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FCC VoIP Ruling Could Impact USF Bill

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FCC Voip Ruling Could Impact USF Bill

November 9, 2004

By Heather Forsgren Weaver

WASHINGTON-A ruling Tuesday by the Federal Communications Commission to declare it has jurisdiction over Voice over Internet Protocol because Voip is interstate will increase the pressure on Congress to pass legislation next year to reform the universal-service program, said the top lobbyist for state regulators.

"The two things that people were predicting next year that may be a possibility was something narrow on universal service and something on dealing with the states on VoIP," said James Bradford Ramsay, general counsel of the National Association of Regulatory Utility Commissioners. "It seems to me this kind of blunts the pressure on the Voip half of the equation and increases the pressure in a very real sense on the universal-service half of the equation, but I am not sure they will be able to move anything on universal service."

The FCC refused to say how its jurisdictional question would impact universal service, but a group of small rural carriers that have presented a plan to reform the revenue mechanisms that rural carriers receive including universal service issued a warning.

"The FCC's decision runs a very real risk of immediately endangering state universal-service funds by giving companies an incentive to declare their services to be IP and thus avoid contributions to state universal-service funds," said the Alliance for Rational Intercarrier Compensation.

Congress is expected to begin consideration of legislation next year that could lead to a complete re-write of the Telecommunications Act of 1996. Many believe a major driver of this legislation was Voip technology. Now that the FCC has taken control of VoIP, Ramsay believes this pressure to pass Voip legislation may have waned, but he also noted the incoming chairman of the Senate Commerce Committee, Sen. Ted Stevens (R-Alaska), is a champion of universal service.

Ramsay spoke to reporters following an FCC meeting where all five commissioners voted in favor of the interstate designation.

"The founding fathers understood the danger of crushing interstate commerce and enshrined the principle of federal jurisdiction over interstate services in the commerce clause of the U.S. Constitution. In the same vein, Congress rightly recognized the borderless nature of mobile-telephone service and classified it an interstate communication. Voip properly stands in this category and the commission is merely affirming the obvious in reaching today's jurisdictional decision," said FCC Chairman Michael Powell. "I emphasize that the commission expresses no opinion here on the applicability to Vonage Holdings Corp. of state's general laws governing entities conducting business within the state, such as laws concerning taxation, fraud, general commercial dealings, marketing and advertising."

The FCC said it was acting on the jurisdictional issues now because oral argument in a lawsuit between Vonage and the state of Minnesota-which said Vonage had to be certified as a telecommunications provider to operate in that state-is scheduled for Nov. 17. The commission feared that if it delayed, the U.S. Court of Appeals for the 8th Circuit would issue a contrary ruling.

FCC Commissioners Michael Copps and Jonathan Adelstein both said they had deep reservations about the FCC not answering all of the other VoIP-related issues-such as the impact on universal service. Powell said that if his commission had waited to answer all of the questions, it would have been paralyzed. Ramsay suggested to reporters that that is exactly what Vonage will now try to do because it has a business model based on "regulatory arbitrage."

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