Alternative Technologies and Impacts on Telecommunications Regulations: The Issue of Bypassing in the Internet Telephony


Chung-Chuan Yang


Advances in voice signal compression, computer software, and networking technologies have made the Internet a feasible and competitive channel for voice communication. Computer software companies such as VocalTec, Inc., Internet Telephony Company, and Digiphone are selling different software packages that can turn the Internet into a telephone network to make local, long-distance, and even international telephone calls. As a result, the America’s Carriers Telecommunication Association (ACTA) filed a petition on March 4, 1996 to the Federal Communications Commission (FCC) to stop the sales of Voice-On-the-Net (VON) software. The FCC has published a Public Notice to request comments from interested parties in this matter

Internet telephony is a new application resulting from the convergence of computing and telephony technologies. It uses a combination of computer programs, hardware, and an Internet connection to transform the Internet into a voice communication network. The introduction of the Internet telephony into the telecommunications service marketplace has advantages of cost-reduction for telecommunications service users and of the increase in the efficiency in the marketplace. However, from the public interest perspective, a major setback from in creasing competition is the endangering of universal service provision. 

The introduction of the Internet telephony allows telephone users to bypass existing telephone service operators. Although a systematic study regarding why users choose to bypass is still lacking, popular literature has shown consistently that the economic (cost saving) reason plays a major role in their decision. In spite of bypassing activities are nothing new in the telecommunications industry, the emergence of the Internet telephony has added complexities to this issue. 

In spite of the ACTA’s call for FCC’s action on the Internet telephony, there are still controversies on whether and how the FCC should regulate this new application. For policy makers, the difficulties result from the innovative nature of this technology, complexities in defining telecommunications service providers, the lack of appropriate regulatory models, and public interest concerns. More broadly, the issue of regulating Internet telephony is also woven into how the Internet, per se, should be regulated. 

This paper is aimed to examine the following issues: 
1) Describe current developments of the Internet telephony in the United States. 
2) Discuss stakeholders’ position in the Internet telephony regulations.
3) Examine regulatory issues due to the introduction of the Internet telephony. 
4) Discuss the impact of Internet telephony on bypassing issue. 
5) Predict future regulatory trends of the Internet telephony regulation.