Federal regulators have declared Vonage Holdings Corp., the poster child for Internet phone service, and other companies offering services with similar characteristics are not subject to traditional state telecommunications rules.
Companies large and small said the ruling would help support advanced IP technology, like the broadband phone service offered by Vonage.
"The FCC took a critical step toward encouraging the deployment of IP-enabled services, such as VoIP, by recognizing the inherent interstate nature of such services,” said Jonathan Banks, BellSouth Corp. vice president of executive and federal regulatory affairs, in a statement. “The future of these and new, innovative IP-enabled services depends critically on investment in next-generation network facilities. The FCC must act to ensure that the investment these networks require will not be hampered by regulation.”
The ruling, however, does not answer several crucial questions challenging regulators, such as whether and how Internet phone companies should contribute to billions of dollars in federal subsidies and pay access charges, the fees phone companies pay one another to complete calls.
Federal regulators are tacking those contentious issues in a separate proceeding, drawing criticism from FCC Commissioner Michael Copps that the FCC is regulating new technology in a piecemeal fashion by ruling on individual petitions filed by companies. “We need a framework for all carriers and services, not a stream of incremental decisions based on the needs of individual companies,” Copps said in a statement.
Early this year, the FCC ruled that pulver.com -- a company routing free calls entirely over the Internet -- is not subject to traditional telephone regulations. In a separate proceeding, the agency declared AT&T Corp. must pay other phone companies access fees if the long-distance carrier is routing calls only partially over a data network.
Today’s ruling helps puts to rest speculation that Internet phone companies could be subject to a patchwork of regulations differing radically from one state to another.
“Numerous regulators understand that a patchwork of varying state rules could kill the emerging VoIP industry and eliminate greater choice for consumers,” Florida Public Service Commissioner Charles Davidson says.
Davidson is among the U.S. regulators endorsing the general philosophy of FCC Chairman Michael Powell: IP technology should be subject to as few traditional rules as possible. However, other states including Minnesota and New York have sought to assert jurisdiction over Vonage.
Last year, the Minnesota Public Utilities Commission released an order requiring Vonage to comply with traditional telecommunications rules. Vonage responded to the decision by filing a petition with the FCC, asking it to declare Internet phone service is an interstate service outside the jurisdiction of state regulators.
“This forward-thinking decision from the FCC assures that competition from VoIP is here to stay,” Vonage CEO Jeffrey A. Citron said, responding to the FCC’s decision." Now we can focus our resources exclusively on building an even better service -- rolling out E-911 for all our subscribers, innovating new features and new devices for VoIP, and expanding aggressively around the globe.”
Despite the FCC’s decision, there is a joker in the cards. Although a judge overturned the Minnesota PUC’s order to regulate Vonage, the case is on appeal before the U.S. Court of Appeals for the 8th Circuit.
