FCC ACTS ON PULVER SERVICE, OPENS VoIP PROCEEDING

The FCC, with Comr. Copps dissenting and Comr. Adelstein registering a partial dissent, said the Pulver decision was based solely on that particular service and didn’t necessarily reflect how the agency might act on other pending IP-related petitions by AT&T, Level 3 and Vonage. Agency officials said later they still were considering what action to take on those petitions. Pulver’s Free World Dialup (FWD) is a free peer-to-peer service that requires specialized telephone equipment or software for computers. FCC officials said the fact that FWD was free and didn’t provide transport meant it was not a telecom service.

The FCC’s action was basically what Pulver had sought. Pulver had petitioned the Commission to determine that FWD wasn’t telecommunications or a telecom service, definitions that could have led to traditional common carrier regulation. Terri Natoli, a Wireline Bureau attorney, said during the meeting that the agency’s decision in Pulver was “consistent with the FCC’s [long-time] policy that information services shouldn’t be regulated.” “Congress expressly preferred the Internet be unfettered by federal and state regulations,” she said in introducing the item.

Copps said he thought the FCC also should have settled policy issues such as law enforcement access and federal- state jurisdiction before acting on Pulver or any other VoIP service. The agency’s decision wrongly “leaves the hard part for another day,” he said. He said he was particularly concerned that the FCC hadn’t acted first on concerns of law enforcement agencies about difficulties in tapping into conversations on IP services under the CALEA law. “This item troubles me a lot,” he said.

FCC officials said the agency would open a companion rulemaking in “several weeks” to consider CALEA issues raised by VoIP service, a move requested by the Dept. of Justice and FBI. Opening that rulemaking “acknowledges that CALEA law enforcement concerns are of special importance,” FCC Wireline Bureau Chief William Maher said. However, Copps said, while DoJ and the FBI made it clear they wouldn’t interfere with the FCC’s action, “they clearly preferred” that the CALEA proceeding be done first. Copps said the Pulver petition had been pending for more than a year and could have waited a little longer. However, other commissioners said the FCC needed to act quickly to give more certainty to the quickly developing industry.

Powell said he would have “fought tooth and nail” if he thought the agency’s actions would hurt law enforcement’s ability to operate. “CALEA is one of many tools available to law enforcement,” he said.

Adelstein said he also had reservations about the CALEA issue along with concern that the Pulver decision “speaks more expansively” than the FCC had portrayed and could “prejudge the outcome” of a proceeding also opened Thurs. to look at the VoIP issue in more depth. Although this notice of proposed rulemaking (NPRM) generally is limited to asking questions without making conclusions, it will “lay out a general vision” of how Internet services should be treated, Maher said in a news conference after the meeting.

The agency said in a news release that the NPRM would seek comment “based on the premise that Internet services should remain largely free of regulatory burdens” and “discrete regulatory requirements” should be applied “only where needed.” FCC officials emphasized that the NPRM would look at all IP-based technologies, not just VoIP. Russell Hanser, Wireline Bureau attorney, said comments would touch on a range of issues such as: (1) How communications services should be categorized” and what regulatory treatment, if any, should be applied to each category. (2) Whether the Pulver decision should be applied to any other services. (3) Whether IP-based services should be subject to access charges, disability access, 911 and other requirements. (4) Whether any other common carrier regulations applied.

“The time is right to build a record” through the NPRM because “divergent [treatment] can create gaming and arbitrage,” Comr. Abernathy said. Powell said: “This NPRM is the curtain going up on a new era of communications.” Asked how the agency would handle so many IP items -- the VoIP and CALEA NPRMs plus the pending petitions -- Maher said it would “simultaneously move on all of those proceedings.

Industry officials tended to praise the FCC for moving forward although, not surprisingly, views varied on other issues such as AT&T’s pending petition. Some unusual similarities surfaced such as both Verizon and MCI praising the agency’s decision that Pulver’s service was interstate, a signal that the FCC also might preempt the states in other pending VoIP proceedings.

TIA said it was “encouraged” because the FCC was trying to “bring some clarity to the regulatory uncertainty surrounding VoIP and IP applications in general. He said the Commission’s action on Pulver “brings a sense of confidence that neither the federal nor state governments are going to be in the business of regulating the… Internet application space.” The Computer & Communications Industry Assn. (CCIA) said “the FCC’s decision is as important as it is simple.” If consumers and businesses can talk to each other without using the traditional phone network, “neither they nor the Internet itself should be subject to the complex and increasingly less relevant rules that govern the nation’s phone network,” CCIA said.

An AT&T spokeswoman said the company was glad the FCC had begun addressing the questions surrounding IP hoped the agency wouldn’t “apply bloated access charges to calls that travel over the Internet” when it acted on AT&T’s separate petition. AT&T has asked for freedom from paying access when it transports calls over its IP backbone. However, USTA said that while the FCC took an important step “in embracing a competitive, technology-driven marketplace,” it didn’t address “AT&T’s flagrant failure to pay access charges on traffic that it is terminating on local telephone company networks.” AT&T has asked in its petition to be freed of access charges, but the Bells have complained that the company already is skirting payments by paying reciprocal compensation instead.

SBC said that by approving the Pulver petition, the FCC “also provided relief for the entire industry that was facing the Balkanization of rules and procedures.” The company said it hoped state PUCs would “now set aside potential IP proceedings and begin working with the FCC on building the kind of environment that will nurture this technology.” SBC also took the opportunity to hit the AT&T petition, saying it was “gratified” the FCC hadn’t acted on it.

Verizon Senior Vp Susanne Geyer said “the FCC took a positive step in making it clear that [VoIP] services are inherently interstate in nature.” She said Verizon “strongly agrees that the FCC should move forward quickly to apply a light touch in regulating true [VoIP] services.” However, she said, AT&T’s petition should be denied because it “attempts to paint its traditional long distance service as [VoIP] in order to avoid the access charges that other long distance carriers pay.”

MCI said it was “encouraging that the FCC is taking a closer look at the legacy regulatory policies affecting [VoIP] and IP-based communications generally.” The company said “federal leadership in developing a national framework… is critical, as the Internet knows no geographic boundaries.”

Acting NTIA Dir. Michael Gallagher said the FCC’s action to “provide a foundation” for future services could “enhance productivity.” He said it was “capital investment and entrepreneurial innovation, not regulation” that would “maintain U.S. leadership in voice, video and interactive data services.”

Sen. Sununu (R-N.H.), who has promised legislation on VoIP, said the FCC was “moving in the right direction.” He said he would introduce a bill this month that would preempt state regulation of VoIP services. There remains a “critical need for vision, direction and statutory authority provided by Congress,” Sununu said. House Telecom Subcommittee Chmn. Upton (R-Mich.) also praised the FCC. He said VoIP would “call into question many aspects of today’s antiquated regulatory regime” and the new technology would underscore “the intense challenge and need to overhaul the 1996 Telecommunications Act.”