Next Stop After VoIP Decision: The FCC

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The next stop in the voice over IP (VoIP) regulatory battle is the FCC, as Vonage Holdings and an association backing Internet telephoning view a federal court ruling declaring VoIP a data service as a strong argument to be presented to the FCC.

Vonage, which emerged as the victor in the decision last week from Federal Judge Michael Davis of Minnesota, has filed for declaratory ruling from the FCC. Arguments in the issue are due at the FCC on October 27. In the ruling, Judge Davis spelled out his rationale for determining that VoIP, as an Internet data-transmission service, should remain unregulated.

Also arguing before the FCC will be the Von Coalition, a Washington-based association of VoIP industry supporters. Said Peter Pitsch, president of the coalition: "We're working the process through the FCC. We're not looking for favored treatment, but we want to keep it [VoIP] unregulated."

Pitsch indicated that Judge Davis's decision could represent a strong argument to the FCC.

Pitsch, who is an Intel employee, heads the Von Coalition, whose other major sponsor--in addition to Intel--is Microsoft. The association says it has "helped deter FCC efforts to characterize VoIP as a basic service, defeat regulations imposing access charges, [and] deter international regulations that would require burdensome accounting rules."

Judge Davis's ruling could figure prominently in the VoIP debate, as the litigation and regulatory battles continue. Ruling initially from the bench, the judge prepared an elaborately reasoned 22-page written decision that was released Thursday. Davis declared: "Congress has expressed a clear intent to leave the Internet free from undue regulation so that this growth and exploration may continue. Congress also differentiated between 'telecommunication services,' which may be regulated, and 'information services,' which like the Internet, may not." VoIP, he stated, is an information service.

Davis said that just the capability of making phone calls didn't qualify Vonage as a telephone service, noting that that simplified "the issue to the detriment of an accurate understanding of this complex question."

The decision means that VoIP provider Vonage won't come under the jurisdiction of the Minnesota Public Utilities Commission (PUC), which had served notice on Vonage that the PUC considered the firm a telephone company and, as such, it would have to register with the PUC and pay various fees. Vonage went to court, asking for an injunction against the PUC. Asked if it would appeal the decision, the PUC said it would make a decision on the issue this week.

Vonage, which offers unlimited service for $34.99 a month, has some 500 subscribers in Minnesota. The company claims the largest VoIP subscriber list--nearly 60,000 total--and says it is signing up 2,000 new customers weekly. Citing Judge Davis's decision, Vonage chief executive Jeffrey Citron said: "Anyone else looking at this issue should draw the same conclusion."

Elsewhere, the California PUC said it follows its own state laws and was not bound by the Minnesota decision; it considers VoIP providers as telephone companies that should be regulated. At the other end of the spectrum, Florida has decided not to regulate VoIP providers.

Several other states have shown heightened interest in VoIP and are considering classifying Web phoning as a telephone service they can regulate and tax. While still in its early start-up stage, VoIP is catching on quickly and threatens to skim off POTS (plain old telephone service) tax revenues.

This story courtesy of TechWeb.

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