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these laws were first written into law over 50 years ago, they are in dire need of revision. In many cases the changes are driven by the growing influence of the cable and Internet-dominated sectors.
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In March 2004, an appeals court struck down FCC rules for how regional telephone companies must open their networks to competitors. Federal law originally required regional phone companies to lease parts of their networks (the UNE-P mandates) to competitors at reasonable rates, set by the states. The ILECs have long contended that they have been forced to give competitors rates that are below their actual cost. In its decision, the appeals court found that the FCC wrongly gave power to state regulators to decide which parts of the telephone network had to be unbundled. The court also upheld an earlier FCC decision that the ILECs are not required to lease their high-speed facilities to competitors at discount rates the way they do their standard phone lines. In April 2004, regulators rejected AT&T s petition to eliminate the requirement that they pay long-distance fees on calls transported partially over the Internet. The decision means that AT&T may be required to pay hundreds of millions of dollars in unpaid retroactive fees to the ILECs. Earlier in 2004 the FCC ruled that calls that originated and terminated on the Internet, such as those made using Skype, Vonage, and other voice-over-Internet service providers, are free from the fees and taxes that traditional phone companies are required to pay, such as support for E911, Universal Service Fund, etc. The FCC said that because calls that travel over the Internet don t provide anything in the way of enhanced features, standard rules apply. Furthermore, in a recent decision, the FCC consolidated all regulatory power over VoIP service at the federal level, wresting it from the states. The key here is that regulatory agencies are trying to balance the need for a regulated telecommunications marketplace with the need for an unfettered development environment that can technologically innovate without fear of onerous fees and taxes. The FCC wants to engender a spirit of facilities-based competition, rather than the UNE-based environment that has not worked as well as hoped. Perhaps the reason for this is a realization on the part of the regulators of exactly what their role should be. For the longest time it appeared
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Downloaded from Digital Engineering Library @ McGraw-Hill (www.digitalengineeringlibrary.com) Copyright 2004 The McGraw-Hill Companies. All rights reserved. Any use is subject to the Terms of Use as given at the website.
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that regulators had come to believe that their primary responsibility was to create competition. In fact, the primary goals of regulation are twofold: first and foremost, to ensure that users of the regulated service (whether it be telecommunications, power, or airlines) have the best possible experience while using the service; and second, to fill in the gaps where the market fails to create the appropriate environment. Now, regulators can use competition as a way to achieve these goals, but competition is a means to an end, not the end itself. Furthermore, regulators should not be in the business of regulating technology per se, but rather the application of technologies according to the mandates listed previously. Today, there is significant regulatory attention being paid to VoIP. But consider this: VoIP is a technology, not a service. What comes out of the phone is still the same voice that has always come out of the phone. And while VoIP today enjoys a certain amount of immunity from regulatory forbearance, that is a temporary situation. The time will come, and not all that long from now, when VoIP providers will reach critical mass and will find themselves under the same degree of regulatory scrutiny as other, more traditional, providers. I have now finished writing this chapter; it is 11:15 PM eastern time on December 30, 2004, and I am sure that it is already woefully out of date. Readers, let me leave you with this: Regulation is a complex, often boring, difficult subject to become engaged with. It is, however, one of the most critical subjects going in telecom today, so if you have skillfully avoided it, now is the time that changes. If you are to be informed about the current goings-on in telecom and the industries it serves, you must be able to discuss the status of current regulation.
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