August 2004
Full House
Congress Antes Up and Plays
its Hand to Prevent a Torrent of State Regulation
BY WILLIAM B. WILHELM, JR.
If you needed proof that immediate Congressional action is necessary to
preserve VoIP services from unwieldy state telephone regulations � that
proof came on May 19, 2004, the day that the New York Public Service
Commission, without holding even a single evidentiary hearing, summarily
dismissed the reasoning of a Federal judge and held Vonage Holdings Corp. to
be a telephone company subject to the PSC�s jurisdiction. As a result of the
PSC�s order, Vonage was ordered to file a tariff covering �intrastate�
transmissions � even though it is impossible to identify which calls are
made on an intrastate basis. Applying the �Duck Test� � first popularized by
the Minnesota PUC � New York also directed Vonage to comply with the same
rules and regulations that govern facilities-based local exchange carriers,
such as those imposed upon Verizon � the 100-billion-dollar market cap
incumbent.
While the scope of the PSC�s order is technically limited to
Vonage, the state�s findings will undoubtedly impact other VoIP services,
both in New York and beyond. The matter is currently under appeal at the
time this article is being prepared � Senator Sununu (R-NH) and
Representative Pickering (R-MS) as well as others in Congress recognized
that immediate Congressional action is probably necessary to halt the
litigation and provide a stable environment for investment and growth in the
U.S. market for this technology.
Senator Sununu�s bill, S. 2281 is entitled the �VoIP Regulatory Freedom Act
of 2004� and it aims to prevent the imposition of a patchwork of multiple
and discriminatory state regulations on providers of applications that
utilize Internet protocol to offer two-way or multidirectional voice
communications. Under S. 2281 the responsibility and authority to regulate
VoIP would be limited and, where permitted, it would be reserved solely to
the Federal Government. This prohibition would prevent states from imposing
upon VoIP applications many taxes of general applicability. The bill also
provides that the FCC would be required to immediately prohibit the
imposition of inflated access charges on those VoIP services covered by the
legislation. The bill further stipulates that although the FCC could exempt
VoIP from Universal Service contributions, to the extent the agency
determines VoIP should be required to contribute, it requires VoIP providers
to pay using a uniform fee structure � such as a flat fee per telephone
number. With regard to matters involving disability access, service
reliability, and standards for system security the FCC will work with
industry to develop guidelines through consensus. The bill applies the same
industry standards process to 911 access except that VoIP applications would
be required to provide clear and conspicuous notice of the limitations of
their services 911 offering. Finally, the legislation makes clear that it
does nothing to undermine the rights already afforded law enforcement under
existing Federal statutes.
Representative Pickering�s companion legislation H.R. 4129 takes a slightly
different approach on the matters of access charges, universal service, and
law enforcement access. With regard to the first two issues, the
Congressman�s bill would require the FCC to undertake a proceeding to
establish a set of rules and standards defining the appropriate contribution
and payment mechanisms. These proceedings would be required to be completed
within 180 days. With regard to law enforcement access, HR 4129 would likely
impose new obligations on certain VoIP applications, but only after the FCC
determined that such obligations were technologically feasible. Specifically
the legislation proposes that each provider of an IP to PSTN VoIP service
ensure that its equipment, facilities, and services be capable of: (1)
enabling the government to intercept communications and access
call-identifying information, (2) delivering the intercepted information to
the government. As drafted, the legislation would not impose any similar law
enforcement access obligations on so-called �computer-to-computer� VoIP
services.
While Sununu and Pickering are among the first to draft specific federal
legislation concerning VoIP, they are not alone in arguing that that there
is an urgent and immediate need for Congress and the FCC to take action. The
migration of communications services to the geographically agnostic Internet
requires that regulators disabuse themselves of the notion that it is in the
public interest to shoehorn new technology into a regulatory framework that
is irrelevant and inapplicable. The late President Reagan could not have
been more clairvoyant on telecommunications policy matters when he observed
that �Government�s view of the economy could be summed up in a few short
phrases: if it moves, tax it. If it keeps moving, regulate it. And if it
stops moving, subsidize it.� Fortunately the Sununu and Pickering bills
offer up a much more rational, and welcome alternative for the treatment of
VoIP applications.
William B. Wilhelm can be reached at
[email protected]. He 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 intellectual
property, antitrust, corporate, litigation, telecommunications and
government affairs. For more information, please visit
www.swidlaw.com. The preceding
represents the views of the author only and does not necessarily represent
the views of Swidler Berlin Shereff Friedman, LLP or its clients
[
Return
To The August 2004 Table Of Contents ]
|