FCC to begin VoIP inquiry

The Federal Communications Commission said Thursday that it plans to formally decide whether to regulate Internet telephone companies.

The FCC will begin a yearlong inquiry into the "appropriate regulatory environment for these services" on Dec. 1, the commission said in an announcement.

"The FCC has been studying VoIP issues for several years, but things have greatly accelerated over the past year, and, thus, so have the FCC's actions to address the complex issues that arise,"

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FCC Chairman Michael Powell wrote in an accompanying letter to Oregon Sen. Ron Wyden, who is sponsoring an Internet tax ban that could affect voice over Internet Protocol services.

VoIP is a technology for making phone calls using the Internet Protocol, the world's most popular method for sending data from one computer to another. It requires a network connection and a PC with a speaker and a microphone or a device to convert a telephone's analog signal into IP and vice versa.

Pressure has been on the FCC to make its position known on VoIP ever since a U.S. District Court shot down an attempt by regulators in Minnesota to make VoIP provider Vonage follow state telephone rules. In that court case, Vonage argued that its service uses the Internet, which has historically fallen under federal control. Vonage, BellSouth, SBC Communications and Motorola have asked the FCC to draft a nationwide policy instead of a patchwork of possibly different state regulations.

States are beginning to try to regulate VoIP services, which provide many of the same functions as the traditional phone system but with different technology and at a lower cost. At stake is a key distinction between voice services, which in the past have used the Public Switched Telephone Network, and data services such as the Internet.

Unlike phone networks, data networks have been left largely unregulated and untaxed to help spur growth. This has raised concerns for groups such as the Multistate Tax Commission that Internet-style services could jeopardize billions of dollars in state funding for programs, including universal telephone service, 911 emergency services and the E-Rate school technology fund.