Trade Groups Urge Federal Regulation of VoIP

Absent FCC action, states are filling “the VoIP regulatory void with an increasingly complex patchwork of disparate regulations -- even though VoIP is an inherently interstate service that cannot and should not be subject to state regulation at all,” the letter said. The groups would like to see the issue addressed soon, potentially as part of the Universal Service Fund and intercarrier compensation decision where VoIP jurisdiction has been raised, VON Executive Director Glenn Richards told us. VON will continue to seek more industry endorsement, he said. Many emerging state efforts, such as in Vermont and California, to regulate VoIP, including attempts to impose high legacy intercarrier comp rates on VoIP, threaten to harm VoIP providers and their customers by retarding innovation and deployment of next-generation VoIP products and by raising the costs of using such products, the letter said. It cited the 2004 Vonage order, saying the FCC preempted states from regulating VoIP. As a result, most states tended not to insert themselves into the VoIP space, the letter said. In the past few years, many state commissions have issued VoIP decisions that, while reaching specific results, largely rest on the assumption that state regulators can and should impose the same rules on VoIP that historically applied to traditional telecom service traffic, the letter said.

The FCC never preempted facilities-based VoIP, NARUC General Counsel Brad Ramsey told us. The legacy regulations cited in the letter to interconnect/arbitrate were imposed in federal legislation, he said. The FCC and the statute passed by Congress explicitly authorize states to have state USF programs and the FCC has said, as the statute compels, that states can assess even nomadic providers for their programs, like all of their competitors already do, he said. The industry proposal seeks to get policy makers to intervene to favor a particular technology, he said. That’s why NARUC supports regulations that are technology-neutral and why Congress made the definition of “telecommunications services” a functional one, he said.

On the complaint it’s cumbersome to observe varying state standards, the problem is that the FCC hasn’t resolved these issues with any federal standards, said Wayne Jortner with Maine’s Consumer Advocate’s office. For over a decade, the FCC has failed to classify interconnected VoIP, he said. Many consumer groups might support a plan of federal regulation that effectively preserved service quality and fair treatment of consumers, he said. As the FCC revamps USF and states their own USF, it’s essential that all carriers pay their fair share for use of the public network, he said.

In the short term, FCC action appears to be the only solution, Richards said. “Presumably we can seek federal legislation or continue to address this issue through the state legislatures.” But state legislation sometimes leaves ambiguous the VoIP compensation issue, he said. The letter noted that many states have passed laws confirming that their commissions may not regulate VoIP services. Still, some state legislatures purport to “empower state regulators to make VoIP compensation determinations in certain contexts,” the letter said. It cited Wisconsin’s recently-passed law requiring the Public Service Commission to impose the state’s legacy compensation regime on interconnected VoIP. Recent Supreme Court and federal appeals court decisions confirm that the FCC can and should ensure that state regulations don’t obstruct the FCC’s longstanding goal of promoting growth in advanced technologies, the letter said.