- The Washington Times - Monday, January 6, 2003

A group of phone companies has asked an advisory group to consider regulating Internet telephone service in response to a threat from the emerging technology.
Three Baby Bells BellSouth Corp., Qwest Communications International and Verizon Communications Inc. have singled out 2-year-old Vonage Holdings Inc. The Bells argue that Vonage, a privately held firm based in Edison, N.J., could dry up the pool of available phone numbers in some areas unless the North American Numbering Counsel steps in to modify the way numbers are assigned to subscribers.
"This is the first skirmish in what I think is going to be a huge fight over the next year," said Jon Canis, a telecommunications lobbyist at Kelley Drye and Warren LLP, in Tysons Corner.
Calls over telephone lines rely on circuit switching. Vonage, which started service in April, charges customers $40 a month to place calls over Internet protocol technology.
To make Vonage technology work, customers must have a broadband connection from a cable modem or digital subscriber line. Their standard telephones are plugged into adapters and hooked up to their broadband connections.
The service is available in about 100 area codes, including the District. Vonage says it has more than 8,000 subscribers.
Vonage also lets subscribers make and receive calls from anywhere with the same phone, as long as they carry their adapters. Each call is sent to an Internet protocol address in the adapter.
BellSouth, Qwest and Verizon are objecting to Vonage's approach to let subscribers pick area codes of their choice. A Vonage customer in Dubuque, Iowa, can have a New York area code.
Vonage is classified as a data service, not a carrier, so it doesn't have a pool of numbers from regulators to assign customers. It receives numbers from phone companies in the 100 area codes where it has negotiated access to the telecommunications network and has set up servers to handle phone calls.
The Bells assign phone numbers based on a person's residence because their markets are determined by geographic boundaries, putting them at a distinct disadvantage to Vonage, which can offer service nationally.
Internet telephony makes the concept of calling areas meaningless because calls are sent to an Internet address, Mr. Canis said.
Vonage should be required to assign phone numbers to customers based on where they live, the Bells argued in a nine-page position paper filed in November with the North American Numbering Counsel, an advisory group to the Federal Communications Commission.
If it doesn't, Vonage will exhaust the supply of phone numbers in some areas, the phone companies say.
"This problem will increase when other [Internet telephone companies] begin to obtain and assign numbers in a similar fashion," the Bell companies wrote.
Vonage Chief Executive Officer Jeffrey Citron doesn't buy the argument.
He says new area codes can be introduced as numbers become scarce and that only about 20 percent of Vonage customers live in area codes different from the three-digit codes they request.
Mr. Citron said the Bells' argument also fails to take into account movement among subscribers to their own wireless services, Verizon Wireless and BellSouth's Cingular Wireless.
He estimates that 1 million of the nation's 138 million wireless subscribers have moved from the areas where they first subscribed to cell phone service and haven't changed their numbers.
"The Baby Bells are just attacking Vonage nothing more. It's because they view us as a threat, and they're right," Mr. Citron said.
Forrester Research predicts 4 million U.S. homes could sign up for the service by 2006. About 1.2 percent of U.S. homes "cut the cord" as of November 2001 and received phone service only through a cell phone provider, the FCC said.
The North American Numbering Counsel will discuss the Bells' proposal at its Jan. 22 meeting. Regulators must have a policy that doesn't favor one technology over another and doesn't deplete available phone numbers, said Bob Atkinson, chairman of the NANC and former deputy director of the FCC's common carrier bureau.
The current pool of numbers is expected to last until 2031.
"To me, the pressure of [running out of numbers] is off," Mr. Atkinson said.
But the pressure on the Bells from Internet telephone companies appears to have just have begun.

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