VoIP backers should celebrate Bush win

But a decision last week illustrates why Bush's ascendancy is terrific news for Internet telephony companies that would have experienced a tougher time if a Democrat had moved into the White House.

The Federal Communications Commission's vote on Tuesday in favor of voice over Internet Protocol, or VoIP, companies nicely captures the long-running discord between the Democrats' regulatory fetishism and the Republicans' regulatory restraint.

Led by FCC Chairman Michael Powell, the Republicans said VoIP must be freed from the clutches of busybody state utility commissioners--an argument also raised by Vonage and Internet companies worried about states regulating prices and levying onerous taxes in the manner of the former Soviet Union. As usual, that approach irked the two Democrats on the five-member commission.

FCC Commissioner Jonathan Adelstein said he "cannot fully endorse an approach that leaves unanswered so many important questions." Commissioner Michael Copps said he would "withhold" his approval because the decision could "erode our partnership with the states." Can't have that, of course.

Because Copps and Adelstein currently don't have a majority, they've had to content themselves with kvetching from the sidelines. But an Election Day victory by Sen. John Kerry would have awarded the Democrats control of the FCC and likely elevated Copps, a former Senate staffer, to chair.

"The Democrats on the commission simply have been more skeptical of markets, and the Republicans have been more skeptical of regulation," says James Gattuso, a fellow at the Heritage Foundation and a former deputy chief at the FCC. "It's almost a classic situation of burden of proof: The Republicans seem to be saying, 'Prove to us you need regulation,' and the Democrats seem to be saying, 'Prove to us markets will work.'"

Long-standing partisan divide
This isn't the first time the two Democrats have wanted to aggressively regulate VoIP and broadband technologies while the Republicans have backed technology companies and the free market.

In February, the FCC granted a request from VoIP provider Pulver.com to be immune from the ponderous stack of government rules, taxes and requirements that apply to 20th century telephone networks. Pulver.com's Free World Dialup software merely lets audio be transferred over the Internet--because the telephone network is never used, Powell and the Republicans realized, there's scant justification for the FCC to be regulating computer software.

But that didn't stop the Copps-Adelstein axis from crying foul. Copps said he had met with the FBI and concluded that deregulating VoIP might create some "challenges for law enforcement and has implications for universal service and public safety"--never mind that his fellow commissioners had heard from the FBI too and rejected police demands as hyperbole.

Votes on broadband also reflect that partisan divide. In 2003, the FCC voted to let former Bell companies run fiber to American homes without being required to make the fiber links available to competitors. Otherwise, the Republicans reasoned, telephone companies will have near-zero incentive to spend the billions of dollars necessary to rip up streets and run the conduits. Once again, the dissenting Democrats predicted disaster.

They were wrong: Fiber is thriving today. Verizon Communications has predicted it will have 1 million homes wired with fiber by the end of 2004 and 3 million by the end of 2005. Verizon is even planning to offer video to compete with cable television, and other former Bells are running fiber to neighborhood nodes.

Powell--who said last week he'd like to stay on as chair--is no David Friedman-quoting libertarian. His politically convenient indecency crusade against broadcasters shows little understanding of the First Amendment, and he deserves the enmity of the open-source community for supporting the ill-advised "broadcast flag." Powell's views on wiretapping aren't as expansive as the FBI's, but they're still problematic.

But given today's political reality, Powell and his Republican allies probably have done as much as they could to help nurture VoIP and bring high-speed connections to Americans' homes. The two Democratic commissioners have not.