Why VoIP Regs Won't Work

Om Malik, writing in his VoIP column for Corante, reports that the US Senate has delivered a "stink bomb" by converting a bill originally intended to protect VoIP from state taxation into a bill that permits state taxation.

It seIn my view the Senate is ignoring an important divergence event in the telecosm. Lets put it this way -- there are two kinds of VoIP. Type (1) -- VoIP as AT&T or Vonage presents it, which is a replacement for PSTN as a back-end technology for delivering a voice signal, but looks just like PSTN to the end consumer. Type (2) VoIP as presented by Skype, FWD, etc -- a data application on the public Internet, impossible to manage, tax, control unless you want to manage, tax, and control ALL applications running on the Internet.

And here is the problem -- to the extent that a regulatory and tax burden is put on , type (1) VoIP, type (2) will diverge and separate from type (1). The laws of Darwinian evolution will generate a faster adoption of type (2) VoIP, more innovation around type (2) VoIP, and a separate class of citizens that use type (2) VoIP to communicate with each other without ever integrating with PSTN/type (1) VoIP. The government will have succeeded only in taking control of an increasingly marginal technology -- and will hasten that marginalization.