Subject: [NEXTEL-1] Cole, Raywid & Braverman, L.L.P (CRB)On VoIP

From: [email-masked]
Date: Wed, 24 Sep 2003 21:41:56 -0400

Cole, Raywid & Braverman, L.L.P (CRB)On VoIP

Voice over Internet Protocol (“VoIP”) telephony service continues to draw interest
from state regulators, the FCC and incumbent local exchange carriers.  At issue is
whether VoIP services will be deemed to be telecommunications services subject to
the same regulatory treatment as telephone carriers, or information services,
which are generally not subject to regulation.  If VoIP is classified as a
telecommunications service, providers may face new obligations including
requirements to provide 911 capability, to participate in universal service
funding, to pay telecommunications taxes, to comply with network reliability and
service standards, to provide network access to law enforcement agencies, and to
pay access charges.
In a prior CRB Update dated April 21, 2003, we addressed the initiation of
investigations into these questions by regulators in Ohio, Virginia and Florida
(http://www.crblaw.com/allclients2/2003/StateRegs.htm).  This Update will
summarize recent regulatory developments in other states and at the FCC.

FCC

Last week, the Chief of the FCC’s Wireline Bureau stated at a news briefing that
the Bureau will initiate a formal proceeding on the regulatory status of VoIP by
the end of 2003.  The proceeding likely will take the form of a Notice of Proposed
Rulemaking to gather information on such matters as how the FCC’s rules should
apply to VoIP and whether VoIP should be deemed a telecommunications service or an
information service.
The FCC now has before it two petitions seeking clarification of these issues.
AT&T is seeking a declaratory ruling that interstate VoIP arrangements in general
are exempt from access charges, and VoIP provider pulver.com is seeking a ruling
that VoIP is an information service.  The FCC has taken no action on either
petition.

Alabama

On August 29, 2003, the Alabama PSC issued an order in which it requested comment
on whether VoIP service is a telephone service.  Specifically, the Order requests
comment on (1) whether VoIP providers are “transportation companies,” and thus
subject to the PSC’s jurisdiction under Alabama law; (2) whether providers of
intrastate VoIP service are subject to PSC rules applicable to the provision of
telephone service, including the filing of tariffs; and (3) whether VoIP providers
are responsible for the payment of intrastate access charges.  The proceeding is
in response to a petition for a declaratory ruling by a group of incumbent LECs.
Comments are due by October 31, 2003, and reply comments are due by December 2,
2003.

California

In December 2002, the California PUC initiated a proceeding to adopt revisions to
its existing service quality measures and standards applicable to
telecommunications carriers.  In its order initiating the rulemaking, the
Commission indicated that it may seek to apply its service quality standards to
VoIP services, stating:

[w]e have jurisdiction to apply our service quality rules to any intrastate
telecommunications service, including any services using Internet Protocol (“IP”)
telephony.  Anticipating this emerging technology, we intend for the rules we
adopt in this proceeding to apply to similar services regardless of the technology
used to provide the service.

Initial and reply comments were filed in this proceeding in April and May 2003.
The proceeding remains pending before the PUC.

Colorado

On April 16, 2003, the Colorado PUC opened an investigation into whether VoIP
services are subject to the regulatory jurisdiction of the Commission, and if so,
how VoIP providers should be regulated.  In particular, the PUC appears to be
concerned about the furnishing of 911 service by VoIP providers.  As part of the
investigation, Commission staff requested agreements relating to the provision of
911 customer name and location information services by regulated facilities-based
telecom carriers.  However, certain entities refused to provide the requested
documents because they are subject to confidentiality provisions.  Thus, on May
21, 2003, the Commission issued an order compelling the production of these
agreements, and the Commission’s investigation appears to be on-going.

Florida

In May 2003, the Florida legislature enacted landmark telecom deregulation
legislation.  See CRB Update dated May 2, 2003.  The new law makes clear that VoIP
services are not to be subject to traditional, legacy regulation.  (It does not,
however, exempt VoIP-based long distance services from intrastate access charges.
That issue remains within the jurisdiction of the Florida PSC.)

Illinois

On May 22, 2003, the staff of the Illinois Commerce Commission (“ICC”) conducted a
workshop to discuss alternative regulatory treatment of VoIP services.  The
workshop addressed the following topics:  (1) jurisdiction of the ICC; (2)
certification and tariff issues; (3) service standards and 911 services; and (4)
consumer protection standards.  The ICC has taken no further public action
following the workshop.

Minnesota

In an Order issued on September 11, 2003, the Minnesota Public Utilities
Commission (“PUC”) ruled that Vonage Holding Corp., a well-known VoIP provider, is
“offering a two-way communication that is functionally no different that any other
telephone service … and is clearly subject to regulation by the Commission.”  The
proceeding was in response to a complaint against Vonage brought by the Minnesota
Department of Commerce.  The PUC ordered Vonage to “fully comply with all
Minnesota Statutes and Rules relating to the offering of telephone service.”
Thus, Vonage is required to obtain a certificate to provide service from the PUC,
file tariffs, and submit a plan to provide 911 service.  The PUC also ordered
Vonage to remit unpaid 911 fees to the Minnesota state government.  Vonage was
ordered to comply with the Commission’s order by October 11, 2003.

Pennsylvania

On May 1, 2003, the Pennsylvania PUC issued an order initiating an investigation
into VoIP.  The PUC’s order posed a series of question about VoIP service,
including (1) the definition of VoIP service; (2) the nature of providers’ VoIP
offerings in Pennsylvania; (3) PUC jurisdiction to regulate VoIP service and the
extent of that jurisdiction; and (4) FCC jurisdiction over VoIP service.  Thirteen
parties filed comments and eleven parties filed reply comments in the proceeding.

Washington

On September 4, 2003, the U.S. District Court for the Western District of
Washington remanded a case involving payment of access charges by a VoIP provider
to the Washington Utilities and Transportation Commission (“WUTC”).  The case,
Washington Exchange Carrier Ass’n v. LocalDial Corp. (Case No. CV03-5012 RBL) was
brought against VoIP provider LocalDial Corp. by incumbent LECs who claimed that
LocalDial’s activities require it to pay access charges for originating and
terminating intrastate long distance telephone calls.  Pursuant to the primary
jurisdiction doctrine, and citing the WUTC’s “specialized competence” as an expert
agency, the district court referred the matter to the WUTC to determine whether
the plaintiffs’ access tariffs apply to VoIP intrastate telephone calls made by
LocalDial’s customers.  The Court further noted that the WUTC is “uniquely
qualified” to address policy questions of whether VoIP providers should be
regulated, and if so, to what extent.

Wisconsin

On September 11, 2003, the Wisconsin Public Service Commission (“PSC”) sent a
letter to VoIP providers 8x8, Inc., Vonage, and Delta 3 seeking information on the
specific services being offered by those entities in Wisconsin.  The PSC’s letter
to 8x8 states:

[o]n August 7, 2003, the [PSC] became aware that 8x8, Inc.  (8x8) was offering
intrastate telecommunications services in Wisconsin.  Pursuant to company issued
press releases, 8x8 launched [VoIP] local phone services in Wisconsin in November
2002.  Please note that without certification in Wisconsin, 8x8 legally cannot
provide resold intrastate services in Wisconsin.  In addition, any customer bills
for intrastate services provided are void and not collectible.

8x8 interpreted the PSC’s letter as essentially a “cease and desist” letter and
issued a press release to that effect.  However, PSC staff stated in response to
the press release that the Commission is investigating VoIP services because of
provider claims that they are offering “broadband telephone” services, which may
be subject to state regulation, but that the Commission has not made a final
determination about the regulatory status of VoIP services.  The VoIP providers
were given 30 days to respond to the Commission.

http://www.crblaw.com/newsarticle.asp?year=2003&file=VoIpRegUpdate.htm

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