November 15, 2004

The Internet and the Commerce Clause

By Bryan

Last week I made note of a Wahington Post article regarding VoIP and the barriers to expansion that have kept providers out of some states. You can read the original short post at My Street.

In summary, Vonage won an FCC ruling that state regulators do not have authority governing internet phone service. The FCC would like to keep the power of regulation to itself. Specifically, Michael Powell declared, "...several technical factors demonstrate that VoIP services are unquestionably interstate in nature." I have watched Michael Powell make many anti-free market decisions in the past, but I wholeheartedly support this move.

Vonage and other VoIP providers are able to provide service to the entire world by shipping product from one office. This is clearly interstate business. Improved communications, and more specifically the Internet, has enabled many companies to instantly expand a local market to a global market. Even from thousands of miles away these companies introduce competition, new services and better quality for their customers.

I can personally understand the barriers these service providers were battling. While selling security electronics to the 50 states and Canada, I found less regulation (albeit more taxes) selling to Canada than I did selling to a nearby suburb. Each of the thousands of police districts had created a unique set of regulations and each demanded various forms of registration, taxation or fingerprinting. Sending employees to be fingerprinted in 50 states is a uniquely expenisve barrier to interstate commerce.

I hope that this FCC ruling will be one of many similar rulings to open up our markets to more competition. Satellite TV and Radio would also benefit from relaxing the localized regulation that prevent individualized content in each geogrpahy and prohibit one geography to receive content from another geography. More on this later.

Have you been affected by barriers to interstate commerce? Please share your thoughts.

Posted at November 15, 2004 05:05 PM

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