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Review: My First Day With Vonage, Excellent!
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Vonage Customer Review: One month with Vonage, and...
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FCC Seen Shielding Web Phone From States


Vonage In Print News

FCC Seen Shielding Web-Phone From States-Sources

November 8, 2004

By Jeremy Pelofsky

WASHINGTON (Reuters) - U.S. communications officials on Tuesday are expected to shield Internet-based telephone services like Vonage from some key state regulations, a step seen as key for advancing the new service.

The Federal Communications Commission is expected to back a petition from privately owned Vonage Holdings Corp. to declare its service interstate in nature and therefore exempt from state requirements that apply to traditional phone services like rate regulation, sources familiar with the matter said.

Vonage, which has more than 300,000 lines in service, allows a customer to make telephone calls nationwide and to Canada for a flat fee using equipment attached to a high-speed Internet, or broadband, connection.

But Vonage is battling with state regulators, like Minnesota, which are demanding Vonage obtain state certification, be subject to rate regulation and offer emergency 911 services comparable to those of land lines.

"In the absence of FCC action we're facing strangulation by regulation -- 50 different states with 50 different ideas about how we should run our business," said Vonage Chief Executive Jeffrey Citron.

"The direct result (of regulatory relief) will be explosive growth of an industry that delivers cost-savings and innovation to consumers," he said.

As competition wanes between local phone companies because of fights over access to copper networks that reach most homes, the FCC has been pushing other services like those offered by Vonage, known as Voice over Internet Protocol, or VoIP.

While the agency likely will insulate Vonage from some key state regulations, two sources said the FCC will skirt the more difficult decisions, like whether charges to connect calls will apply or whether contributions are required to a fund that subsidizes rural phone service and Internet in schools.

The FCC will likely leave "some room for the states to continue their traditional role in consumer protection," Legg Mason's Washington office said in a note last week.
An FCC spokesman declined comment.

The Vonage petition has drawn the attention of traditional phone companies, like AT&T Corp. (T.N: Quote, Profile, Research) , SBC Communications Inc. (SBC.N: Quote, Profile, Research) and cable giant Time Warner Inc. (TWX.N: Quote, Profile, Research) , which are aggressively rolling out their own Voip service.

The FCC decision is expected to apply to the Voip services offered by these other companies, an agency source said.
The phone and cable companies are aggressively pushing Voip because it is relatively inexpensive for them to offer and requires customers to have a broadband connection, which usually runs $30 to $50 a month and adds to their profits.
Minnesota tried to force Vonage to comply with state regulations but the company won a federal court decision that said it was exempt. Oral arguments for the state's appeal is set for Nov. 17.

Vonage says it is adding 25,000 lines a month but is facing mounting competition. And it must also compete against wireless carriers as more and more consumers cut the cord.



 
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†AK and HI residents pay $29.95 shipping. ††Limited time offer. Valid for residents of the United States (&DC), 18 years or older, who open new accounts. Offer good while supplies last and only on new account activations. One kit per account/household. Offer cannot be combined with any other discounts, promotions or plans and is not applicable to past purchases. Good while supplies last. Allow up to 2 weeks for shipping. Other restrictions may apply.

1Unlimited calling and other services for all residential plans are based on normal residential, personal, non-commercial use. A combination of factors is used to determine abnormal use, including but not limited to: the number of unique numbers called, calls forwarded, minutes used and other factors. Subject to our Reasonable Use Policy and Terms of Service.

2Shipping and activation fees waived with 1-year agreement. An Early Termination Fee (with periodic pro-rated reductions) applies if service is terminated before the end of the first 12 months. Additional restrictions may apply. See Terms of Service for details.

HIGH SPEED INTERNET REQUIRED. †VALID FOR NEW LINES ONLY. RATES EXCLUDE INTERNET SERVICE, SURCHARGES, FEES AND TAXES. DEVICE MAY BE REFURBISHED. If you subscribe to plans with monthly minutes allotments, all call minutes placed from both from your home and registered ExtensionsTM phones will count toward your monthly minutes allotment. ExtensionsTM calls made from mobiles use airtime and may incur surcharges, depending on your mobile plan. Alarms, TTY and other systems may not be compatible. Vonage 911 service operates differently than traditional 911. See www.vonage.com/911 for details.

** Certain call types excluded.

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