Today’s New York Times carries a story about the sudden failure and shutdown of my former home telephone company, SunRocket. Although it obviously could have handled its own demise better, SunRocket did provide pretty good service: Unlike its competitor Vonage, SunRocket never went down and generally provided call quality as good as land line. The 11 months of service I got for $203.00 (including all taxes) cost about what I would have paid to Vonage and a lot less than I would have paid for traditional land-line service. Although he can’t actually find a single expert who supports his point of view, the Times reporter nonetheless talks about the possibility of more regulation for VOIP companies and, implies that it would be a good idea. Here’s a quote:
Standard telephone companies are required to give customers notice if they plan to stop service. But companies like SunRocket that use the infrastructure of the Internet to transmit calls do not have to give such notice. They fall into a bit of a regulatory no man’s land [What a weasel phrase!-EL] in which they are required to adhere to some traditional requirements, such as building their systems so customers can get 911 service and law enforcement can get easy access to data, but they are free of many other regulations, particularly at the state level.
Many industry analysts and former policy makers said the absence of broad regulations was, to a large extent, desirable because it would allow the emerging Internet phone industry to develop. While these experts said the SunRocket shutdown was clearly a big problem for customers, they said it might [emphasis added] not justify a spate of new regulation. One important difference between the current telecommunications era and years past is that most people now have a cellphone as a backup.
Actually, the experts the reporter, Matt Richel, quotes, all seem to agree that it does not call for regulation. Only Richel seems to support regulation.
If landline phones are to survive at all in homes — and I’m not sure if they will under any circumstances — it seems pretty obvious that they’ll work over the Internet rather than old copper cable. The copper wire network can’t do one-tenth of what the Internet can and remains so regulated through pricing rules that nobody has an incentive to invest in it in any case. Letting a telephone company fail without any actual hardship (the most “sympathetic” person the reporter could find actually hasn’t suffered at all, he’s just worried) shows how resilient the telephone network has become. Like most other SunRocket subscribers, I signed up for new telephone service the same day I got a notice of SunRocket’s shutdown. I still don’t have voicemail but, all in all, I’m in pretty good shape. I may be out a few months of prepaid telephone service but, all in all, I’m not all that dismayed by SunRocket’s collapse.
Business collapses are part of the free market. I wonder, in fact, if any sizeable land-line telephone provider has ever collapsed before. I’m guessing that none has. Without business failures, you can’t get innovations. Between 1920 and 1995, the period during which telephone service was heavily regulated just about everywhere, I can think of only three major innovations: direct dial long-distance, private telephone lines, and touch-tone dialing. Not much. We’ve seen more changes since 1995 than in the entire history of telephone service before then. Regulation of Voice Over IP phone service would only slow things down. Whatever happens, I’m guessing that life — and telephone service — will go on.