FCC to report on Net telephony

On the eve of an FCC report to Congress on Net telephony fees, the White House urges the commission to avoid regulating the fledgling industry.

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Beating a familiar drum, the Clinton administration today warned the Federal Communications Commission not to go down the path toward Net regulation in an anticipated report to Congress tomorrow.

As previously reported, the FCC is considering whether companies that deliver voice-to-voice calls over the Net should be reclassified as long distance providers.

The FCC was asked by Congress to clarify which communications companies have to pay into the nation's universal service fund, which helps subsidize phone service for rural and low-income U.S. consumers and Net access for schools and libraries.

Based on various plans being mulled over by FCC staff, the five-person commission could declare that domestic Net telephony companies are no different from long distance providers and should be required to pay into the universal service fund through access charges collected by local phone companies.

Net telephony firms that switch international calls to the United States say they already pay the charge.

But the White House is calling on the FCC to steer clear of any definition changes that officials worry could stifle the Net's commercial growth. For now, the Net telephony market is booming, with numerous firms rolling out services that utilize Internet protocol (IP), allowing consumers to make voice calls from traditional phones or with their computers using special software.

"While legitimate issues have been raised regarding the obligations of new players to contribute to universal service, any proposal to regulate Internet telephony as a 'telecommunication service' would raise contentious issues, resolution of which would have international, as well as domestic, repercussions," Larry Irving, head of the Commerce Department's National Telecommunications and Information Administration, stated today in a letter to FCC Chairman William Kennard.

"Thus, the administration urges the Commission not to change its current approach," he added. "The administration is prepared to work with Congress, the Commission, industry, and all other stakeholders to ensure that universal service goals are met. However, we must be careful not to thwart the development of an innovation that promises consumers the very kind of competitive alternative that the 1996 [Telecommunications] Act was intended to encourage."

In September, Irving also said the federal government should not regulate telephone calls over the Net. His letter reiterates the administration's ongoing position that Net services should be allowed to flourish and should not be hit with new taxes or regulations.