Comcast VoIP Actions Draw New FCC Scrutiny

Info Tech & Telecom News (Heartland Institute), April 1, 2009

The Federal Communications Commission, which has sanctioned Comcast for impeding peer-to-peer traffic on its servers, has sent a letter to the cable and Internet service company demanding an explanation why it appears to favor its own digital telephone services over its competitors’.

A Comcast spokesperson said the company is still reviewing the letter but has “fully complied with the FCC’s order regarding our congestion management.” Comcast announced on its Web site it might occasionally slow voice over Internet protocol (VoIP) telephone service to ease traffic congestion but will not do so for its own digital voice service.

The FCC questioned that policy in its January 18 letter to Comcast: “We … ask that you provide a detailed justification for Comcast’s disparate treatment of its own VoIP service as compared to that offered by other competitors on its network.”

‘Stickiest Wicket’

Telecom experts say Comcast is in a nearly impossible position of trying to protect and promote its own VoIP services while not angering customers or raising the ire of federal regulators.

“This is one of the stickiest wickets I have seen,” said Jeff Kagan, an independent telecom analyst based in Atlanta. “It is very difficult to satisfy both sides. Since the main idea is to give customers competition and choice, then all competitors should have the same access to the networks to provide similar quality.

“On one hand we think that the company that rolls out the broadband connection should be able to do what they want with it, including giving themselves an advantage over the competition,” Kagan said. “Unfortunately, if the competition is not [of high] quality, they eventually die. The provider of the service would love that, but the consumer marketplace would not.”

Could Judge Services Separately

As a solution, Kagan suggested the broadband connection be considered a separate service from the other services that are offered using it.

“Every company should have equal connection quality,” Kagan said. “The winners and losers should come from the ability to deliver service. That constant opportunity and threat keeps the marketplace sharp. It helps keep prices down and innovation up.”

A ‘Damaging’ Move

The problem with the FCC’s action, according to Daniel Ballon, a technology policy fellow at the San Francisco-based Pacific Research Institute, is that companies that build the delivery technology expect to collect fees from competitors that use it. Otherwise, there is no advantage to be gained by developing the technology in the first place.

“Essentially, the FCC is trying to enforce open access to other people’s business,” Ballon said. “This has a damaging effect on the market. Companies need to make a profit; otherwise they won’t bring [a product or service] to market.

For example, “Verizon would likely stop the development of FiOS if competitors can use it [as well],” Ballon said. “[The FCC] got rid of mandatory unbundling, now they’re trying to bring it back.”

Phil Britt ([email protected]) writes from South Holland, Illinois.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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