States Take a Closer Look at Fixed VoIP Services

Regulation Watch

States Take a Closer Look at Fixed VoIP Services

Despite the FCC’s broad finding in the 2004 Vonage (News - Alert) Order preempting state regulation of certain VoIP services, several states have recently started to challenge its applicability.

The Maine Public Utilities Commission, for example, recently found that the FCC’s (News - Alert) decision in the Vonage Order is limited to nomadic VoIP services where the location of the interconnected VoIP service user was difficult or impossible to determine. Where an interconnected VoIP provider knows its customer’s location (i.e., the customer can only use the service in a single location), referred to as fixed VoIP, the Maine Commission hearing examiner found that the preemption provided by the Vonage Order is inapplicable. Several parties have appealed the Maine commission’s decision to the Maine Supreme Judicial Court, with which the appeal remains pending.

Similarly, the Wisconsin Public Service Commission has opened a proceeding aimed at determining the appropriate level of regulation that should apply to fixed, interconnected VoIP services.

Other states are also beginning to legislate the regulation of fixed VoIP. Illinois, for example, recently passed a law giving the Illinois Commerce Commission oversight of fixed VoIP services, and the agency now requires registration by fixed VoIP service providers. While these regulatory activities currently primarily concern VoIP services offered by cable operators, the precedent established may signal a desire to expand state oversight into other forms of VoIP.

To the extent that state regulatory authorities are successful in their attempts to narrow the scope of the FCC’s Vonage Order, fixed and other types of VoIP offerings could be subjected to state jurisdiction. Such an outcome could subject certain offerings to additional regulatory obligations including state certifications, prior approval of transfers of control and financing arrangements, and additional reporting requirements. 

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Edited by Jennifer Russell