Ok. Let's come clean: Vonage is a phone company. They offer a phone service. They market a phone service. They enable calls to every other telephone service in the world. They're a phone company.
The justification for regulating anything has to be based on the threat that it provides to the society. That's at least part of what it means to live in a free society. Anyone of us is allowed to come up with a better mouse trap and sell that mouse trap as long as that mouse trap doesn't harm society. And the definition of harm does NOT include impacting the business models of those who can't/won't innovate. In other words, the cat sellers are NOT harmed by the mouse trap. They're harmed by their own inability to come up with the mousetrap. The rest of society benefits. So, if it doesn't harm society, you're free to do it. In the case of the traditional telco, those guys have been given a state enforced monopoly. Anyone really think there's no threat to society if the monopoly isn't regulated?
Sure, we could undo the state enforced monopoly, and grant anyone with a backhoe the right to dig a trench and wire up your house. But we tried that already. It sucked. Back when the telephone was first invented (before the concept of "right of way" was applied to municipal wiring) anyone could wire up your house. And frequently anyone did. Unfortunately, all of those companies couldn't (or more likely wouldn't) interoperate with each other. So if you wanted to call Jim, and he was connected to TelcoA, you had to get a line from TelcoA. And if you wanted to call Janet who was connected to TelcoB, you had to get a line from TelcoB. And the procedures for calling Jim were drastically different than the ones for calling Janat. It was a mess and someone decided that a regulated monopoly was a good way to solve it.
Eventually the legislators decided that the monopoly that telcos had been granted did not allow them to pick and choose where they were going to provide service based on the income level of the neighborhood. So they started enforcing that the telco's provide universal service - including underprivileged neighborhoods and schools. The telcos then passed that cost onto the consumers in the form of the Universal Service Fee. The legislators also decided that everyone needed to be able to dial a single number (911) in the event of an emergency. So the telcos were required to establish some sort of priority call routing and mechanism by which this could be accomplished. They again passed this cost onto the customers.
But the key thing to recognize here is this: all of this is the cost that the local telco has to pay for being granted a monopoly on wires running to all of our houses. You get the monopoly you have to behave responsibly. Without the monopoly there is NO justification for regulating a company.
Vonage does not have a monopoly. Nor do any of the more than 500 VoIP providers. Moreover, I am unable to understand what threat of harm to society exists due to VoIP. And without that threat of harm, I am unable to agree that VoIP providers should be regulated like a telco with a monopoly on the last mile.
But, of course, I could be missing something. So my challenge to you (dear reader) is to identify the justification for regulating a non-monopoly like a monopoly. Identify the threat of harm that VoIP providers inflict on society, and then you might convince me that regulation is justified. Until then, I think almost everyone in favor of regulating Vonage or Packet8 or any other VoIP provider misunderstands what it means to live in a "free society".