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VoIP provider fears predatory practices

To a large degree, the concerns of Net phone provider Nuvio illustrate how the industry has become politically divided.

Nuvio, a Net phone service provider, has asked federal regulators to ensure that broadband providers that also sell phone services don't engage in predatory practices to stifle competition.

Kansas City, Mo.-based Nuvio caters to broadband service providers, working with them to provide Net phone service to their subscribers. The company also works with schools, municipalities and value-added resellers, according to its Web site. It does not own its own broadband network and does not focus on selling directly to consumers.

Chief Executive Jason Talley said in an interview that it took just "five minutes" for one of his company's engineers to write coding to block Net phone calls from one provider, while letting others go through unabated. The ease at which it can be done, coupled with the economic incentives for doing so, may prove too great a temptation for cable and DSL providers that also sell Net phone services, he said.

Nuvio has asked the Federal Communications Commission to include a prohibition of such a practice in the rules it's now writing to oversee Net phone calls.

"This is a very large concern in (the) industry," Talley said. "Broadband providers are in a unique situation to exert the influence they have as to unfairly and artificially make other services appear poor."

To a large degree, Nuvio's claims illustrate how the Net phone industry has become divided both economically and politically. On one side are those that own their own broadband facilities, such as Verizon Communications and Cox Communications; on the other side are those that don't.

The two camps' fighting is growing more furious as the stakes continue to rise. By the end of the year, analysts say, more than a million homes in the United States will have dropped their traditional phone line for one that uses voice over Internet Protocol (VoIP), the technology for converting phone calls into digital packets that are then sent over the Internet rather than the heavily taxed and regulated phone network. That number is expected to surge to 17.5 million by 2008, according to a study by The Yankee Group.

Several cable and DSL providers contacted since Nuvio's FCC filing last week have denied they do, or ever will, engage in such practices. "It wouldn't be in our interest to do such a thing," a Verizon Communications representative said.