BEFORE THE SENATE COMMUNICATIONS AND HIGH TECHNOLOGY COMMITTEE Senator Jake Corman, Chairman Testimony of SONNY POPOWSKY CONSUMER ADVOCATE Regarding Voice Over Internet Protocol Pottstown, Pennsylvania September 15, 2004 Office of Consumer Advocate 555 Walnut Street Forum Place, 5th Floor Harrisburg, PA 17101-1923 (717) 783-5048 Office (717) 783-7152 Fax Email: spopowsky@paoca.org 81003
SENATOR CORMAN, SENATOR WILLIAMS AND MEMBERS OF THE SENATE COMMUNICATIONS AND HIGH TECHNOLOGY COMMITTEE My name is Sonny Popowsky. I have served as the Consumer Advocate of Pennsylvania since 1990 and I have worked at the Office of Consumer Advocate since 1979. As the statutory representative of Pennsylvania s telephone consumers, I am pleased to testify here regarding an issue of extraordinary importance to those consumers, that is, the future of Voice Over Internet Protocol or VOIP in Pennsylvania. I say this is an issue of extraordinary importance because I am convinced that the future of landline telecommunications service lies in the use of packet switching and internet protocol. There is no question that the use of packet switching and internet protocol can greatly increase the efficiency and reduce the cost of many diverse telecommunications services. I am also convinced that technological developments will allow VOIP users to receive as good a quality of voice service as they receive now from the traditional public switched telephone network, while at the same time, gaining access to a wide array of new services that would be impossible to provide over the traditional network. I am certain that other witnesses at this hearing will describe the great potential of VOIP as a means of enriching the lives of telecommunications consumers and advancing the economic welfare of our Commonwealth. My goal is to seek to ensure that in achieving this potential, the General Assembly not lose sight of other important societal goals that must be maintained, such as the preservation of universal basic telephone service and the availability of safe and adequate emergency 911 service. Fortunately, I do not believe we need to sacrifice one set of these goals in order to achieve the other. 1
I think it is important not to create a false choice on the issue of VOIP regulation by suggesting that any attempt to regulate VOIP in any way will somehow stifle this technology and prevent the benefits of VOIP from reaching consumers. To me, for example, requiring VOIP providers to offer reliable 911 service will no more destroy the VOIP industry than requiring auto manufacturers to install seatbelts has destroyed the auto industry. I also don t think it is too much to ask VOIP providers and VOIP users to contribute to the funding of universal telecommunications service along with the providers and users of all other telecommunications services in Pennsylvania and in the Nation. At the same time, I, for one, have no interest in regulating the prices charged for the current generation of VOIP services or engaging in other types of regulation that are ordinarily applied to traditional basic telephone service. There is a reasonable balance, I believe, that can be struck at both the state and federal level, between traditional regulation and total deregulation of all VOIP service at this time. Today s hearing is an important step for the General Assembly in learning about VOIP and what it can mean for Pennsylvania consumers. My concern, however, is that this examination could be short-circuited by passage of House Bill 30, the comprehensive telecommunications legislation that passed the House last year and that contains a provision that would prohibit state taxation and regulation of a very broadly defined set of VOIP services. The only exception to the ban on VOIP regulation in House Bill 30 concerns access charges that VOIP providers would have to pay to incumbent local exchange companies (ILECs) and other carriers who provide access to their network. I happen to agree with the ILECs that they should be compensated for this access, but I think it would be a terrible mistake for the General Assembly to prematurely prohibit all other regulation of VOIP service for such matters as 911 2
and universal service. As I will discuss later in my testimony, I am also concerned that the definition of VOIP in House Bill 30 is so broad that it might eventually encompass even the basic service that is currently offered by ILECs over the public switched telephone network. I would note that my concern about prematurely prohibiting regulation of such VOIP issues as 911 service and universal service is shared by at least some members of the United States Senate who have been considering legislation that would have prohibited any state regulation of VOIP service. United States Senate Bill 2281, as introduced by Senator Sununu, would have pre-empted all state regulation of VOIP service. When that Bill was brought to the Senate Commerce Committee on July 22, 2004, however, it was amended explicitly to permit state regulation of both the provision of and payment for 911 service by VOIP providers as well as state requirements to contribute on an equitable and non-discriminatory basis to the preservation and advancement of universal service. The amendments also allowed states to require compensation to other carriers for the use of their facilities. While I do not anticipate that the federal VOIP legislation, as amended in Committee, will become law in this session of Congress, I think it is significant that a bi-partisan majority of the Senate Commerce Committee agreed that it was not appropriate at this time to prohibit state regulation of such issues as 911 and universal service. As I said earlier, I think it would be a mistake for the Pennsylvania General Assembly to prematurely preempt its own regulators, the Public Utility Commission, from exercising the responsibilities that even some members of Congress believe that the states should retain. At the same time, I am not urging this Committee to take affirmative action to impose any form of state regulation on VOIP at this time. I think our Public Utility Commission has probably taken the correct course for now by deferring any decisions on VOIP regulation 3
until jurisdictional issues are addressed by the Federal Communications Commission and some of the technical implications of VOIP become somewhat clearer. I also agree that even if states retain some jurisdiction over VOIP, we do not want 50 different state standards, for example, regarding how VOIP companies must provide 911 service. I do think, however, that Pennsylvania does have a significant interest in ensuring that VOIP providers in Pennsylvania do provide some form of reliable 911 service that can identify the telephone number and location of the caller, and that Pennsylvania s 911 emergency service providers receive adequate compensation for supporting that service, just as they receive from other Pennsylvania telecommunications providers and customers through 911 surcharges. I would also note, in this regard, that many of the initial VOIP offerings that we are seeing today do not yet have full 911 service capability. Indeed, the advertising and terms of service for Verizon s VoiceWing explicitly state that: VoiceWing does NOT support traditional 911 or E911 access to emergency services. You must maintain alternative means of accessing traditional emergency response services. An advertisement I recently received at home for Vonage VOIP does not mention 911 service, but the Vonage Website advises prospective customers that, when you dial 911 your call goes to a different phone than traditional 911 calls and that you will need to state the nature of your emergency promptly and clearly, including your location and telephone number, as Public Safety Answering Point (PSAP) personnel will NOT have this information on hand. It is my understanding that members of the industry are working with emergency service providers at the national level to address existing technical limitations in VOIP 911 service and I am confident that such limitations can be overcome. Again, however, I would urge the General Assembly not to take precipitous action through House Bill 30 to prohibit state 4
regulation even before we know how VOIP providers intend to address 911 and other societal obligations, and how those obligations will be paid for. With respect to the issue of universal service support, I would note that one of the benefits of many of the new VOIP services is that a VOIP subscriber can call anyone who has a telephone and can receive calls. That is, unlike some of the earlier Internet-based calling systems, the use of VOIP is not limited to calls or messages between computer users. Like other telephone customers, VOIP subscribers benefit by being able to call the entire universe of telephone customers. The more customers who are connected to the telephone network in some way, the greater the benefit to all other telephone users. That is the whole principle behind universal service, which has been a bedrock policy of both federal and state telecommunications laws for decades. Again, there is no reason, in my view, why VOIP providers and subscribers should not contribute to universal service support as do all other telecommunications providers and subscribers. Finally, as I mentioned earlier, I have a technical concern regarding the definition of VOIP in House Bill 30. The bill defines VOIP to include the provision of voice communications and related features by means of encoding voice and related signals into packetized form and transmission of those packets using internet protocol or any successor protocol for some or all of the transmission. My concern is that many current basic telephone service providers are considering or are already in the process of converting their existing network to packet switching and the use of internet protocols, even though those calls will not travel over the public Internet as we know it today. In other words, the basic telephone service See, for example, Verizon press release dated January 7, 2004, declaring that Verizon is Largest Telecom Provider in U.S. to Begin Replacing Traditional Central Office Switches with Packet Switches and quoting Verizon executive Paul Lacouture as saying We are literally taking what is known in the industry as Public Switched Telephone Network and transforming it. http://newscenter.verizon.com/proactive/documents/printerfriendly- 5
that companies today provide over the public switched network might soon meet the House Bill 30 definition of VOIP and could therefore be totally deregulated. I do not think that is the intent of House Bill 30, but if it were to come to pass, then all the other protections contained in that Bill and in the Public Utility Code for basic telephone service would become moot. It is essential that we not inadvertently remove all consumer protections regarding the price and quality of basic telephone services in Pennsylvania simply because those services may soon be provided over packet switches, rather than circuit switches. In closing, I would like to thank the Committee for holding this hearing and for permitting me to testify on this complex and exciting development in telecommunications technology. I hope that you and other members of the General Assembly will continue to make a careful examination of this issue, and develop long-term policy responses that allow this technology to reach its full potential to benefit Pennsylvania consumers, while preserving the many other essential societal goals for which we rely on a universally available, safe and adequate telecommunications system. 81003 shared/printerfriendly?docid=83213; See also http://www.pittsburghlive.com/x/tribune-review/business/s_173500.html, Pittsburgh Tribune-Review, January 8, 2004, Verizon Communications said Wednesday it will begin by the middle of the year converting its massive nationwide network from a traditional circuit switch platform to a platform known as Voice Over Internet Protocol. It is OCA s understanding that Sprint has already begun to convert several of its central offices in Pennsylvania to packet switching. 6