Hands-off approach urged for Internet calls

WASHINGTON — Heavy regulation of phone calls made over the Internet would crimp innovation and stifle investment in the new technology, industry officials told Congress on Wednesday.

The technology, known as Voice Over Internet Protocol or VoIP, converts phone calls to data packets and sends them across high-speed Internet connections. It promises cheaper calls because it avoids some access charges associated with regular phone service.

But some states, such as Minnesota and New York, have eyed regulation of VoIP services — prompting representatives from Vonage Holdings Corp., AT&T, and other Internet voice providers to ask lawmakers to intervene.

Requiring providers to face rules from 50 different states could result in a “patchwork of premature, burdensome state legislation and regulations, crippling the domestic VoIP industry,” Jeffrey Citron, chairman and CEO of Vonage, said in testimony before a House Energy and Commerce Committee panel.

Too much regulation, Citron told the subcommittee on telecommunications and the Internet, “will make it impossible for VoIP to grow.”

Vonage and other providers want Congress to declare Internet voice calls an interstate information service, keeping the states from regulating it.

The Federal Communications Commission is also looking at VoIP as it considers whether to treat the service as a taxable telecom service or an untaxed data service. FCC Chairman Michael Powell and the other two Republicans on the five-member commission have said the emerging technology should be lightly regulated.

Republicans on the subcommittee also supported the lighter approach. “We will never know VoIP’s tremendous potential if we saddle it with unwarranted government regulation,” said subcommittee Chairman Fred Upton, R-Mich.

Democrats, however, said some regulation would be necessary.

“The need for consumer privacy rules, billing protections, fraud protections, emergency 911 services, law enforcement access, or ensuring affordable residential service, does not disappear simply because a voice call travels in packets rather than dedicated circuits,” said Massachusetts Rep. Edward Markey, the panel’s ranking Democrat.

Two other panel members, Reps. Rick Boucher, D-Va., and Cliff Stearns, R-Fla., introduced legislation Tuesday that would declare VoIP an interstate service — placing authority for regulation at the federal level by the Federal Communications Commission, not the states.