Regulators, telcos should step carefully... (Score 2, Interesting)

If anything has become clear to me over the past fifteen or so years, it is that most or all of the telecomm regulation should be tossed as soon as humanly possible. All such regulation was granted in exchange for monopoly status, which is no longer even possible; indeed, such regulations as UNE-P are actually delaying true competition, because neither the incumbents nor the competition have any incentive to build out their networks.

With inner-city phone customers paying up to three times as much for basic service as their suburban neighbors, there is no sane argument remaining for the universal service fee structure.

When some ISPs took advantage of the access-fee legislation to put up modem banks and realized ROIs in the 400-500% range, it became painfully obvious that regulating the industry was bound to continue to fail in its objectives due to ever-present unintended consequences.

The most dramatic effect I can see coming out of regulating VoIP is hastening the demise of the public switched telephone network. Since the only value proposition offered by VoIP-as-service is quality guarantees and PSTN access, it will not be competitive with regular phone service any more, and bypassing the LD providers will continue to be possible by using direct IP-phone to IP-phone, which can't be regulated, carries no incremental cost to those already equipped with broadband access, and will continue to push PSTN rates up due to the loss of LD subsidies. The positive-feedback loop involved means that it is inevitable; we will see the trend accelerate as more standardization of protocols results in more network-effect value, more cheap phone devices equipped for direct Internet connection, and local phone service rates going up. Every one of these trends is already in progress and irreversible, and they all build on one another.

I know by painful experience not to try to predict when these things will happen, but they will happen, and soon. If my predictions were accurate, it would already have happened five years ago. But the basic economic fact is that it costs orders-of-magnitude less to provide communications using a ubiquitous packet-switched network, and only government regulation can slow it significantly, and in the current case may actually accelerate it dramatically.