VoIP is, by definition, a voice communications service. Traditionally, voice services were only available to the residential, public, and businesses on the public switched telephone network ("PSTN"). Government entities have heavily regulated voice services over the PSTN in the United Statesand around the world for more than a century. In the United States, the original rationale for regulation of voice services was based on principles of common carriage borrowed from case law. Moreover, many accepted the argument that voice service, commonly known as "telephone service,"was a natural monopoly and should be regulated under principles of antitrust law.The U.S. government’s preferred regulatory approach became more formal and expansive after the creation of the Federal Communications Commission ("FCC" or "Commission") in 1934. Yet, the underlying rationale remained necessary to constrain the otherwise dominant market power of the telephone service providers, in particular the Bell operating companies (“BOCs”) and, to a lesser extent, the other incumbent local exchange carriers.
The original rationale for government regulation of the PSTN was different in much of the rest of the world. In most countries, the national government constructed and operated the PSTN, either because no private entity had enough capital to construct a nationwide telephone system, or because of the perceived importance to society of the ability to communicate with others connected to the PSTN. Usually the ministry that managed the postal and telegraph services also regulated the telephone system—hence the acronym "PTT."
In the 1980s and 1990s, the convergence of several factors led many governments to begin privatizing their PTT operations. The most important factors included technological changes, government financial difficulties, and the lessens learned from the breakup of AT&T in the United States. Additionally, the widespread adoption of the World Trade Organization ("WTO") Agreement on Basic Telecommunications ("ABT") since 1997 has accelerated this trend.
As a result of privatization, governments were forced to develop both rationales for regulating the behavior of the new private monopolists and regulatory agencies capable of doing so. In most cases, particularly in the countries that agreed to participate in the ABT, the basis for regulation was, at least in theory, U.S. style antitrust law. In fact, the Regulatory Framework Reference Paper annexed to the ABT constitutes the first instance that such a varied group of countries agreed to adopt principles of antitrust or competition policy to govern a specific sector of their economy.
Until recently, few countries had laws or regulations that addressed VoIP services or even acknowledged their existence. In the United States, to the extent VoIP was considered at all by regulators, it was generally assumed to be an unregulated application running over telecommunications services. Most of those countries that had privatized their PTTs followed a similar approval. However, dozens of countries started at the other extreme—their laws that gave a monopoly on voice service to a single (usually government-owned) entity meant that any form of VoIP provided by any entity other than the incumbent was presumptively illegal. A few countries, usually those with underdeveloped telecom infrastructure and incumbent (usually government-owned) monopoly providers of international toll service, actually took the additional step of making international VoIP calls that terminated in their country illegal.
The original rationale for government regulation of the PSTN was different in much of the rest of the world. In most countries, the national government constructed and operated the PSTN, either because no private entity had enough capital to construct a nationwide telephone system, or because of the perceived importance to society of the ability to communicate with others connected to the PSTN. Usually the ministry that managed the postal and telegraph services also regulated the telephone system—hence the acronym "PTT."
In the 1980s and 1990s, the convergence of several factors led many governments to begin privatizing their PTT operations. The most important factors included technological changes, government financial difficulties, and the lessens learned from the breakup of AT&T in the United States. Additionally, the widespread adoption of the World Trade Organization ("WTO") Agreement on Basic Telecommunications ("ABT") since 1997 has accelerated this trend.
As a result of privatization, governments were forced to develop both rationales for regulating the behavior of the new private monopolists and regulatory agencies capable of doing so. In most cases, particularly in the countries that agreed to participate in the ABT, the basis for regulation was, at least in theory, U.S. style antitrust law. In fact, the Regulatory Framework Reference Paper annexed to the ABT constitutes the first instance that such a varied group of countries agreed to adopt principles of antitrust or competition policy to govern a specific sector of their economy.
Until recently, few countries had laws or regulations that addressed VoIP services or even acknowledged their existence. In the United States, to the extent VoIP was considered at all by regulators, it was generally assumed to be an unregulated application running over telecommunications services. Most of those countries that had privatized their PTTs followed a similar approval. However, dozens of countries started at the other extreme—their laws that gave a monopoly on voice service to a single (usually government-owned) entity meant that any form of VoIP provided by any entity other than the incumbent was presumptively illegal. A few countries, usually those with underdeveloped telecom infrastructure and incumbent (usually government-owned) monopoly providers of international toll service, actually took the additional step of making international VoIP calls that terminated in their country illegal.
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