VoIP May Get A Rocky Mountain High

Colorado appears to be on the verge of joining the ranks of those states that have eschewed any state regulation of VoIP.

With almost half of the states in the United States now on the non-regulation bandwagon, the reason I’m keen on writing about Colorado is because this is where I live. Were Colorado to attempt any state regulation of VoIP it would thus directly affect me and my Phone.com account.

It should be first understood that, as of this moment, Colorado’s Public Utilities Commission (PUC) does not regulate VoIP, nor has it any proposals before it to do so. But of course that could always change in the future, but not if the bills now in the Colorado Legislature are passed into law.

The first hurdle has been passed, with unanimous approval by Colorado’s House of Representatives of a bill that prohibits the PUC from setting any new rules, service standards of pricing regulations for VoIP, or for that matter any other service, which is carried over the Internet. The next step is approval by the state’s Senate, after which the governor has to sign it into law. No immediate roadblocks are known to exist to either happening.

The legislation “sends a message to the rest of the world that Colorado welcomes continued investment, new high-tech companies, and job growth from rapidly evolving Internet technologies,” state Democratic Representative Angela Williams, who co-sponsored the bill with Republican Representative Carole Murray.

As various states line up behind these sentiments, I think it is incumbent on me to point out that the issue is not VoIP regulation per se, but rather it’s what would happen if each of the 50 states had its own separate set of regulations. That could have a chilling effect on the VoIP industry, indeed could result in a few industry giants taking over from the highly innovative and competitive situation that exists today. That’s because of what would be a burdensome chore for a small company of complying with so many different regulatory regimes.

In other words, any regulation of VoIP needs to be at the federal level only, applicable to service no matter where in the country it occurs. I personally am particularly keen on the one issue of service standards – not regulations for VoIP companies, but rather regulations for Internet providers. As a small office/home office (SOHO) user of broadband and VoIP, I’m getting particularly tired of the phrase “up to” describing my broadband service. I’d be a lot happier if the FCC mandated that any broadband provider nationwide instead use the term “at least” when describing the speed they’re promising to sell me.

I’d also like the FCC to start dealing with the issue of nationwide revenue generation and distribution of funds for so-called “high cost” telephone service. Currently that comes from taxes on traditional phone service, but with VoIP rapidly displacing that service, the revenues are going down. In Colorado, for instance, there is a state fund that subsidizes rural landline phone service, but that’s going to decrease by $5 million annually as VoIP takes over, Colorado legislative researchers say. The only way out, it seems, is to increase the high cost phone service tax by about 10%, which no doubt will drive more users to VoIP, meaning up the tax again.

The solution … now why didn’t the FCC and Colorado government gurus think of this … is to stop providing high cost traditional phone service, and plow the money (while there is still some) into providing decent rural broadband, so those folks can benefit from VoIP.