[March 9, 2005]

Government Punishes VoIP Blocker

By David Sims, TMCnet CRM Alert Columnist

In a first-of-its-kind penalty, according to the Associated Press, “a telephone company will pay $15,000 to settle allegations that it blocked phone lines that [Vonage] customers used to make calls over the Internet, federal regulators said.”

Madison River Communications, LLC, also must not block Internet calls in the future, according to the Mebane, N.C.-based company’s settlement with the Federal Communications Commission. While the company did not admit to violating any rules – heaven forbid they be wrong – it’s a significant victory for the fledgling VoIP industry.

It’s the first time the FCC has ever settled allegations that a traditional telephone company has blocked calls using Voice over Internet Protocol, and as such a powerful deterrent to future behavior and a strong precedent.

“We saw a problem, and we acted swiftly to ensure that Internet voice service remains a viable option for consumers,” FCC Chairman Michael Powell said in a statement.

Powell, a good friend of VoIP who unfortunately is ending his term as FCC chairman, told the AP he thinks the fledgling VoIP industry should be “very lightly” regulated: “The industry must adhere to certain consumer protection norms if the Internet is to remain an open platform for innovation.”

Madison River, as well as other traditional phone companies, is cheesed off because Internet calls are frequently cheaper than conventional calls because they are not subject to government fees to access the traditional phone network, so why should they sit by as VoIP uses their lines to undercut them? One understands their point of view, but the handwriting on the wall is clear.

Powell believes the U.S. is beginning to warm up to VoIP Powell said Tuesday, stepping down after eight years at the FCC. Powell reports seeing momentum gather around his efforts to help the emerging technology thrive.

“Internet voice is not your grandma's phone service,” Powell told reporters, “it is genuinely something new and not just a new way of doing something old… VoIP should not be economically regulated, [there is a consensus that] it should be regulated as a federal service and that it does hold enormous promise for consumers around the world and a competitive and more productive economy.”

In related action Congress will likely look deeper into this problem of "port blocking” in the wake of the FCC’s Madison River ruling, according to eWeek.

On Monday news of the FCC decision raised "a blip on the radar screen" for U.S. Sen. John Sununu of New Hampshire, whose legislative assistant Mike O'Reilly said any follow up would involve learning more about how this particular incident happened to determine whether any further congressional action is needed beyond the FCC's ruling,

The FCC gets rare points for speed from a governmental entity as well, as the FCC acted within weeks after Vonage filed its complaint against Madison River Communications to impose a $15,000 fine and order an end to the port blocking.

The battle might be won but the war is not, as New York, California and Ohio indicated they would appeal the FCC decision.

O’Reilly and, presumably, Sununu would like to see Congress pass legislation to ensure the "complete neutrality" of wire-line and wireless telephone companies to enable VoIP customers to freely access any telephone network in the country.

David Sims is contributing editor and CRM Alert columnist for TMCnet.