[October 8, 2003]

Minnesota Judge Rules In Favor Of Vonage

ST. PAUL - (AP) A federal judge barred state officials in Minnesota from treating a company that provides calls over the Internet as a traditional telephone company.

Vonage, a small Edison, N.J.-based company, offers what's known as "Internet telephony" where voice calls are converted into Internet data to bypass the larger phone companies.

It allows long-distance calls for rates as cheap as local calls. Vonage advertises unlimited calls to anywhere within the United States and Canada for $39.99 per month.

Until Tuesday's injunction by federal Judge Michael Davis in Minneapolis, the Minnesota Public Utilities Commission had sought to require the company to apply for certification as a phone company.

PUC rate analyst Stuart Mitchell said Wednesday that the commission likely would stay an order it issued in August that required Vonage to file a proper phone company application, including a list of prices and a 911 emergency phone plan.

"They're probably not going to defy a federal judge," Mitchell said.

The commission plans to discuss the issue at a meeting on Thursday.

"I think once this commission sees the injunction order, they'll be able to review it and decide how they want to proceed," he said.

The judge's Tuesday injunction was unpublished, according to Davis' office. A written order explaining the rationale behind the decision was expected by Friday.

Mitchell said the broader effect of the order was that it could allow other companies to operate similarly without PUC regulation in the state.

Vonage officials didn't immediately return a phone call seeking comment Wednesday.

In the past, they have said their startup is not a phone company, even though on its Web site Vonage calls itself "the broadband phone company." They claim Vonage is a data information service because it transports Internet data rather than traditional voice traffic.

The Minnesota Department of Commerce brought the complaint about Vonage to the PUC after seeing Vonage advertising in Minnesota last December.

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