Jeff Pulver (co-founder of Vonage and founder of Free World Dial-up) and other "pure" VOIP providers scored a victory today, after the FCC ruled his service is not a traditional telecom service and therefore not subject to the same regulation. FCC chairman Michael Powell declared that pure VoIP communications is "in no way different than e-mail and other peer-to-peer applications blossoming on the Internet". Pulver had requested (pdf copy) a "declaratory ruling" that Free World Dial-Up be freed of any regulatory hurdles.

Such freedom from regulatory oversight could prove to be a thorn in the side of the FBI, who have been urging the FCC to apply telecom regulation to all VoIP providers so they can be forced to adhere to the Communications Assistance for Law Enforcement Act (CALEA). The act mandates providers must make their networks "wiretap friendly". The FBI has been very vocal in their concerns that VoIP has become a wretched hive of scum and villainy - a favorite communications medium of terrorists, criminals, and assorted other malcontents.

In anticipation of such a ruling, the FBI has been working with several hardware manufacturers to create backdoor access. Cisco's Lawful Intercept Control technology is one such example of these efforts.

While some anticipated the FCC would heavily regulate the VoIP industry (former FCC Chairman Reed Hundt being one), Powell so far seems content to allow the industry room to breath, though today indicated there will likely be some regulations in instances where VoIP providers cross paths with the PSTN (public switched telephone network). It's also hard to believe Powell won't at least bend to the will of the FBI.

In Pulver's case Free World Dial-up operates via SIP (Session Initiated Protocol) technology, where users primarily call other SIP based phone users via the web. While the victory is considerable - considering Pulver had the FBI, states, and bell lobbyists working in opposition - this really is only the beginning of a long process at the FCC that has the potential to get rather ugly.

FWD is considered a "pure" VoIP provider. Decisions still need to be made regarding VoIP providers that allow their traffic to travel partially over the web, but also via traditional phone networks. AT&T and other providers are waiting for a ruling on how much they have to pay telcos when their VoIP traffic bumps into the PSTN. SBC claims they've lost between $200 to $450 million due to "illegal access avoidance" by long-distance carriers and VoIP providers.

Although Powell has urged states to keep their hands off of VoIP technology, today the California Public Utilities Commission did the exact opposite. Though there are some legit concerns about regulating the quality of E-911 services, primarily it's a cash-grab. The PUC estimates that VoIP could represent as much as 40% of intrastate telecommunications revenue in California by 2008, and therefore announced today they'd be moving forward in their plans to leash VoIP providers.

Pulver, who we interviewed last summer and frequents our VoIP forum, has been commenting on his progress at the FCC via his blog.