FCC Keeps States' Hands Off

November 24, 2004
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In precluding states from regulating Internet-based telecom services, the Federal Communications Commission wants to avoid a clutter of rules that vary from state to state and hinder the technology’s evolution in the marketplace and the resulting competition.

While this month’s decision does not mean the FCC won’t some day regulate Voice over Internet Protocol (VoIP), it gives some sense of regulatory certainty to telecommunications providers that are deploying the new service across the country.

Divergent state rules, regulations and licensing requirements could impede the rollout of such services that benefit consumers by providing them with more choice, competition and innovation,” the FCC stated in announcing its Nov. 9 decision involving a Minnesota case.

VoIP allows users with high-speed connections to use the Internet for voice and data services, eliminating tolls and local and long-distance charges. The new technology is quickly altering the telecommunications industry landscape by providing a low-cost alternative to consumers and businesses.

Michigan’s largest provider of phone services, SBC Communications Inc., welcomed the FCC ruling.

“It makes no sense to have a pathwork of rules and regulations all across the country. All it would do is stifle it,” said Matt Resch, the director of communications for SBC in Michigan

In the Minnesota case, the FCC declared that an Internet-based service offered by Vonage Holdings Corp. is an interstate service and, therefore, is not subject to traditional state utility regulations. The same applies, it said, to similar services offered by other telecom providers.

The ruling is designed to prevent varying state regulations across the country that could generate regulatory uncertainty and interfere with the deployment of VoIP services that are forecast to grow rapidly in the years ahead.

“This landmark order recognizes that a revolution has occurred,” FCC Chairman Michael Powell said. “To subject a global network to disparate local regulatory treatment by 51 different jurisdictions would be to destroy the very qualities that embody the technological marvel that is the Internet.”

In its VoIP ruling, the FCC did not completely remove states from the regulatory equation. States still have a role in working with the FCC on questions such as how VoIP works with emergency 911 systems that identify a wireline caller’s location, as well as on issues of fraud and abuse.

“It is not true that states are or should be complete bystanders with regard to these issues,” Powell said.    

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