Policy

Time Warner Nets VoIP Win

3/02/2007 7:00 PM Eastern

Washington— Time Warner Cable won a regulatory battle at the Federal Communications Commission last Thursday over state regulatory agencies in Nebraska and South Carolina, which had been frustrating the company’s ability to provide competitive phone service in rural areas.

In a staff ruling endorsed by FCC chairman Kevin Martin, the agency concluded that Time Warner is allowed to use third-party telecommunications carriers as an indirect means of exchanging voice traffic with market-dominant phone incumbents.

Time Warner offers local phone service by relying on voice-over-Internet Protocol technology. Because the FCC hasn’t classified cable VoIP as a telecommunications service, Time Warner’s VoIP product hasn’t had the federal right to interconnect directly with phone incumbents.

As a result, Time Warner has cut deals with telecommunications-service wholesalers with interconnection rights, to ensure that its customers may communicate with customers of phone incumbents.

South Carolina and Nebraska regulators, however, refused to recognize the interconnection rights of wholesalers with which Time Warner had signed contracts, causing Time Warner to seek an FCC ruling. In a 16-page decision, the agency held that states couldn’t nullify Time Warner’s reliance on wholesalers offering telecom services.

“By increasing competition in the telephone sector, this action encourages the deployment of broadband facilities and ensures that consumers in all areas of the country reap the benefits of competition in the form of lower prices, innovative services and more choice,” Martin said in a prepared statement.

Although Time Warner won the support of Martin — who has been a vocal cable critic during his entire time as chairman — the company had to wait exactly one year for the agency to produce a ruling. AT&T supported Time Warner’s request.

“This order sends a strong statement that cable’s VoIP telephone service must be permitted to deliver to consumers across the country the benefits and savings brought by facilities-based voice competition,” said National Cable & Telecommunications Association president Kyle McSlarrow in a statement.

The FCC has said that VoIP service is an interstate service largely within its jurisdiction. In recent years, the agency has required interconnected VoIP providers like Time Warner to comply with 911 regulations and contribute to the universal service fund, which keeps phone rates affordable in rural parts of the country.

September