VoIP: FCC Prepares to Shape Ground Rules

Until now, the FCC has remained on the sidelines in the VoIP regulatory debate. Recent petitions by industry participants, regulatory actions by state commissions and court rulings, however, have forced the FCC into the game to address the issue of the proper regulatory regime for VoIP services head-on. For instance, within the past year, AT&T filed a petition asking for FCC guidance on whether VoIP services are subject to access charges, and a VoIP provider sought an FCC declaration that its particular brand of VoIP service is not subject to regulation. At the same time, certain state commissions – including the New York Public Service Commission, the California Public Utilities Commission and the Minnesota Public Service Commission – have taken actions designed to regulate VoIP services within their states. State legislatures are also being lobbied for legislation on the regulation – or unregulation – of VoIP services.

Against this backdrop, on Monday, Dec. 1, the FCC held a forum on VoIP to gather information concerning advancements, innovations, and regulatory issues related to VoIP services. The forum gave the industry an opportunity to discuss the state of the VoIP industry and provided some preliminary insight into where the FCC may be headed on this important issue.

To regulate, or not to regulate — a split along party lines
The Republican Commissioners indicated their predisposition to allow VoIP services to flourish with regulatory intervention only where there is a “compelling justification for doing so.” According to Chairman Powell, federal regulators should borrow the credo of the medical profession and "first, do no harm." Industry participants agreed, arguing that a hostile regulatory environment could drive VoIP service providers to foreign countries with a more sympathetic regulatory environment.

The Democrats on the Commission expressed concerns with the effect on particular social goals and security obligations if VoIP is taken outside of the regulators’ jurisdiction. According to Commissioner Copps, the federal government should not ignore its "important statutory obligations" to provide "universal service, homeland security, 911 service, accessibility (for) people with disabilities." Some state commissioners represented at the forum echoed these concerns.

Next step – an NPRM
Indicating the FCC’s intention to take the VoIP debate seriously, Chairman Powell announced during the forum the formation of a special task force within the FCC to investigate and make recommendations to the FCC on the regulatory status of VoIP services. In addition, the FCC announced its intention to issue a Notice of Proposed Rulemaking (NPRM) related to VoIP, possibly as soon as the end of the year. Certain to be addressed in the NPRM is whether the FCC should establish a national policy on VoIP regulation, thereby pre-empting state regulation, in whole or in part. How access charges will fit into the new regulatory regime is also sure to take a prominent role in the ongoing debate, as millions of dollars flow among telecommunications carriers in payment of these charges. The other issues addressed during the FCC’s forum — contributions to the Universal Service Fund (USF), security issues addressed by CALEA, access to 911/E911 services, consumer protection issues and access for the disabled — are also teed up to be addressed in the NPRM.

In sum, the FCC intends to establish the rules of the game, thereby guaranteeing that the VoIP NPRM proceeding will be one of the most important dockets on the FCC’s calendar next year. We’ll keep you posted as this issue continues to develop.