Nothing But Net Telephony

The status quo finds a likely champion

Don't look now, but the Man in Plaid is back, finding compromise and defending a state's right to screw its residents without meddling from Washington. Sen. Lamar Alexander (R-TN) is not about to stand idly by while new technologies make state public utility commissions irrelevant, no sir. Ostensibly conservative but functionally a life-long politician, Alexander simply cannot let solutions erupt from the private sector without appropriate government oversight.

As a result Alexander finds himself standing opposite Federal Communications Commission chairman Michael Powell on the future of Net telephony. Powell has cautioned the states to leave regulation of voice over Internet protocol (VoIP) telephony to the feds. The states have resisted that advice, and Alexander's broadside against Powell and the FCC last week indicates the states intend to try and complete an end-run around the feds.

VoIP busts up the old assumption that this wire is "data" and that wire is "voice" by sending voice traffic around the globe as Internet data-packets. And since voice traffic is traditionally heavily regulated and taxed and data traffic is not, something has to give.

Alexander clearly wants the old rules for voice to apply to new VoIP services. Although he leavened his comments with some boilerplate about sharing Powell's vision of a minimally regulated VoIP world, Alexander trotted out the very burdens the old circuit-switched phone network labors under as a reason to maintain a large state regulatory role over VoIP.

When Alexander says that Congress wants to "make those telephone services available to low-income Americans as well as to those who live in remote areas, and are able to maintain effective 911 and other emergency services—especially during this time of emphasis on homeland security" he is endorsing nothing less that state control over VoIP.

But that isn't even the most immediate concern for Alexander, the states, and the defenders of the status quo. Taxes and fees on telephone service throw off some $20 billion a year to the states, mostly in obtuse ways that consumers never notice unless they read the fine print of their phone bills.

However, consumers are beginning to notice that if they use their broadband connection to run a VoIP application they suddenly lose a $30-40 monthly bill from the phone company. As that practice expands, and Alexander, the states, and the Bell companies know it will, the money stream to the old system will dry up.

In essence, Alexander is echoing Abraham Lincoln in the Lincoln-Douglas debates. Telephony cannot long exist both slave and free. This is why Alexander says we need "an appropriate decision about how to regulate and tax the migration of telecommunications services to the Internet."

Either telephony, Net and traditional, will operate as a heavily regulated state utility or voice traffic will just become something else your broadband pipe does for you when you are not downloading pr0n. And, as part of the bargain, government wiretaps could be a thing of the past, which accounts for Lamar's homeland security worries. Because it doesn't use a simple closed-circuit for transmission, VoIP needs to have government back-door built into it. Trouble is, there is already a move afoot to encrypt those pesky little packets, too.

Although it may be in the midst of a hype bubble, Skype is a VoIP offering that uses very powerful encryption—256 bit—to keep snoopers at bay, be they neighbors, FBI agents, or the National Security Agency. Breaking into such a call with mathematical brute force would take years. One reviewer notes just what this portends:

A practically unbreakable encrypted phone call means that the NSA can be the man in the middle between you talking to your Mom, devote all their resources to cracking the conversation, and never prove in a court of law that you told her you liked the cardigan she knitted you… The encryption is arranged by both PCs taking part in the call, and the keys are unique for each call and thrown away after. An electronic wiretap would require corruption/cooperation of the actual PC making the call using Skype.

Plus Skype is peer-to-peer, meaning there is no there there when authorities go looking for someone to slap with a court order. In short, VoIP technologies like Skype take the century-long tight, symbiotic relationship between telephone service and government and break it into a million little gabbing nodes.

But still Alexander searches for some technocratic middle-road which can save all the old relationships. Guess he cannot change his stripes.