July 23rd, 2007
Does SunRocket's sudden close show more VoIP regulations needed?
When last week’s failure of SunRocket left some 200,000 subscribers scrambling for an alternative home phone service, many saw this as the free market at work. Free market as in, survival of the fittest, and the availability of other choices waving discounts to former SR customers as the wisdom of the markets.
A somewhat contrarian view would note that if SunRocket were a regulated phone company, such a sudden flameout would not have been tolerated. That’s because standard landline phone companies are subject to a degree of regulation that VoIP services are not.
As Matt Richtel in The New York Times points out today, the issue is somewhat complicated by the fact that unlike in the times when landline regulations were crafted, VoIP subscribers almost always have cell phones. So in the interim, that’s a second choice.
“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,” Matt writes. “While these experts said the SunRocket shutdown was clearly a big problem for customers, they said it might 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.”
Matt then quotes former FCC chief of staff John Nakahata as noting that SunRocket’s sudden closing “does point out that there’s some need for either protection or education — I’m not sure which is the right one.”
I’m not sure, either.
Are you?
Russell Shaw is an enterprise computing journalist, analyst and author based in Portland, Oregon. See his full profile and disclosure of his industry affiliations.
