[Fwd: [ICS] Vonage and VoIP Regs]

[Chris Peabody <>]

Great article about a topic which is getting tons of review recently.

My $.02 - take a look at the Vonage website.  http://www.vonage.com/
Sure looks like a phone company.

I'm going to send this to several Phone Co execs (PaeTec, Verizon etc...) to see what they think.  CBP

-------- Original Message --------

Subject:	[ICS] Vonage and VoIP Regs
Date:	Mon, 29 Sep 2003 11:00:39 -0600
From:	Wendy Wigen
Reply-To:	NET@EDU Integrated Communications Strategies Listserv
To:

Vonage, 8x8 at Center of VoIP Regulatory Debate
By Josh Long
Posted on: 09/26/2003
Vonage Holdings Corp. and 8x8 Inc. are the subjects of a national debate on whether and how to regulate phone companies routing traffic over the Internet.

Vonage on Monday asked the FCC to declare that the company is not technically providing telephone service and therefore should be exempt from regulations the Minnesota Public Utilities Commission wants to impose. Vonage also has filed an appeal in a Minnesota district court, challenging a ruling that Vonage is a telephone company and must obtain a certificate to operate, file tariffs and comply with other requirements applying to in-state phone companies.

The Edison, N.J., company provides local and long-distance phone service to consumers and small businesses over the Internet, rather than via a traditional phone network. Vonage customers must have a high-speed Internet connection and special customer premise equipment.

Regulators across the country have not all weighed in regarding how they should treat companies such as Vonage.
An FCC spokesperson said Friday it would be "premature" to comment on what action the federal regulator would take concerning Vonage's petition. The FCC first will solicit public comments this fall.

In July, the Minnesota Department of Commerce filed a complaint against Vonage, alleging the company is providing phone service without obtaining a necessary certificate to operate, and violating the law because Vonage is not providing adequate 911 service. The Minnesota Public Utilities Commission ruled in September that Vonage is subject to regulations and must obtain a certificate to operate and comply with other requirements by Oct. 15.

"The commission finds that what Vonage is offering is two-way communications that is functionally no different than any other telephone service," the state regulator said in the September ruling. "Further, although there have been arguments that other states and the FCC are addressing the status of VoIP technology, the commission finds that at this time there is no evidence that supports the claim that this issue has been decided. Nor is there any federal law that preempts state law with respect to telephone service provided using VoIP technology."

John Rego, CFO of Vonage, says the company does not provide a telephone service as defined by the FCC. For one thing, Vonage customers must have special equipment [rather than just a standard phone] that converts analog signals to digital packets; and Vonage also converts protocols so phone traffic can move from the traditional public switched network to the Internet, and vice versa. Vonage carries traffic over the Internet, but the company partners with traditional phone companies to originate and terminate the calls.

"In the eyes of [the] FCC," Rego says, "We are not a telephone service. We are an enhanced service or data service."
In Minnesota, regulated phone companies must be able to provide E911 service, which allows an emergency dispatcher to track the location of a caller. This requirement poses a problem for Vonage since its calls are routed over the Internet and customers own a portable box that allows them to originate calls from anywhere - not just their primary home or business.

Vonage provides 911 service, maintaining a database of where the customer premise equipment resides. However, one of the selling points of Vonage also creates a technical problem. Vonage customers can take their customer premise equipment with them on a business trip to London, for example, and make calls anywhere there is a high-speed Internet connection. But, if there is an emergency, a dispatcher will not be able to find the caller unless the person previously let Vonage know where the equipment was going to be temporarily located.

Vonage is not the only broadband phone company facing possible regulation.
In September, 8x8 Inc., a broadband phone company, announced the Public Service Commission of Wisconsin had notified the company the state regulator believed 8x8 was offering interstate telecommunications services without getting the proper certification from the commission.

States across the country are looking at whether to regulate IP-based phone companies. In May Florida Governor Jeb Bush signed a bill into law that would allow local phone companies to petition the Florida Public Service Commission to increase local phone rates. Part of the law opposes regulating VoIP service.

"The legislature further finds that the provision of voice-over-Internet protocol free of unnecessary regulation, regardless of the provider, is in the public interest."

A Pennsylvania state senator, Jake Corman, has called for a five-year moratorium on regulating VoIP, CNET News.com reported Sept. 16.

Rego says the VoIP industry should be regulated someday, but it needs time to grow.
"I think five years would be nice," he says.
Millions of Americans still get their phone service from traditional phone companies, such as BellSouth Corp. and Verizon Communications Inc., but that is gradually changing. Earlier this week, Vonage announced activating 50,000 lines on its network since launching service in April 2002.

Wendy Wigen
Policy Analyst
EDUCAUSE
1150 18th St. NW, Suite 1010
Washington, DC 20036-3824
 
Ph:  202 331 5372
Fax: 202 872 4318

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