DoJ, FBI RAISE CONCERNS ABOUT VoIP PREEMPTION FROM REGULATION

Vonage has asked the FCC to rule that it provides an information service and thus shouldn’t be regulated as a phone company. However, the FBI and DoJ warned the Commission that such action could “jeopardize the ability of federal, state and local governments to protect public safety and national security against domestic and foreign threats… If Vonage’s VoIP service is deemed to be an information service, there will be a serious risk that certain call content and call identifying information would evade lawful electronic surveillance because it would preclude CALEA- compliant surveillance of telephone calls merely because the call transmission happened to employ an alternate protocol, such as Internet Protocol.” The FBI and DoJ said “at the very least, the Commission must not find that Vonage’s VoIP service is an information service for purposes of CALEA.”

A variety of groups opposed the petition, including the Bells, rural LECs and state regulators. Most of them said the agency shouldn’t be making such a significant determination without conducting a full-scale rulemaking. They also raised concerns about whether important regulatory programs such as E-911 and universal service would suffer if IP telephony were freed of regulation and some pointed out that the petition actually was moot because the U.S. Dist. Court, Minneapolis, had issued an injunction barring the Minn. PUC from enforcing its decision.

The Assn. of Public-Safety Communications Officials (APCO) expressed concern that “VoIP, if not properly regulated, could seriously undermine 911 service,” especially “as VoIP grows and becomes a common source of voice communications.” The biggest concern is that without regulation, VoIP providers might not be required to provide enhanced 911 capability, APCO said. The Vonage petition asked, among other things, that the FCC preempt 911 obligations imposed by the Minn. PUC.

The CWA said lack of regulation could impede several policy obligations such as “universal service support, support of telecommunications relay services, access for people with disabilities, intercarrier compensation, public safety obligations such as E911 and CALEA, privacy protections, advance notice of termination of service and other consumer protections.” Until the FCC completes a rulemaking on the broader issue of how to regulate VoIP, “it is not unreasonable to permit Minnesota to require certification and the provision of a 911 plan by Vonage,” CWA said.

The Dist. Court in Minn. made the Vonage petition moot so the FCC shouldn’t expend “its limited resources with that request,” BellSouth said. Instead, it said, the agency should “direct its available resources toward initiating a rulemaking proceeding that establishes a generally applicable regulatory framework for… VoIP.” The need for an FCC rulemaking “is demonstrated by the reality that courts and states will continue to fill the void caused by continued passivity,” the company said.

The Minn. PUC said it based its Vonage decision on a belief that it wasn’t preempted from exercising its state authority “unless and until such time as [the FCC] decided the contrary.” The MPUC said “there is no question but that Vonage holds itself out and markets itself as a telephone company, offering the ability to place and receive telephone calls using a standard Touch-Tone phone and standard telephone numbers… Even if the technology employed by Vonage is arguably different from other local exchange carriers or resellers of those services, the functionality is the same.” Because of the Dist. Court’s injunction, the FCC should close the preemption docket and open a rulemaking proceeding “to address the legal and policy implications of VoIP services in its various forms,” the MPUC said.

The PUC of Ohio said it “cautions the FCC against accepting Vonage’s invitation to rush to judgment by adopting an ad hoc approach [to] establishing a regulatory framework for VoIP services.” The FCC should undertake “a more holistic examination of the complicated regulatory issues surrounding the recent proliferation of VoIP services,” PUCO said.

Supporters such as equipment manufacturers, IP network operators and CLECs, warned that the FCC could undermine the development of new technology by placing old telephone-based regulations on VoIP. Like opponents, they supported a broader rulemaking down the road but they wanted the FCC to preempt state regulation while the rulemaking was pending. “The advantages of VoIP derive not from regulatory differences, but from the enormous differences between advanced IP networks and traditional networks,” Cisco Systems said.

Motorola said VoIP regulations adopted by Minn. and other states were “resulting in a patchwork of inconsistent regulations and policies that, in turn, are creating significant uncertainty in the market for VoIP equipment and services.” The FCC should take 3 steps to eliminate that uncertainty, Motorola said: (1) Adopt the Vonage petition and preempt the Minn. PUC’s regulations. (2) Preempt all state regulation of VoIP services “that share the same or similar characteristics as the Vonage service until the Commission establishes a national policy for VoIP regulatory treatment.” (3) “Launch a broader rulemaking to address in a comprehensive manner the regulatory issues raised by Vonage’s and other VoIP-related petitions filed with the Commission over the last year.”

The High Tech Broadband Coalition (HTBC) said it was “greatly concerned that misclassification and inappropriate regulation of VoIP services by state commissions will stifle their development.” The coalition said it supported Vonage’s petition because “both as a matter of policy and as a matter of law, the MPUC’s decision to regulate Vonage as if it were a traditional common carrier was wrong -- and it is important for this Commission so to declare.” HTBC said Vonage “clearly does not provide a ’telecommunications service’ under the Communications Act.” Because Vonage “performs a net protocol conversion on calls between Vonage customers and stations on the Public Switched Telephone Network, Vonage provides an ‘enhanced service,'” HTBC said. However, the FCC also should initiate a “broader proceeding to define the regulatory status of VoIP services and applications” because the “current lack of clarity for VoIP compounds the risk associated with network investment and product deployment,” the association said.

MCI, which owns a large IP network, and CompTel, which represents the competitive market, said in a joint filing that the Minn. PUC decision could set a bad precedent: “While it might appear that there is less compelling need for prompt Commission action in the wake of the district court’s decision, a number of state commissions have actively taken steps… to regulate VoIP service within their jurisdiction,” including Cal. and Wis., and other state commissions such as Mo. had indicated they might open proceedings in the near future. “Given this increased level of state involvement… it would be preferable for the Commission to address Vonage’s petition as soon as possible,” the joint filing said. “The MPUC decision, even though enjoined, has established a bad precedent for other state commissions.”