Local Agencies Press VoIP Case With FCC

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Rapid technological change separates winners from losers not only in the marketplace but also in the ranks of government.

The explosion of interest in voice-over-Internet protocol (VoIP) services could result in a controversial realignment of government authority over local telephone service, an arena traditionally shared by state and federal authorities.

Because VoIP services ride the global Internet, Federal Communications Commission chairman Michael Powell is seriously questioning whether state and local governments have a substantive role in overseeing the burgeoning VoIP industry, whose players include cable and telephone companies that provide high-speed Internet access.

Powell's stance, enunciated most recently in a speech here two weeks ago, has local governments nervous. Although local communities have overseen cable companies for decades, they might find in the not-too-distant future that VoIP will fall outside of their regulatory ambit.

The most recent expression of local government concern came in a Jan. 16 letter to Powell that asked the FCC to tackle myriad VoIP issues in a comprehensive single rulemaking, not piecemeal as some companies have urged.

"It is clear even now that VoIP policy is a complex problem, with many interrelated parts. Thus, it would be arbitrary and capricious for the [FCC] to act without developing an overall, holistic approach to the problems posed by VoIP," the letter said.

The letter was drafted by the Washington, D.C., law firm Miller & Van Eaton on behalf of a large group of local interests, including the National League of Cities, the U.S. Conference of Mayors, the International Municipal Lawyers Association, the National Association of Counties, the National Association of Telecommunications Officers and Advisors and the Alliance for Community Media.

By favoring a "holistic approach," the local interests were effectively requesting no action from the FCC on VoIP-related rulemakings filed over the last two years by AT&T Corp., Pulver.com, and Vonage Holdings Corp. prior to the conclusion of the broad VoIP rulemaking.

Powell expects the FCC to launch such a rulemaking in February, but gave no guarantee as to how much time he needs to produce the blueprint.

The FCC might not have the last word on the regulatory classification of VoIP. U.S. Sen. John Sununu (R-N.H.), a member of the Senate Commerce Committee, is planning to introduce legislation that would pre-empt state and local regulation of VoIP.

In the letter to Powell, local regulators raised at least five VoIP issues that the FCC should address, including recognition of their role as providers of "police power protection" for consumers and their own role as large consumers of telecommunications services.

In almost every regulatory context involving the Internet, local governments have objected to regulatory regimes that impinge on their taxing authority, and the VoIP debate is no different.

"Local governments should receive adequate rent for use of public land or other public resources. And VoIP providers should pay a fair share of taxes in a broad-based taxation system," the letter said.

Lastly, localities urged the FCC to examine closely the legal consequences if cable companies migrate all their services, including video programming, to the IP platform.

The letter suggested that such a move might mean that cable companies would become information-service providers that would not have the same federal rights as cable companies in obtaining, transferring or renewing local franchises.

Cable companies that go all-IP, the letter concluded, "will endanger their special status" as cable operators.

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