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FCC to Decide VoIP Fate Next Week

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The Federal Communications Commission (FCC) announced Tuesday it would rule
Nov. 9 on whether Internet telephony is an interstate service and exempt
from state and local regulation and tariffs.

The decision is considered critical to the future development of the
emerging Voice over IP industry, which hopes to avoid
negotiating rates with 50 separate state governments.

In particular, the FCC will be ruling on a request by independent Internet
telephony provider Vonage that would classify the business as an interstate
information service, which is no different from applications, such as e-mail. Such a
ruling would put VoIP beyond the taxing and regulatory reach of the states.

“The [Vonage] petition gives the commission an appropriate opportunity to
immediately declare that VoIP services, whether traversing the public
Internet or privately managed IP networks, are interstate in nature and
subject to the commission’s exclusive jurisdiction,” 61 members of Congress
stated in an October letter to FCC
Chairman Michael Powell.

The lawmakers decided to turn to the FCC after legislation calling for VoIP
services to be exempt from carrier access charges, state taxes and local
regulations failed to generate congressional support. The bills would have
prevented the FCC from delegating VoIP regulatory authority to state and
local officials.

“VoIP is the next forward step in voice communications,” Pickering said in a
separate statement from the congressional letter. “As this efficient
technology grows, consumers will benefit from advanced services and reduced
costs. Clearly, VoIP is interstate in nature and thus subject to FCC
jurisdiction. This letter asks the FCC to expedite their ruling on the
subject and provide jurisdictional and regulatory clarity.”

The Edison, N.J.-based Vonage, which provides SIP-based local
and long distance services to broadband users, has been battling state
regulators since August 2003 when the Minnesota Public Utilities Commission (PUC) issued an order that
said Vonage needs to become certified as a common telephone carrier. Vonage
successfully sued to prevent the PUC from enforcing its order, arguing the
company operates as an information services provider and is not subject to
the jurisdiction of the state’s PUC.

Minnesota appealed the decision. Without an FCC ruling, oral arguments are
expected to get under way Nov. 17 in the case. New York and several other
states are also considering regulating VoIP.

“We expect that there will continue to be various state commission decisions
that take place through the end of the year in significant jurisdictions,”
Jeffrey J. Carlisle, FCC Wireline Competition Bureau chief, recently
told reporters.
“It would be nice to get clarity out in the November timeframe so at least
the states that are looking at these decisions will have something from us
to read about before they make a decision.”

Tuesday’s FCC vote on the Vonage petition is part of a year-long review of
VoIP’s regulatory status. The FCC has already exempted Jeff Pulver’s Free
World Dialup (FWP) from state regulations because the free calls customers
make are routed entirely over the Internet and never interconnect with the
public switched telephone network . With a broadband
connection, FWD members talk with each other computer-to-computer.

In a ruling issued in August, the FCC also said Internet telephony should be
subject to traditional wiretap laws. The preliminary decision will force
VoIP providers to comply with the same law enforcement rules as telephone

The FCC is also considering VoIP carrier obligations in regards to emergency
911 calling services and any contributions the VoIP industry should make to
the Universal Service Fund.

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