FCC'S Expected Proposal on VoIP Jurisdiction Brings Mixed State Reaction

“I think that is certainly a good first step, but it is not sufficient to resolve the issues… such as what will be 911 obligations, what will be universal service fund obligations, how will this be managed,” Fla. PSC Comr. Charles Davidson told us, noting that “my personal opinion is most VoIP is clearly interstate in nature.” Susan Kennedy, Cal. PUC comr., said “the role of states with regards to VoIP should be embedded in a relook at what the states’ role in telecom is in general.” She said it was “important to preempt states [from economic regulations] now because VoIP is really EoIP [Everything over IP]… We have to recognize that we are in a national market.” Davidson and Kennedy co-chair the Federation for Economically Rational Utility Policy, which Davidson described as “a bipartisan think tank of commissioners from across the country who share certain beliefs.” FERUP has taken a position on VoIP jurisdiction different from the NARUC’s and favors federal jurisdiction for VoIP.

NARUC Pres. Stan Wise said “the role of states will continue to be there… One of the roles we see for states is evaluating and encouraging the competitive model.” He said while consumer protection was “important to all of us… more importantly is how this new technology is going to be deployed in this market place. The Bells continue to fight us in the states where we try to have naked DSL and not to have voice from the incumbent provider. Nobody thinks that it’s going to be an issue on that last mile and what those monopoly wireline providers have. They also don’t go ahead and give access to that business providers. So I think states will continue to go ahead and represent consumers and the competitive model.” He called on the FCC and Congress to act quickly on defining the role of states: “Do something even if it’s wrong.”

States should play a role in consumer protection, but they should “bring something extra to the table,” Davidson said. “It’s safe to say that all states have attorney generals offices that prosecute consumer fraud,” he told us: “Most states, like Florida, have deceptive trade practices statute. Most states have agencies that license the businesses that come into their state. The question is if there is something unique that [PUCs and PSCs] need to do. Maybe, the answer is yes, maybe the answer is no.” He said states’ role in consumer protection made sense “when we were talking about regulated wireline” monopolies, but he said “in this new market, is there something unique that [PSCs] need to do or do we need to enhance our existing consumer infrastructure?”

Noting that “the notion of cooperative federalism is the right one,” Robert Mayer, N.Y. Dept. of Public Service dir.-Office of Telecom, said there were “some core public policy issues that states need to be engaged in, [including] pubic safety issues around 911, issues around network reliability and the infrastructure and basic consumer issues. And that’s it.” N.Y. PSC in May ruled that service provided by Vonage should be considered telecom under state law. But Mayer said the PSC’s intent wasn’t to hurt VoIP providers: “We are also very mindful that this is a new technology and we don’t want to do anything that overburdens these new companies, so we have to find a balance between having some ability to oversee their services, while at the same time not discouraging them from entering the market.” He said “to the extent that market has a sufficient competition to provide the discipline, we'll step back. We are only interested in stepping in if the market doesn’t provide appropriate remedies. It’s not regulation for regulation’s sake.”

Speakers said wireless is the best model to apply to VoIP. Davidson gave these reasons: (1) “The wireless industry is not characterized by monopolies, it’s a fairly competitive model.” (2) “Economic regulation is not permitted at a state level: We have a national approach, wireless is interstate in nature and we have a national framework. Yet, the wireless model allows states to deal with important consumer issues.” Mayer said the wireless model “will be applied to VoIP. I think the industry is moving in that direction. I see potentially more communications moving to modalities that we may have a very limited ability to regulate it. And we can’t control that -- that’s partly a function of technology.”