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Regulation in VoIP – How Much Is Too Much?

Updated on October 4, 2012
Deregulating VoIP in California
Deregulating VoIP in California

VoIP Deregulation in California

The latest VoIP news to come out of California is a law passed by the California assembly known as SB 1161 which prohibits the local telecom authority in that state from interfering with any VoIP related communications. Understandably, this bill was lobbied for and pushed hard by a large number of telecom companies including AT&T and Verizon. It's easy to see why these organizations would want such a law. To start off with, more and more landline phones are being internally replaced with VoIP infrastructure. Even though the actual device itself is based on the traditional analog PSTN system, internally the Internet plays a huge role in routing all that traffic. This saves the telecommunications companies vast amounts of money.

In addition, every cable subscriber who has a telephone line attached with his or her plan is a VoIP user in reality. The cable modem is acting like a glorified ATA adapter converting digital and analog signals back and forth. The handset itself is the only remnant of the PSTN phone system. The deregulation of VoIP by the telecom authority in California means that carriers will be able to offer more innovative services without being shackled by cumbersome government rules.

But is the removal of all authority a good thing? Free-market capitalists would say that it is. But this neglects the reality that there are only a handful of companies that own the infrastructure through which Internet services are delivered. It is not a free market with high barriers to entry. What we have is an oligopoly instead.

Regulation to Prevent Abuse

If government regulation has the potential to hinder new and innovative services, a tight control of the product by a handful of companies has the potential to do the same. Possibly even worse. At the very least the government has a mandate to serve the best interests of the people. Corporations on the other hand have a mandate to increase their profits at any cost. We have seen how this plays out in the VoIP field when carriers choose to hinder or block VoIP related traffic that competes with their own business models.

One wonders what kind of effect SB 1161 will have on the competitive marketplace in California. While it naturally leaves the telecom carriers free to implement their own Internet-based voice communications, we can at least hope that the same will be true for smaller companies wanting to do the same thing by providing over-the-top services delivered over the Internet directly to customers. The problem is that such an outcome is left in the hands of corporations. Without stringent net neutrality rules there is no guarantee that the situation will continue. Not all regulation of VoIP is a bad thing.

Contact an ITSP providing VoIP services in Los Angeles to find out how you can get started with today.


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