FCC: 'Pure' VoIP not a phone service

By Declan McCullagh and Ben Charny
Staff Writer, CNET News.com
Story last modified February 12, 2004, 12:51 PM PST

Handing a partial victory to Internet phone providers, federal regulators said Thursday that voice communications flowing entirely over the Internet are not subject to traditional government regulations.

The Federal Communications Commission, in a split decision, approved a request from voice over Internet Protocol (VoIP) provider Pulver.com to be immune from the hefty stack of government rules, taxes and requirements that applied to 20th-century telephone networks.

"This is in no way different than e-mail and other peer-to-peer applications blossoming on the Internet," FCC Chairman Michael Powell said. "Such services have never been held to be telecom services." Commissioner Michael Copps opposed the decision, and Jonathan Adelstein said he partially dissented.

In a significant limitation, the decision does not address whether traditional phone regulations might apply to VoIP services that interconnect with the traditional telephone system. As a result, the FCC's vote for now only applies to developers of VoIP applications similar to Pulver.com's Free World Dialup (FWD)--software that allows voice conversations to take place between computers, but not between computers and ordinary telephones.

Other applications covered by the decision include Skype and instant-messaging programs from Microsoft, Yahoo and America Online. But the ruling appears to leave in limbo VoIP services from Vonage Holdings, cable giants and others that allow calls to be placed from a computer over a broadband connection to any phone number in the world, and vice versa.