Regulators Intensify Focus On Voice Over
BY WILLIAM B. WILHELM, JR., ESQ
What moves faster than a runaway locomotive, but is as difficult to
understand as the solution to the Rubikï¿½s Cube? If you answered
ï¿½recent efforts to regulate VoIPï¿½ you would be right.
In fact, the recent clamor over VoIP regulation has been hard not to
notice. Over the course of the last several months, State and Federal
regulators have begun parallel initiatives to consider whether traditional
telephone carrier regulations should apply to VoIP providers. The outcome
of these proceedings will impact the market for broadband services and
affect demand for IP telephony equipment. For companies interested in
making immediate business and investment decisions, the myriad legal
proceedings can be hard to follow and the specific impact difficult to
understand. For those that donï¿½t regularly socialize with regulatory
attorneys, what follows is a snapshot of the most significant ongoing
regulatory proceedings and an outlook ahead to the material developments
likely to occur in 2004.
In response to developments in the industry as well as state regulatory
activity, the FCC held a public forum on VoIP services in late December.
The forum explored whether carrier regulation is appropriate for VoIP
services, considered the impact of VoIP applications on existing Universal
Service funds, explored issues related to provisioning of 911 services
over VoIP, touched upon law enforcement intercept capabilities over packet
networks, addressed whether VoIP services would be available to persons
with disabilities, and considered the applicability of local telephone
company access charge payments to VoIP. During the course of the public
forum, VoIP providers made a strong case for finding that these issues can
be addressed without the imposition of legacy telecommunications carrier
regulation. The FCC is expected follow-up on the forum with the issuance
of a Notice of Proposed Rulemaking (ï¿½NPRMï¿½) on VoIP sometime in
February or March of 2004. This proceeding is expected to touch upon
virtually every aspect of VoIP services and will provide a focal point for
much of the industry through 2004.
Also outstanding at the FCC are three Petitions for Declaratory Ruling --
one filed by AT&T, another filed by pulver.com, and a third filed by
Vonage Holdings, Corp. Each of these proceedings could also have an impact
on the regulatory treatment of different forms of VoIP.
The first petition, filed by AT&T, involves so-called phone-to-phone
VoIP. This form of service utilizes traditional telephone equipment and
originates and terminates calls on the PSTN. AT&Tï¿½s petition asks
the FCC to find that originating and terminating local telephone company
access charges are not payable on this form of VoIP. The pulver.com
petition seeks an FCC finding that Pulverï¿½s service, a form of
computer-to-computer VoIP, is not a telecommunications service. Finally,
the Vonage petition involves a hybrid of computer-to-computer and
computer-to-phone VoIP. Vonage asked the FCC to preempt Minnesota state
regulation and find that its service is an interstate information service.
Because these proceedings are independent of the FCCï¿½s VoIP NPRM,
resolution of each of these specific matters could occur well before a
ruling in the broader VoIP NPRM.
Despite a Federal Court ruling earlier this year holding that the
Minnesota Public Utilities Commission was preempted from regulating
Vonageï¿½s VoIP service, at least 10 other states continue to actively
evaluate possible regulation of VoIP services. These states include
Alabama, California, Missouri, North Dakota, New York, Ohio, Oregon,
Pennsylvania, Washington and Wisconsin. At least one state, Florida, has
passed legislation that protects VoIP providers from unnecessary
telecommunications regulatory obligations. Similar legislative initiatives
are underway in other states, including, most notably Pennsylvania.
Because FCC Chairman Powell has been a strong advocate for a national
regulatory framework that preserves business incentives to innovate and
invest, many industry participants are hopeful that state PUCs will take a
ï¿½wait and seeï¿½ attitude toward state regulation. Notwithstanding the
Chairmanï¿½s pronouncements, at least several VoIP providers have become
the subject of individual lawsuits or PUC complaints in several states.
Finally, at the time this article was being prepared, motions filed by
Qwest, the Minnesota PUC and the Minnesota Department of Commerce were
pending before the Minnesota Federal District Court seeking
reconsideration of the permanent injunction issued against the state PUC.
Separately, a Federal Court in the Ninth Circuit has held that cable modem
services provided over cable facilities constitute both the provision of
information services and an underlying telecommunications transport
service. The FCC is seeking reconsideration of this decision. Although the
case does not directly involve VoIP, the outcome of the proceeding could
have some bearing on how the FCC characterizes services offered by
facilities-based providers of VoIP.
While 2004 may not provide complete regulatory certainty for the Internet
communications industry, readers should take heart that the attention the
industry is now receiving is one of the unintended consequences of an
increasing awareness that the technology will not only reshape the
competitive landscape of the communications industry -- but also very
possibly the current regulatory environment as well.
William B. Wilhelm is a Partner in the firm of Swidler Berlin Shereff Friedman, LLP, a
law firm with nearly 300 lawyers in offices in Washington, D.C. and New
York City. The firm has more than twenty different practice areas,
including antitrust, corporate, litigation, telecommunications, and
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