[December 29, 2004]

Update: Judge Favors Vonage in Minnesota Court

BY JOHANNE TORRES

Last month, VoIP-based calling service provider Vonage Holdings Inc. was asked to wait a period of 90 days for a Minnesota judge to reach a decision on whether or not the company’s services could be regulated and taxed at state level by the Minnesota public utilities commission (PUC). It has been reported, however, that yesterday, a ruling by the United States Court of Appeals for the Eighth Circuit in St. Paul favored Vonage and other companies that offer comparable services in the case—exempting them from Minnesota PUC’s state-level telecom taxing and other regulations.

The state’s Public Utilities Commission was scheduled to appeal a decision made a year ago by a Minnesota judge who declared Vonage’s services not liable for fixed phone line calling regulations at state level. Many of us utterly confused about the reasons why this appeal went on, especially after the FCC ruled VoIP services as “interstate” and exempt from most taxes and regulations at state level, expected the Minnesota judge to rule in favor of Vonage and all VoIP providers serving the state.

Yesterday’s decision will hopefully put a halt to other states, such as New York, that might want to take this route to set individual taxing and regulation on VoIP-based services—resulting in less money spent on unnecessary court time. The decision is surely a boost to our booming VoIP industry. It is great to receive support from the federal government, the kind of support that will allow for amazing opportunities to further develop and perfect VoIP technology, products and services.

Regulation and taxation of VoIP-enabled calling services seem to be shaping up as more legal and federal rulings take place. I will definitely keep you posted on new developments as these issues unfold.