Daiwa Eurotelcoblog No. 13 Tuesday 30th September, 2003 Breaking news: VoIP = Voice over Internet Politics/BBC feature on public Wi-Fi in the UK (original email blast 5:09 PM Tuesday, 30th September, 2003)

VoIP = Voice over Internet Politics
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We have just learned that US-based SIP operator VoicePulse has received a letter from the chairman of the California State Public Utilities Commission, demanding that it seek certification as a telecommunications operator in the state of California. This is interesting, as the letter apparently cites the provision of telephony services to Californians as qualifying the operator for regulation, though VoicePulse does not currently offer numbers in California area codes. This reminds us of Jeff Pulver's frequent comparison of the States' stance towards VoIP regulation as being like "Minority Report" (the film which depicts a world in which individuals are punished for crimes they have not yet committed). Then again, we are talking about a state with 125 people (and one robot) running for governor. It is also apparently a state where regulators believe a carrier can apply and qualify for certification within three weeks (the deadline imposed on VoicePulse) - a feat we are told is historically unprecedented.

VoicePulse does have customers in California (keep in mind that one of the distinguishing features of such next generation voice offerings is that the connection between physical location and phone number can be severed). This brings up one of the central questions dogging regulation in the sector - are SIP services actually telephony in the conventional sense of the word? Vonage CEO Jeffrey Citron, in his presentation at the VON event last week, raised an interesting example of the quandary in terms of conventional 911 services. He said that Vonage is able and willing to submit appropriate subscriber data to local PSAP databases (the databases used to maintain 911 services across the US), but the PSAP database is technically unable to associate a single number with more than one location, a situation which would be applicable to the Vonage service. Viewed in this way, the service clearly contains both fixed and mobile elements - a situation the current regulatory framework is not set to deal with (for the record, Vonage does have its own 911 solution in place to compensate for the failings of the traditional 911 architecture). For this reason and others, Vonage and others have called for a five year moratorium on regulation of VoIP until the entire regulatory framework can be overhauled. FCC policy chief Robert Pepper, in his presentation at VON last week, was suitably prudent in his statements, but seemed to indicate a pretty clear "hands-off" bias within the FCC towards the technology. The individual states, however, have taken radically different views, with the three most vocal opponents to the new generation operators, Wisconsin, Minnesota and California all coincidentally lying within the footprint of the same ILEC. Today's share price performance of the ILECs in New York trading shows no obvious benefit from today's news, though it is an extremely significant short-term stumbling block for the VoIP industry in our view.

The big question for us is, once this process starts, where does it end? Given that SIP is embedded in MSN Messenger, will Microsoft (and by extension Yahoo!, AIM, ICQ, Skype, iptel, et al) now be required to seek certification in all 50 states? What mechanism can be used to facilitate this process, and what happens when the operator in question (such as an iptel or a Skype) is not domiciled in the US? The potential for this to become absurd very quickly is very high, and we think it is a fruitless task for the parties involved, and ultimately one which may harm innovation and consumer choice if it prevails.


BBC feature on public Wi-Fi in the UK
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While we have been writing this bit of invective, BBC Radio 4's "Shoptalk" program has been presenting a 30-minute feature on public Wi-Fi in the UK, following on from Intel's much-hyped free Wi-Fi day in the US last Thursday. The BBC show has been informative for the non-specialist, as well as very balanced. We heard the official telco line from BT Openzone as well as a less orthodox view from James Stephens, the founder of do-it-yourself Wi-Fi forum Consume. To date there has been little coverage of Wi-Fi in the mainstream media in the UK, and such coverage may be key in promoting awareness of all sides of the issues. In relation to the regulatory quagmire above, broad public awareness may hold the key to making such constraints less likely, if consumers have a greater variety of opportunities for broadband access and all that it enables. One illustrative stat from today's Wi-Fi Networking News was that, in downtown Portland, Oregon, a hotbed of free networking activity, the Intel free Wi-Fi day generated 40 unique log-ins at the downtown Starbucks, while Personal Telco's permanently free downtown hotspot generated 176. Is there a message there somewhere? We assume that today's program will be archived on the Radio 4 website, and invite anyone interested in a flavour of Wi-Fi in Europe to listen in (http://www.bbc.co.uk/radio4/news/shoptalk/index.shtml).