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

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

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

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.

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