The challenges of classification: Emerging VOIP regulation in Europe and the United States

July 10, 2005

Internet telephony — or Voice over Internet Protocol (VOIP) — has the potential to transform the world of voice communications more profoundly than anything since the invention of the telephone itself. As telecommunications incumbents and a range of new entrants begin rolling out commercial VOIP services, policymakers around the world are grappling with the regulatory implications. In the United States and the European Union, the two largest near–term VOIP markets, efforts are underway to fit VOIP into existing regulatory frameworks. This process of “regulatory classification” is by no means a purely administrative act. A lot is at stake and different interest groups have therefore mobilized to shape the respective outcomes. Because legacy regulatory systems in Europe and the United States differ, the regulatory treatment of VOIP in the two markets is beginning to differ as well. Yet in both markets there is a substantial danger that fitting VOIP into existing classifications will force VOIP to look more like regular telephony, thereby limiting its innovation potential.

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