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Powell Questions States' VoIP Appeals

WASHINGTON -- Federal Communications Commission (FCC) Chairman Michael Powell said today that states appealing the FCC's November decision ruling Voice over IP an interstate service "pretty much makes zero sense to me."

Minnesota, California, Ohio and New York have all announced they are heading to court to challenge the FCC ruling, which preempts state and local regulation of Internet telephony services. The ruling grew out of N.J.-based Vonage's request to be declared an interstate service in order to avoid state efforts to tax and treat Internet telephony as a traditional telephone service.

In a letter to the FCC by Chairman William M. Flynn of the New York Public Service Commission (NYPSC) sent late last week, he states, "I am directing this appeal not to assert a traditional regulatory role, but rather because [the FCC ruling] leaves unanswered several important questions critical to the competitive policies that this state has advocated."

The Vonage ruling is part of a more than year long review of IP-based services. In addition to the interstate ruling, the FCC has also determined that VoIP providers must comply with federal wiretap regulations. The agency is still reviewing Internet telephone companies' E-911, Universal Service Fund, intercarrier compensation rates and handicap access obligations.

"If the [ruling] is left unchallenged, we will be in a situation where the states are prohibited from acting while there has yet to be a publicly announced plan from the FCC in its new responsibility," Flynn added in the NYPSC letter. "Ensuring that consumers have access to E-911 as new technologies develop cannot be delayed."

Minnesota, which was the first state to attempt to regulate Vonage, California and Ohio are appealing the FCC decision on much the same grounds as New York.

"All I see coming out of this particular decision is more questions," FCC Commissioner Michael Copps, who cast the sole dissenting vote in the Vonage decision, said during the November vote.

The NYSPC letter agrees with Copps. "This [ruling] places us in an impossible position due to its lack of clarity and its conclusion to delay action on issues that are critical to smooth transition to fully competitive facilities-based markets."

Powell insisted Thursday that the unresolved VoIP issues are in "no way being neglected" and that the FCC is acting within its authority.

"Some of these states are making relatively unusual claims," Powell, speaking after the FCC's January open meeting, said. "They suggest that their concerns are not the jurisdictional nature of economic regulation but somehow the 911 and public safety issues."

Powell said the FCC "expressly has proceedings on each and every one of these things. The Commission is allowed flexibility to address them in the way it finds best.

"The wireless mobility system in the United States has 911 [services] developed and administered by the FCC," he added.

Congress is also considering wading into the regulatory issues surrounding VoIP, with many lawmakers promising the new 109th Congress will address who controls Internet telephony in proposed telecom reform measures.

Until Congress passes new laws or the FCC concludes its IP-based services review, Powell said he doesn't expect California, Minnesota, New York and Ohio to have much company in the courtroom.

"I don't think that many states are going to do that [appeal]," Powell said. "My impression is that the vast majority of states, while they are concerned about the decision, will not fight the ruling."