SAN JOSE--Voice-over -IP service providers looking for regulatory certainty to cement their business plans are out of luck, according to a succession of panelists at the Voice on the Net Telecom Policy Summit here today.

While two Congressional staff members couldn't agree on whether a re-write of the 1996 Telecom Act is even possible in this session, a broader panel of Washington insiders encouraged the VON industry to keep innovating--even if there isn't any guarantee that the regulatory sands aren't shifting.

Jason Mahler, chief of staff to Rep. Anna Eshoo (D-Calif.), predicted little Congressional action at all this year, owing largely to the "monkey wrench" of the recent merger announcements, and some stark differences between the House and Senate leaders on telecom issues.

"When it comes to telecom issues [House Energy and Commerce Committee] Chairman [Joe] Barton is from Mars and [Senate Commerce Committee] Chairman [Ted] Stevens is from Venus," Mahler said. "Their bi-cameral differences are much more stark than any bilateral differences and will be harder to resolve."

Mike O'Rielly, legislative assistant to Sen. John Sununu (R-N.H.), believes Congress will act to alter the Telecom Act of '96, if not do a total rewrite.

"I believe Congress is going to tackle a more comprehensive approach to IP services," O'Reilly said. "There are a number of decisions that need to be made, in a number of different forums--intercarrier compensation, Universal Service, etc. If you are waiting for the [FCC] to answer these questions, you are waiting for Christmas that is two years away. [Sununu] doesn't have all the answers, but his goal is to provide some certainty."

O'Reilly believes Congress will address reform of intercarrier compensation, either directly or by providing the FCC with direction.

Other key issues for VoIP providers include the FCC's pending decision on whether VoIP is an information service or a telecom service, and general matters of whether states can regulate VoIP. A group of state regulatory commissions is challenging the FCC's ruling that Vonage's service is interstate, and therefore not subject to state regulations. In the long run, the bigger issue may be telecom versus information service, said Connie Hughes, commissioner with the New Jersey Board of Public Utilities.

"The FCC's ruling [on Vonage] is correct, as far as it went," said Hughes. "We've got to go to the next stages, like whether it's an info service, to determine what the role of the states will be."

The states have a role to play in consumer protection issues, such as making sure access to E911, service for the hearing impaired and CALEA requirements are met, said Daniel Mitchell, senior regulatory counsel to the National Telecommunications Cooperative Association. "You will get a much better service if you work with the states on issues that directly affect consumers," he said.

But determining jurisdictional issues is much trickier than it used to be, said JulieVeach, deputy chief of the Competition Policy Division within the Wireline Competition Bureau for the FCC.

"With the advent of Internet access, all the lines are getting blurred and it will take time [for the FCC] to sort this out," she said. During this time, Veach added, the industry can work to inform regulators of what they view as the critical issues. The only quick certainty would be delivered by Congress, she said.

The bottom line for VON participants is that they need to keep trying to press forward, and to consider taking their business plans before state or even federal regulators in advance of regulatory action.

"You've got to make business decisions," said Jim Kirkland, general counsel of Covad Communications. "We know what the states care about and we know what the feds care about, so do your risk assessment, and if you think there's a right answer, go do it." Hughes encouraged those attending to talk with regulators in advance of launching a business plan, if not to get a blessing to increase awareness of where investment dollars are going and could be put at risk.

But Veach admitted that the FCC will be looking this year at the forbearance petitions of the Bell companies, who are seeking to be able to limit access to their DSL lines and could decide the issue by leveling the playing field and classifying DSL as it has cable modems as a system that doesn't have to be opened to competition. That could prove disastrous to the VoIP players.

The cable case, known as Brand X, is still before the U.S. Supreme Court, which could provide a definitive answer that would likely ripple through the industry, one way or another. "We hope the Supreme Court provides a substantive answer," Veach said. The only other answer for VoIP players may be to try to work within the industry to find a compromise that can be presented to the regulators.

"To the extent the competing factions can come together with a compromise, it can speed things up," said the NTCA's Mitchell, who said Vonage CEO Jeffrey Citron's recent announcement of support for a new definition of Universal Service to include broadband as encouraging.