Next year may mark the emergence of VoIP (voice over Internet Protocol) regulation, starting in the US, according to some Monday speakers at the Voice on the Net conference in Santa Clara, California.

Several petitions to the US Federal Communications Commission (FCC) to make decisions on the services are currently pending, and some of them legally should be decided within 12 to 15 months, according to Julie Veach, an assistant chief in the FCC's wireline competition bureau, who addressed a one-day policy summit at VON.

While the immediate effects would be in the US, such legislation could be an important shift in the broader international debate over how governments should treat IP-voice services. VoIP, which transmits voice conversations over the same data networks, is considered to have great potential for reducing business' telecommunications costs, although the technology is still controversial, because of security and cost issues, among others.

In the UK, a consumer advisory group formed by new communications regulator Ofcom has listed VoIP as one of its top areas of research, along with broadband and the switch to digital television, the panel said this week. A VoIP pressure group, the Internet Telephony Service Providers Association was also launched last week.

Major US federal policy decisions on VoIP probably won't be made until at least after the November election, with the uncertainty of a possible administration change looming, said Blair Levin, a managing director at financial services company Legg Mason and a former FCC official.

A state telecommunications regulator also said next year might be an opportune time to address the services before consumers start to switch en masse from traditional circuit-switched telecommunications to VoIP services. By three or four years from now, the movement could be substantial, which could hurt government programmes that depend on funds from telcos if VoIP service providers aren't required to contribute, he said.

"In a year, there's not going to be a massive migration that's going to undercut all the universal service (funds)," said Carl Wood, a commissioner at the California Public Utilities Commission.

The issue of government handling of IP voice services is a thorny one. In the US, phone service is subject to a number of federal and state regulations and taxes that may or may not be appropriate for offerings based on the new technology. Among the issues are access charges paid to carriers for using their infrastructure, fees to support universal access to phone service, emergency service, access for the disabled and support for law enforcement wiretaps.

Just as VoIP adoption has barely scratched the surface of the total telephone service market, the decisions currently being made on its regulation are just the beginning of what needs to be worked out, panellists said. What's needed, most said, is total reform of the regulations in light of a technology that will transform telecommunications.

The FCC already has ruled that at least one VoIP service, the Free World Dialup service offered by Pulver.com, should be free from most federal regulation. That service does not use conventional phones and does not allow calls to non-members of the service. That decision and comments by FCC chairman Michael Powell indicate the agency wants to apply a light touch.

The Pulver ruling may have had more to do with the size of the service provider than with the technology, Legg Mason's Levin said. Because Pulver.com is a relatively small player and VoIP currently makes up a small portion of the telecommunications industry, the government didn't see it threatening a "material impairment" to the industry, he said. That would be different if Microsoft were to build VoIP software into its next operating system and steal away 30 percent of traditional carriers' revenue, he said. That is entirely possible given Microsoft's "unique" ability to make a technology ubiquitous, Levin said.

Two state regulators at the forum presented opposing views of VoIP regulation. Charles Davidson, a commissioner from the Florida Public Service Commission, said the best way to serve the public may be by minimizing regulation to stimulate innovation. That might lead, for example, to less expensive phone service for economically disadvantaged citizens in danger of being left out, he said.

Wood, of the California PUC, disagreed. "That's faith-based policy-making. The reality is that all markets discriminate," and focus investment on the most lucrative markets, he said.