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Vonage to Present at the Oppenheimer 20th Annual Technology, Internet & Communications Conference


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Phone Company Settles In Blocking Of Vonage VoIP Calls

Vonage In Print News

Phone Company Settles In Blocking Of Internet Calls

March 4, 2005

By Jonathan Krim

The Federal Communications Commission announced yesterday that a North Carolina-based telephone company agreed to pay $15,000 and to stop blocking the ability of consumers to use voice-over-Internet calling services instead of regular phone lines.

In the first action of its kind, the FCC settled with Madison River Communications Corp., which operates several rural phone companies throughout the Southeast and Midwest.
Calling based on voice over Internet protocol (VoIP) increasingly is being used by businesses and consumers as a substitute for traditional phone service. Although Voip requires high-speed Internet access, its major providers offer unlimited local, long-distance, and even some international calling for as little as $20 a month.

Vonage Holdings Corp., one of the nation's leading Internet phone companies, had complained that as many as 200 customers had their service blocked by a Madison River subsidiary that provided its phone customers with Internet access.

For those customers who had disconnected their traditional phone lines and were relying solely on Vonage, the blocking meant they had no ability to make calls, even to emergency 911 services.

"The industry must adhere to certain consumer protection norms if the Internet is to remain an open platform for innovation," FCC Chairman Michael K. Powell said in a statement.

A spokesman for Madison River declined to comment, citing the company's pending filing for an initial public offering of its stock.

Vonage chief executive Jeffrey A. Citron praised the FCC for moving quickly.

"Blocking is akin to censorship," Citron said. Voice-over-Internet traffic is just like any other type of content, he said, and if an Internet provider were allowed to block calls, it could also censor certain types of news or entertainment.

"This sends a clear message . . . that interference in broadband communication will not be tolerated by the government," he said.

But the Madison River case may not be an isolated incident. Citron said Vonage is investigating incidents involving other small telephone companies around the country.

Christopher Libertelli, Powell's senior legal advisor, said other Voip providers have brought similar complaints to the commission, and they are being evaluated.

According to Nuvio Corp., a Missouri-based Internet phone provider, two cable companies that provide Internet access appeared to be degrading its service.

Jason P. Talley, Nuvio's chief executive, said that when his customers complained to their cable companies, they were told that if they switched to the cable company's voice service, the problems would disappear.

"That raised the hair on the back of our necks," said Talley, who declined to name the cable companies.
Unlike outright blocking, Talley said, degrading service by introducing delays or dropping occasional calls is difficult to prove.

Some consumer groups, and even a few major technology corporations, have called on the FCC to establish strong "network neutrality" guidelines.

They say this is especially important as the current FCC pushes to reduce rules governing Internet services provided over phone lines. Cable firms are free from regulations over their Internet services, but that is being challenged in a case that is scheduled to be heard by the U.S. Supreme Court on March 29.

Major cable and phone companies, while saying they have no intention of engaging in network discrimination, nonetheless oppose formal guidelines or rules.

Powell said yesterday that the proper way to handle the issue is through case-by-case enforcement.

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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.

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