WASHINGTON -- Internet telephony pioneer Jeff Pulver pulled no punches today in criticizing last week's vote by the U.S. Senate Commerce Committee vote to allow states to continue regulating Voice over IP (define) services.

Pulver, participating in a Federal Communications Commission (FCC) roundtable on IP regulations, called the vote a "bizarre, last-minute procedural maneuver" and vowed to lead the fight against it if the bill reaches the Senate floor for a full vote.

"[The bill] would arguably subject even people playing Xbox live to [the] Universal Service [Fund] simply because Xbox utilizes voice applications," said Pulver, who is the president and CEO of Pulver.com and the founder of Free World Dialup (FWD).

The Universal Service Fund subsidizes telephone service for low-income individuals and schools and libraries.

Last Thursday, the committee amended legislation to preserve state authority to impose access charges and universal service fees on Internet telephony. Sen. Byron Dorgan (D-N.D.), who sponsored the amendment, said he was concerned about the economic impact on states of voice traffic migrating from the public switched telephone network to the Internet.

The FCC is also considering VoIP regulations in a year-long review of the emerging technology.

In February, the agency exempted Pulver's FWD from FCC telecom regulations because the free calls customers make are routed entirely over the Internet and never interconnect with the public switched telephone network (PSTN). With a broadband connection, FWD members talk with each other computer-to-computer.

"This [bill] runs absolutely counter to the logic of the Pulver [FCC] order and only to serve the cyber roadside police agents," Pulver said.

If the notion to allow states to regulate VoIP prevails, Pulver said, "I think we should find a Caribbean island country" to move VoIP operations. "It would be a tremendous investment ... if this doesn't happen right in the U.S."

Although the bill has received widespread publicity, a Hill staffer closely associated with the legislation told internetnews.com earlier this week, "The bill is dead on arrival. It isn't going anywhere."

VoIP technology presents a vexing problem for regulators. Unlike FWD, which is a pure VoIP play never touching the PSTN, most VoIP calls originate on the PSTN and travel to a gateway server that converts analog voice into data packets. From there, the data packets traverse the public Internet or a private backbone to a destination point where it goes through another gateway, rolling over to a local PSTN line.

It's when the VoIP calls hit the PSTN that cash-strapped state regulators want to call Internet telephony a normal voice service and charge access fees. VoIP providers say they shouldn't be regulated like telephone carriers since they don't traffic in voice packets, contending VoIP is just an another software application like e-mail.

"And it isn't entirely all about the money," the Hill staffer said. "If eventually all voice traffic moves to the Internet, what will these people [state regulators] have left to regulate? They don't want to lose their power."

In the current absence of any federal laws regulating VoIP, the FCC's review is expected to result in regulations to be issued late this year or early next year. FCC Chairman Michael Powell has repeatedly said the agency wants to regulate VoIP as little as possible to help the industry grow.

"Nothing has been a clearer beacon and signal to [other] countries and regulators than to hold up the United States as an example," Jonathan Draluck, vice president of business affairs and general counsel of iBasis, a wholesale provider of international IP telephony services, told the FCC Friday. "The United States has had light regulatory touch and this has fueled, more than anything, the innovation and the growth in this industry."

A June Merrill Lynch research report says in the first quarter of this year, broadband penetration, a critical factor in the deployment of VoIP services, reached 23.8 percent in the United States, with the strongest penetration rates driven by cable operators with VoIP deployments.

"We call it everything over IP," Glen Campbell, author of the report, told the FCC roundtable discussion. "Over time, we're going to see a complete separation of applications from the [underlying] networks."

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