Senator wants VoIP to be regulation-free

LAS VEGAS--U.S. Sen. John Sununu said he's preparing legislation to keep broadband telephone service providers from being "smothered by state and federal regulators."

The New Hampshire Republican described the proposed law at the Consumer Electronics Show as a "clear, pre-emptive remedy" that directs state utility regulators to take a hands-off regulatory stance on what's called voice over Internet Protocol (VoIP).

The legislation also seeks to make the Federal Communications Commission the main authority over VoIP service providers, the senator said.

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As more conversations begin to flow through unregulated VoIP links instead of the heavily taxed public switched telephone network, state governments stand to lose billions of dollars. Because Net telelphony is not regulated, companies offering the service aren't subject to the vast thicket of taxes and regulations governing E911 and guaranteeing wiretapping access for police.

Also at issue is the future of a special $2.25 billion-a-year tax--typically reflected in higher monthly phone bills--that provides schools and libraries with discounts on everything from Internet access to phone lines for fax machines and domain name registrations.

Some states want broadband phone providers to follow the same state rules and regulations as do traditional phone providers. But FCC Chairman Michael Powell indicated here at CES that he favors either new regulations for VoIP providers or a hands-off approach for now to enable the young industry to mature.

"Unfortunately, if left unattended, I'm afraid the benefits of VoIP will be smothered by state and federal regulators," Sununu said during a CES panel this week. "A clear pre-emptive remedy is needed now. Congress must establish pre-eminence of federal authority in this area and provide major direction for any action by the FCC."

State regulators in California, New York and Minnesota, which have all indicated they want to regulate VoIP service providers, could not be reached Saturday for comment.