Policy

Powell: States Can’t Regulate VoIP

10/19/2004 10:27 AM Eastern

Siding with major players like the cable industry, Federal Communications Commission chairman Michael Powell said Tuesday that states should not have primary jurisdiction over voice-over-Internet-protocol services.

“We cannot avoid this question any longer. To hold that packets flying across national and, indeed, international digital networks should be subject to state-commission economic-regulatory authority is to dumb down the Internet to match the limited vision of government officials. That would be a tragedy,” Powell said in a speech in Boston at the Voice on the Net Conference.

The FCC is expected to vote in November on a petition filed by Vonage Holdings Corp. asking the FCC to declare that VoIP is beyond state jurisdiction, meaning that providers at a minimum would not have to seek state permission to enter the business.

The National Cable & Telecommunications Association supports state pre-emption.

Powell has been telegraphing his intentions for months, arguing that because VoIP is a data application with global reach, it is far different from traditional circuit-switched telephony and should not be regulated by the states.

"Many regulators have protested change, saying that VoIP is just a different way to make a phone call. But isn’t that the point. It is a different way, and it deserves a different regulatory structure that reflects its unique qualities. I guess one could say that the Constitution and the democratic form of government are just another way to run a nation," Powell said.

Vonage embraced Powell's comments.

“We've always said that we support the chairman and that we think true VoIP … is an interstate service because it relies on the Internet, which itself is interstate in nature and … because you can take the service with you wherever you go and use it. Interstate in nature is the only way to go,” Vonage spokeswoman Brooke Schulz said.

State regulators are concerned that losing jurisdiction will impair their ability to tax VoIP providers to support phone companies that need subsidies to provide affordable phone service to rural and high-cost areas. The FCC is expected to address this issue at a later date.

The commission has already said that VoIP services that are free and do not come in contact with the traditional telephone network are information services that are not subject to state authority.

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