The federal government is looking into allegations that as many as 200 people who switched from traditional telephone service to placing calls via the Internet had their new service disrupted by the local telephone company in their area.
Federal Communications Commission Chairman Michael K. Powell confirmed earlier this week that the FCC is examining informal complaints from Vonage Holdings Corp., the nation's leading provider of voice over Internet protocol, known as VoIP. Vonage declined to identify the phone company involved.
Vonage, along with competitors such as AT&T Corp. and a number of start-ups, is posing a growing challenge to local and regional phone providers by offering unlimited local and long-distance Internet-calling plans for as little as $20 a month. More than 1 million consumers use VoIP, and many businesses are adopting the technology.
Vonage chief executive Jeffrey A. Citron said his engineers went to many of the customers' homes in December to confirm that the local phone company, which provides high-speed Internet access for residents, had blocked Vonage's data stream, thus making it impossible to make calls.
He said Vonage has seen a few other examples of blocking by other phone companies but did not complain about those.
The allegations could focus new legislative and regulatory attention on a long-simmering issue: whether the small number of phone and cable giants that provide high-speed Internet access to most of the country might undermine, degrade or discriminate against content that relies on their networks to reach homes and businesses.
With telephone companies' land-based service under siege by wireless and VoIP and cable firms also eyeing the Internet telephone market, VoIP providers that rely on consumers' Internet connections are one obvious potential target.
But other major Internet firms, including Yahoo Inc. and Amazon.com Inc., have raised red flags as well. They fear a scenario in which the network owners cut deals with certain vendors of Internet content so that their information gets to consumers faster, or with higher quality, at the expense of others.
"It's disturbing to us to see a gatekeeper blocking a customer's use of a service that rides over the Internet," said Matthew Zinn, general counsel of TiVo Inc., which makes digital television recorders. "It's a dangerous precedent. The Internet represents the free flow of information."
Citron, who said Vonage was able to route its customers' calls around the phone company's blocks, regards it as a form of censorship.
Citron said network operators can look into and distinguish between the "data packets" that carry information across the Internet. This gives them the ability to prioritize some over others or even block them entirely.
Although he generally opposes government regulation, Citron said some form of insurance might be necessary to ensure networks will be kept neutral.
Powell, who said he takes the allegations seriously, has in the past admonished network owners to make sure they do not discriminate.
But the FCC has not proposed rules on the issue. The major phone and cable companies have said that regulation is unnecessary because they have no plans to discriminate and that the problem was purely hypothetical.
"Not anymore," Citron said.