FCC Chairman Speaks on VoIP Regulations

The Powell Pulpit
FCC chairman, in `field trip' to valley, talks about VoIP, telecom

Michael Powell has his feet in two worlds.

As chairman of the Federal Communications Commission, he regulates a telecommunications industry that has virtually imploded in recent years. At the same time, he is shaping a regulatory framework for a new era of communications, one that includes Internet phone services, digital television, an explosion in broadband services and countless other innovations.

During a recent ``field trip'' to Silicon Valley, where he visited Intel and Apple and some smaller companies, Powell met with Mercury News reporters and editors. Here are excerpts of his remarks on various topics:

The `digital migration': It's really basically the simple thesis that for 100 years we've had one kind of communications system -- analog and narrow band -- and it's the greatest machine ever built by mankind. It's also extremely mature, and it's really, in my view, at the end of its innovation life.

But what we see is this quantum-leap potential to create a network, infrastructure and architecture that has almost undefinable innovation potential. . . . You begin to bring in non-traditional constituencies, everything from Microsoft to Intel to Apple to Sun, to a communications space long dominated by monopolies, who are very used to going home or playing golf at 4 o'clock, and really have never had to cope with the kind of software economics and the technology economics that have driven the computer world.

So I see two worlds that have been steadily drifting toward each other and we knew would crash into each other, and the crash has already occurred. And we're trying to see which falls in on which. I'm an avid believer that I want the Internet-computer-software model to fall in on the telephone model rather than the other way around.

The goal of FCC regulations:

The government, by its own embrace of monopoly in the 1900s, basically accepted the idea there is one route into your home and one company gets to own it. And that is really the sole premise of all telecom regulation.

And the one pipe is optimized for one application. And we built a brilliant engineering solution to carry voice phone calls. And we built a brilliant infrastructure for one-way video distribution, called coaxial cable. And we use the airwaves in a very lockstep way.

What's the future we'd like to see?

One, we don't want one pipe. We're doing everything we can to incent the free-radical opportunities for multiple routes to the home. So when you look at FCC proceedings, that's where there's so much energy going into WiFi, and ultra-wideband and powerline broadband and laser optics and free-space optics and other policies that encourage and incent the creation of alternate digital platforms.

It's why I want digital companies to become phone companies, and phone companies to become video companies. We want to get more platforms.

If you're Vonage, a young IP (Internet protocol) telephony company, you don't have a 30-person regulatory shop in Washington. But Verizon does. And AT&T has 40 lawyers in Washington dedicated to regulatory issues. . . .

So the minute you start telling a Vonage or an 8x8 (another Internet phone company), or a new, innovator-entrepreneur, ``Oh, by the way, you have to have a regulatory apparatus capable of matching your competitors,'' you're about to kill them.

Applications vs. platforms: The most powerful paradigm shift is the fact that applications are not woven into the platforms. . . .

Now to be a phone company, you don't have to weave tightly the voice service into the infrastructure. You can ride it on top of the infrastructure. So if you're a Vonage, you own no infrastructure. You own no trucks. You roll to no one's house. They turn voice into a application and shoot it across one of these platforms. And, suddenly, you're in your business.

And that's why if you're the music industry, you're scared. And if you're the television studio, movie industry, you're scared. And if you're an incumbent infrastructure carrier, you'd better be scared. Because this application separation is the most important paradigm shift in the history of communications, and will change things forever. . . . I have no problem if a big and venerable company no longer exists tomorrow, as long as that value is transferred somewhere else in the economy.

The FCC's media ownership rules: There is no question that there are an order of magnitude more media choices than at any time in our nation's history.

I don't know when this golden age was that everyone is benchmarking from. TV started by being dominated by three networks and three networks only, and it has done nothing but dilute since then. . . . Where was it more concentrated?

And we've had the invention of cable television, satellite television, the Internet. So you may disagree where to draw the line, but to argue for a line on the idea that the market is 10 times more concentrated than sometime . . . then you're just willing to have a debate not rooted in factual reality.

Contact Michael Bazeley at [email protected] or (408) 920-5642.