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Regulatory Watch


Vonage In Print News

Regulatory Watch

PR News --December 21, 2004

By John L. Guerra

The FCC ruled in November that Voip – in the form of Vonage's DigitalVoice service – is exempt from some forms of state regulatory oversight. In a 3-to-2 vote, commissioners proclaimed Vonage's form of IP-to-PSTN communications an interstate service and not under state jurisdiction. The ruling puts Voip under federal jurisdiction, and the FCC has declared its intent to employ a hands-off attitude toward its regulation of the service.

The FCC ruling, however, does not mean that states will have no regulatory role in the management of IP voice and other packet services. In fact, the ruling means Voip providers still face a bit of chaos in the running of their businesses.

The FCC's decision came about after Minnesota, in August 2003, concluded that Vonage's DigitalVoice product was a telephone service for which Vonage was required to obtain a certificate of authority and meet other rules and regulations governing telephone companies in the state. Vonage appealed to the FCC, which then made its ruling: that Minnesota – nor any other state -- has jurisdiction over Voip providers.

Though the vote had been expected for some time (the FCC had ruled on the side of less regulation for IP services several times in the past year or so) it didn't clear up questions surrounding how Voip carriers conduct certain aspects of their business.

The FCC's ruling, for instance, doesn't halt the right of states to collect taxes on intrastate Voip calls. Other jurisdictions, such as municipalities and even school districts, regularly tax circuit-switched carriers, and they may be able to do the same to Voip providers.

An even larger and more contentious issue is the ability of circuit networks to collect the quickly growing revenue from Voip providers who interconnect with the PSTN. So far, there's no regulatory framework that makes it practical.

"The problem with Voip is that it's not that easy to define or determine where it interconnects" with the PSTN, says Martin Demers, senior vice president of marketing and development for Ace-Comm.

"Usually a softswitch is composed of at least two pieces. There's the call processing engine, and the gateway that acts as the bridge between the legacy environment and the IP environment." Yet the gateway may be in another state, far from where the Voip traffic occurred, he says.

"You could have two people in the same state using Voip to communicate, but the gateway may be in another state," Demers says. The state where the gateway is located "may want to collect taxes on that call, but the state can't determine where the call originated or terminated. Depending on how you look at the traffic, it could be an intrastate call or interstate call."

Says another telecom expert: "The result is commercial chaos. Individual phone companies decide what access fees to charge when Voip companies pass calls on to them."

In the VoIP/PSTN world, carriers disagree about something as basic as where a call comes from: For instance, if a call from Minnesota to Atlanta actually rides the Internet as far as New Jersey, did it originate in Minnesota or New Jersey?

Other regulatory issues are not settled, either. It isn't yet clear whether states will have input as to whether Voip providers will be required to provide E-911 services or pay into the Universal Service Fund.

FCC: Carriers Must Improve Reporting Techniques

The FCC, looking for a more accurate picture of available bandwidth around the nation, as well as a clearer picture of telephone competition, has asked for changes in what carriers report in its annual surveys.

For instance, the commission wants all carriers—large and small—to start reporting the speed and nature of their broadband service, instead of just collecting information from larger carriers. The idea is to get a better reading on available bandwidth in underserved and rural areas.

The rules also establish broadband over powerline as a separate category as to track that new technology more closely. Incumbent carriers as well as cable broadband providers will have to report the extent to which their DSL and cable modem service is available where they provide phone or cable TV service.

LECs now will also have to report how many of their local customers also buy long distance services from them. The FCC wants to get a fix on how much bundling plays a part in local competition.



 
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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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