RealTime IT News

Vonage Wins Round in VoIP Regulatory Fight

Voice over IP service provider Vonage is claiming a victory for regulation-free IP telephony services, albeit cautiously, after a court ruled late Tuesday that it does not have to register as a telephone company in order to conduct business in Minnesota.

A federal judge approved a request by Edison, N.J.-based Vonage that the Minnesota Public Utilities Commission be restrained from requiring Vonage to register as a telephone provider to provide its IP telephony services to customers in the state. The ruling grants Vonage a permanent injunction.

Provided it is not overturned on appeal, the ruling could help untangle the emergence of IP-enabled telephony from the same thicket of regulations governing traditional wireline telephone operators such as AT&T, Verizon and MCI.

The full wording of the order is expected by Friday, officials involved in the case said. But in the meantime, Vonage said it was happy with the court's decision to grant the injunction and is looking forward to seeing the full court opinion when it's released Friday.

Advocates of IP telephony, which essentially uses the Internet to transmit local and long distance calls, say the case is one among several they are eyeing as potential test cases to free VoIP services from traditional telephone regulations. Their outcome would decide whether phone calls transmitted over data networks should be governed by regulators at the state or federal level.

Vonage, which provides SIP-based local and long distance voice services to broadband customers, has been battling for freedom from traditional regulatory oversight since August, when the Minnesota PUC issued an order that said Vonage needs to become certified as a common telephone carrier.

The state's PUC argued that "local telephone service offered by Vonage violates Minnesota law in that it fails to provide adequate 911 service."

Vonage, which later sued to prevent the PUC from enforcing its order, argued that the company operates as an "information services provider" (rather than the traditional designation of a telecommunications services provider), and is not subject to the jurisdiction of the state's PUC.

Prior to the federal ruling granting an injunction to Vonage, the Minnesota PUC has set October 11th as the deadline for Vonage to become certified as a common carrier.

There was no word yet as to whether the Minnesota PUC plans to appeal the federal court's permanent injunction, since the full wording of the ruling won't be available until Friday.

In addition, federal regulators are expected to take up the issue. Other states have also moved to regulate VoIP services. If the ruling stands, the case could potentially deter other states from trying to regulate phone calls over the Internet.