Cuomo backs off regulating Internet phone

When Gov. Andrew M. Cuomo released his executive budget in January, the telecommunications industry was thrilled.

The various legislation needed to enact Cuomo's budget

Nestled inside the various legislation needed to enact Cuomo's budget was a bill designed to ensure that the state would not start regulating Internet phone service, if not known as Voice-over-Internet Protocol, or VoIP (Voice over Internet Protocol).

For years, telecom companies -- notably Verizon and Time Warner Cable, fierce competitors in the marketplace -- have worked at the same time to convince the State Legislature that regulating Internet phone service is a bad idea for consumers and that the best thing to do is to pass a law saying that Internet phone, which is already subject to federal regulation, is not subject to state regulation.

But union and consumer groups say the in contrast is true and that a state law backing off regulation would benefit the large phone and cable companies, during harming consumers.

Perhaps not wanting to get caught in the middle of such a fierce debate at a time when he has bigger priorities, just as pension overhaul, Cuomo quietly removed the VoIP bill from his budget, to all appearances at the urging of the Assembly.

Nothing fundamentally changes with no law in place. Internet phone service is not regulated by the state Public Service Commission, which has wide-ranging oversight of the traditional landline business of Verizon and others.

After all, Cuomo's budget documents said the legislation was critical because it would encourage more capital investment in broadband networks that carry large amounts of data and voice service. Otherwise increasing broadband Internet access, the networks would as well presumably create jobs and increase tax revenue in the state.

Instead, although VoIP remains unregulated, the telecoms say Cuomo's move will have a chilling effect on their investment plans in New York -- which they say will be bad for consumers, who won't benefit from lower prices and better products that come from the heat of competition.

The Cable Telecommunications Association of New York estimates that VoIP service in New York allows consumers to save more than $326 million a year because of cheaper rates, compared with traditional, regulated phone service.