[December 30, 2004]

California to Appeal FCC�s Decision on VoIP Regulation

BY JOHANNE TORRES

It seems that this week’s ruling that the state of Minnesota is not allowed to regulate VoIP-enabled calling services provided by Vonage and other Internet telephony companies at state level fell on deaf ears. The state of California decided to appeal the Federal Communications Commission (FCC)’s decision ruling VoIP services interstate, exempting them from most taxes and state-level regulation.

The Public Utilities Commission (PUC) of the state of California just issued a petition for review which was filed with the U.S. Court of Appeals for the Ninth Circuit. According to the petition, California’s PUC challenges the FCC’s ruling last month, arguing that the commission exceeded its statutory jurisdiction in this issue.

California’s PUC says that the appeal will seek a judgment on whether the FCC acted "arbitrarily, capriciously and contrary to law" in ruling that it had exclusive jurisdiction over voice services and facilities-based providers.

What baffled most of us this morning is that this appeal comes on the heels of a ruling two days ago from a court of appeals in St. Paul, Minnesota: That court ruled that the state’s PUC is not allowed to tax and/or regulate VoIP-enabled calling services at state level.

As I see it, more states will join Minnesota and California by filing individual appeals against the FCC’s decision. We have yet to see whether the lack of legal regulation will either hurt adoption of VoIP technology, or actually help its development, overall public interest and future investment opportunities.