NY, Ohio Join States Appealing FCC's Vonage Ruling

New York's Public Service Commission and Ohio's Public Utilities Commission have joined the ever-growing group of states and organizations planning to appeal the Federal Communications Commission's Vonage ruling, joining California and Minnesota's already-announced intents to challenge.

In a letter sent to the FCC on Jan. 7, chairman William Flynn said the NYPSC would seek review of the Vonage ruling "not to assert a traditional regulatory role, but rather because the Order leaves unanswered several very important questions critical to the competitive policies that this state has advocated." In its ruling last November, the FCC said Vonage's service was interstate in nature, and as such not subject to state-by-state regulations.

However, the Vonage ruling did leave many questions about VoIP policy unanswered, a point the NYPSC made repeatedly in its letter (a facsimile of which was sent to Advanced IP Pipeline). "This [the Vonage] Order places us in an impossible position due to its lack of clarity and its conclusion to delay action on issues that are critical to a smooth transition to fully competitive facilities-based markets," the NYPSC's letter said. One consequence of the ruling, the letter says, is that traditional phone carriers may switch their traffic to IP networks in order to avoid state regulations and taxes.

Also on Jan. 7, the Ohio Public Utilities Commission filed a petition with the Sixth Circuit Court of Appeals, seeking "an order and judgment that the Commission's [Vonage] order is in excess of the Commission's statutory jurisdiction, authority, or limitations, or short of statutory right," according to a copy of the filing sent to Advanced IP Pipeline by the Ohio PUC.

In addition to the states themselves, the National Association of State Utility Consumer Advocates (NASUCA), an association of 44 consumer advocates in 42 states and the District of Columbia, has also filed a notice to appeal the Vonage ruling. But the FCC, which expected such challenges to its order, said it plans to keep pushing forward with a light regulatory strategy for VoIP.

At last week's Consumer Electronics Show in Las Vegas, FCC chairman Michael Powell said "I guarantee you" there will be many such challenges to the commission's VoIP decisions during 2005. But he made a special point of saying he was proud of the FCC's decisions to keep VoIP as free of regulation as possible. "This [VoIP] should be allowed to grow," Powell said.

Which state will take the lead on the appeals process is still uncertain, since California -- which filed first -- may still decide to reverse its own decision. While the state's PUC had planned to address the appeal question at its meeting on Jan. 13, that vote has been pushed back two weeks in part because the commission's two new commissioners have not yet been sworn in. California has filed its petition in the Ninth Circuit Court of Appeals, while Minnesota plans to file with the Eighth Circuit and New York with the Second.

Simultaneously, some members of Congress are pushing forward with aggressive regulation reform for IP communications. Florida representative Cliff Stearns, vice-chairman of the House Telecommunications Subcommittee, last week re-introduced legislation seeking federal pre-emption of states for regulation of "Advanced Internet Communications Services," including VoIP. The Senate also plans to introduce its own telecom regulation reform bill soon, though there is no solid timetable yet.

So far, the courts seem to agree with the FCC's stance on VoIP. A recent decision by the Eighth Circuit even used the Vonage ruling as evidence to uphold a lower court's ruling in favor of Vonage in a case brought by Minnesota.