Minnesota PUC Appeals in VoIP Classification Fight
The Minnesota Public Utilities Commission will appeal a federal district court opinion that Charter VoIP is an information service that may not be regulated. The commission informed U.S. District Court in St. Paul of its appeal to the St. Louis-based 8th U.S. Circuit Court of Appeals in a Wednesday notice (in Pacer). With the FCC never ruling definitively on how to classify interconnected VoIP, observers see the case as having big implications for whether states also may regulate internet-based voice communications.
The state commission challenged a court decision supporting Charter’s complaint that the PUC overstepped its authority by imposing state regulations for traditional phone services on VoIP services. In the May 8 opinion (in Pacer), U.S. District Court in St. Paul said the PUC may not regulate Charter’s VoIP-based Spectrum Voice as a telecom service. The case began in March 2013, when Charter transferred 100,000 Minnesota customers to an affiliate that provided VoIP phone service that wasn't certified by the PUC. The agency said interconnected VoIP is a telecom service subject to state regulation, but Charter and intervenor the Voice on the Net (VON) Coalition said it’s an information service and subject only to FCC regulation.
“This case is important because the FCC continues to avoid making any decision about the status of VoIP,” emailed National Regulatory Research Institute Principal Sherry Lichtenberg. “If Charter's service is a telecom service at least in [Minnesota], just like other services that allow calls to and from the [public switched telephone network], it may come under the PUC's regulatory purview. The FCC already assesses interconnected VoIP for federal USF funds, but this would potentially open the door to the states … to assess VoIP providers for the state funds.”
Lichtenberg doubts the appeal puts pressure on the FCC to make a decision on VoIP classification, she said. “They've successfully avoided the decision for many years." In remarks last month to the American Legislative Exchange Council, Commissioner Mike O’Rielly said he spoke with Chairman Ajit Pai about potentially blocking states from regulating VoIP and IP services (see 1705050058). The FCC didn’t comment Wednesday.
State utility regulators supported the Minnesota PUC appeal. "The law and the text of the relevant federal statute are clear,” NARUC General Counsel Brad Ramsay emailed. The Communications Act and FCC and court precedent support the PUC’s case, and the FCC treats VoIP as equivalent to traditional telecom services, Ramsay said. If the 8th Circuit agrees, “the PUC should have a very good shot on appeal.” But the VON Coalition predicted another defeat for the PUC. "The district court decision will be upheld on appeal,” emailed VON Coalition Executive Director Glenn Richards. The attorney predicted parties’ arguments wouldn’t differ much from what they said in the lower court. Charter didn’t comment Wednesday.
Minnesota legislators' attempt to ban VoIP regulation died last month after Gov. Mark Dayton (D) vetoed their omnibus jobs bill including the prohibition (see 1705160029). He highlighted the VoIP provision among other “extraneous policy language that I have made clear I find objectionable.” The legislature later passed another version of the omnibus without the VoIP language.
Other states also considered the VoIP question this year. West Virginia banned VoIP regulation in April. Earlier, the Iowa Utilities Board ruled VoIP is an information service, while the Vermont Public Service Board proposed that the state may regulate VoIP as a telecom service. The Idaho PUC considered ruling on the issue, but held off in part to wait and see if federal lawmakers would resolve the debate in a rewrite of the 1996 Telecom Act (see 1702160038).