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Do We Have Lift-Off?

VoIP is a bottle rocket, but red tape could ground it.

This story appears in the April 2004 issue of Entrepreneur. Subscribe »

As telephony diverts an ever greater share of the nation's phone calls from the Public Switched Network (PSTN), state and national regulatory bodies are wondering how to ensure adequate security and law enforcement protections for voice over IP (VoIP). They also fear the loss of millions in tax dollars that underwrite services for schools, libraries, people with disabilities and rural areas.

The courts have turned aside early attempts by states to extend PSTN-style regulation to VoIP, giving the time to formulate a national policy. But the sudden interest in IP calling has regulators anxious, while VoIP proponents fear that precipitous rule-making could scuttle the industry before it really gets airborne.

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