, the regulators are trying to protect the public from confusion over different phone service options. Since there is no apparent benefit for normal humans in these, and many other, actions of the regulators the question pops to mind: 'just what benefit do regulators provide?'

In some areas it is clear to almost everyone that regulations and regulators are unambiguously needed. There are only a few people who think that we do not need regulations designed to protect life and health by making sure that restaurant food or prescription drugs will not kill you. These people think that the market will punish restaurants that kill their customers and regulations are not needed. (I exaggerate only a little bit - this is exactly the argument I have heard about drug regulations.)

But in other areas it is less clear. A lot seems to be written on the topic of the purpose of regulations - google gets 5.6 million hits for "purpose of regulation," but the rational still eludes me in much of the telcom space. In fact, a number of state regulators seem to be determined to show that they are not only no longer needed but are a clear and present danger to innovation.

A U.S District Court stopped, at least temporally, Minnesota regulators from trying to regulate Voice over IP provider Vonage as if it were a traditional telephone company. But regulators in California say they are not backing down from their demand that six VoIP companies submit to being regulated as telephone companies.

When I wrote about the Minnesota case (See http://www.nwfusion.com/columnists/2003/0825bradner.html.) I got some reader response disagreeing with my opinion. A few readers felt that it was reasonable to demand that the VoIP providers provide services such as enhanced 911 and ensure high quality voice. I strongly disagree. We would have no cell phones today if cell phone companies had to provide enhanced 911 functionality before they could have started to offer their service and its not clear that we could ever have cell phone service if the providers had to guarantee high voice quality. Some people might complain that I'm not being fair because the E911 and quality regulations refer to the basic phone service for a home and not an add on service like cell phones - that argument is becoming less true as more people decide to use a cell phone as their only phone. (See http://www.nwfusion.com/columnists/2003/0818bradner.html.) About the only clear issue to me is the issue of taxes. You pay taxes for phone services, you do not (yet?) pay taxes on instant messages, even if the instant message contains voice.

I can see a rational for a regulator to insist that a VoIP provider be very clear on what services they do or do not offer but I have a hard time understanding what other value they add. Telcom regulators are a vestige of an era of monopoly telcom carriers. They should only ensure that those monopolies do not kill their competitors then they should fade away.

disclaimer: Harvard does not understand the concept of "fade away" so the above must be my own opinion.