NARUC Slams 'Disingenuous' FCC Opposition to State VoIP Regulation

NARUC blasted the FCC for rejecting what the agency termed the “blunderbuss approach” of the Minnesota Public Utilities Commission applying state regulations to Charter Communications’ fixed interconnected VoIP service (see 1710270053). In an amicus brief Friday at the 8th U.S. Circuit Court of Appeals, the FCC said allowing Minnesota to regulate VoIP would disrupt the market, stifle competition and hurt consumers. The federal agency again declined to say if it's a telecom or information service. But its statement could have big impact in the case and on the broader question of whether states can regulate such services, observers said.

“The FCC’s brief is disingenuous,” NARUC General Counsel Brad Ramsay said Monday. “The problem is the arguments presented are flawed and require circular reasoning. Its legal ruminations cannot solve the problem facing the 8th Circuit. The only way to decide the legal issue is to classify the services either as ‘telecommunications services’ or as ‘information services.'” Under the Telecom Act, Congress intended for states to be able to regulate telecom services, Ramsay said, and no FCC proceeding pre-empted state oversight of “severable” telecom service providers: “The FCC effectively argues the court should not do the one thing required to present a cogent legal analysis -- classify.”

But the FCC got kudos from VoIP providers. "It aligns precisely with the position that the VON Coalition has taken for more than a decade that the FCC, and not the states, should be responsible for regulation of VoIP (to the extent any regulation is needed)," emailed Voice on the Net Coalition Executive Director Glenn Richards.

“PUC’s sweeping demand that Charter comply with the state’s full panoply of legacy telephone regulations, even though the FCC has not classified VoIP as a telecommunications service, threatens to disrupt the national voice services market,” the FCC said. “By subjecting fixed VoIP service to an extensive array of state public-utility requirements, the PUC’s Order is likely to stifle competition and innovation in emerging VoIP technology." A ruling that Charter service is a telecom service could subject VoIP providers "to the full panoply of federal common carriage requirements found in Title II," the FCC said. “All 50 states could potentially seek to impose a patchwork of separate and potentially conflicting requirements.”

Minnesota shouldn’t need to regulate interconnected VoIP, said the federal agency, because “each of the specific regulatory needs invoked by the PUC is already addressed … by existing FCC orders." The FCC issued "an extensive series of orders regulating many different aspects of VoIP service as needed," including access charges and interconnection, federal and state USF requirements, E-911 and number portability, the agency said. If the PUC has other regulatory needs but isn't sure of authority, it should seek a declaratory ruling or new rulemaking so the FCC can address it nationally, the agency said.

The FCC said the state commission is incorrect that Vonage pre-emption or interim USF contribution orders "somehow held that fixed VOIP providers are subject to state regulation.” Neither addressed classification of VoIP nor suggested that federal law permits state regulation if VoIP is determined to be an information service, the agency said. The FCC's 1996 non-accounting safeguards order and the 1998 Stevens report didn't purport to classify VoIP service, it said. The Minnesota PUC declined and Charter didn't comment.

The federal regulator “takes a narrow line, asserting existing federal orders regulating fixed VoIP provide more than enough guidance,” said Doug Brake, Information Technology and Innovation Foundation senior analyst. “There is an outside chance the court would try to reach a factual question of VoIP classification,” but it’s “more likely this case turns on federalism arcana than big precedent classification,” said Brake, who supports federal pre-emption on VoIP. The FCC statement may make the court lean toward Charter, even if it seems to include conflicting ideas of opposing anyone resolving VoIP classification and not wanting the services to be regulated, said a state telecom researcher.