Vonage Declaratory Ruling ... Vonage appealed in federa

1
FCC Treatment of VoIP

• Russ Hanser
• Special Counsel to the Chief
• Competition Policy Division
• Wireline Competition Bureau
• Federal Communications Commission

2
Outline

• Legal Framework/Background
• Pulver.com
• ATT (brief)
• CALEA (brief)
• Vonage
• IP-Enabled Services NPRM

3
Legal Framework 1996 Act Definitions

• Telecommunications
• The transmission, between or among points
  specified by the user, of information of the
  users choosing, without change in the form or
  content of the information as sent and received.
• Telecommunications Service
• The offering of telecommunications for a fee
  directly to the public, or to such classes of
  users as to be effectively available to the
  public, regardless of facilities used.
• Information Service
• The offering of a capability for generating,
  acquiring, storing, transforming, processing,
  retrieving, utilizing, or making available
  information via telecommunications.

4
Legal Framework Title I Title II Regulation

• Regulation of Telecommunications Services
• (Title II)
• Just, reasonable, nondiscriminatory rates and
  terms
• Certification/discontinuance requirements
• Contribution to universal service fund
• Disability accessibility requirements
• Privacy requirements
• Consumer protection requirements
• Interconnection obligations (some carriers)
• Tariffing requirements (some carriers)
• (Un)regulation of Information Services (Title
  I)

5
Pulver.com Declaratory Ruling

• FWD only facilitates call set-up traffic is
  carried by the end users ISP over existing BB
  facilities.
• As described in petition, only facilitates calls
  between members.
• Specialized phones, non-NANP numbers.
• Offered for free.
• Sought ruling that FWD is neither
  telecommunications nor a telecommunications
  service.

6
Pulver.com Declaratory Ruling

• FWD is not telecommunications.
• The heart of telecommunications is
  transmission. Pulver neither offers nor provides
  transmission.
• Information FWD provides is not information of
  the users choosing, without change in the form
  or content of the information as sent and
  received. Instead, FWD provides new
  information whether other FWD members are
  present at what IP address a member may be
  reached or, in some cases, a voicemail or an
  email response.
• Use of telecommunications does not mean that
  Pulver offers or provides telecommunications.

7
Pulver.com Declaratory Ruling

• FWD is not a telecommunications service.
• Must offer (not simply use) telecommunications
  to be a telecommunications service. Pulver does
  not.
• Must be offered for a fee to be a
  telecommunications service. Free World Dialup is
  free.

8
Pulver.com Declaratory Ruling

• FWD is an information service.
• Enables members to acquire information regarding
  online presence of other members.
• Stores member information, voicemail messages
• Provides passwords and numbers that members
  utilize.
• Processes the SIP invite to initiate a call.
• Makes available SIP invite to recipient.
• Allows member to retrieve information.
• Transforms erroneous address information.

9
Pulver.com Declaratory Ruling

• FWD is subject to federal jurisdiction.
• Preeminence of federal authority in the area of
  the Internet.
• Congressional preference for unregulation.
• End-to-end analysis inapplicable w/r/t
  Internet-based services.
• Commerce Clause prescribes preeminent federal
  role over interstate commerce.
• No definitive statement regarding role of the
  states, but any state regulations that seek to
  treat FWD as a telecommunications service or
  otherwise subject it to public-utility type
  regulation would almost certainly pose a conflict
  with our policy of nonregulation.

10
ATT Declaratory Ruling

• Under current rules (subject to change in other
  proceedings), an interexchange service using IP
  is still subject to the access charge regime if
• Uses ordinary CPE with no enhanced functionality
• Calls originate and terminate on PSTN
• Service offers no enhanced functionality and
  message undergoes no net protocol conversion.
• Such service is the offering of
  telecommunications, and thus, when provided for a
  fee, is telecommunications service, subject to
  access charges under current rules.

11
Communications Assistance For Law Enforcement
(CALEA)

• CALEA requires certain service providers to
  incorporate into their networks, facilities and
  services certain technical capabilities to assist
  law enforcement in conducting authorized
  electronic surveillance.
• Law enforcement community is concerned about the
  extent to which IP-Enabled services, especially
  VoIP, are subject to CALEA.
• Law enforcement agencies have sought
  clarification, and FCC has begun to review
  application of CALEA requirements to IP-enabled
  services.

12
CALEA Contd

• FCC has tentatively concluded that CALEA applies
  to facilities-based providers of any type of
  broadband Internet access service including
  wireline, cable modem, satellite, wireless, and
  BPL and to managed or mediated VoIP services.
• Key questions Under CALEA (which employs
  definitions differing from those in the
  Communications Act), are VoIP providers
  telecommunications carriers, or do they provide
  information services? Even if VoIP services
  are information services under CALEA, does
  replacement for a substantial portion of the
  local telephone exchange service language apply?
  

13
Vonage Declaratory Ruling

• Vonage provides DigitalVoice, a VoIP service
  that
• requires the use of a third-party broadband
  connection
• requires the customer to have a multimedia
  terminal adapter, IP phone, or computer with
  peripherals
• provides calling, web-based personalization and
  control, voicemail management, and other features
• is accessible from any broadband connection in
  the world.

14
Vonage Declaratory Ruling

• In 2003, Minnesota PUC exerted jurisdiction over
  DigitalVoice service, attempted to regulate as
  telephone service.
• Vonage appealed in federal court, sought ruling
  before FCC. In both cases, sought ruling that
  DigitalVoice was an information service and that
  it was jurisdictionally interstate.
• Federal District Court agreed with Vonage. PUC
  appealed. Oral argument before court of appeals
  was held on November 17th.

15
Vonage Declaratory Ruling

• On November 9, 2004, the FCC preempted the
  Minnesota Commissions order in various respects
• Preempted Minnesotas requirement that Vonage get
  a certificate.
• Preempted Minnesotas tariffing requirement.
• Preempted Minnesotas 911 requirement only to the
  extent it operated as a condition to entry (i.e.
  was tied to the certification process) and noted
  that Vonage currently provides an interim 911
  solution.

16
Vonage Declaratory Ruling

• If DV is a telecommunications service, Vonage
  would be a nondominant provider, not subject to
  entry regulations, tariffing, and other
  requirements of the type set out in the MPUC
  order.
• If information service, MPUC order is
  inconsistent with federal policy and subject to
  preemption, b/c cannot separate interstate and
  intrastate components and federal policy favors
  nonregulation of information services (note
  sections 230 and 706).
• Multiple state regulatory regimes would also
  likely violate the Commerce Clause, because of
  the unavoidable effect that regulation on an
  intrastate component would have on interstate use
  or use of the service within other states.
• Other types of IP-enabled services that have
  basic characteristics similar to DigitalVoice,
  such as those offered by cable companies, are
  also not subject to traditional state public
  utility regulation.
• States will retain their important role in
  matters of consumer protection and enforcing laws
  of general applicability.

17
In re IP-Enabled Services

• NPRMs scope is broad addresses services
  (communications capabilities using IP) as well as
  applications (software-based functionalities
  using these communications capabilities).
• To ensure that any regulations applied are
  tailored as narrowly as possible, and do not draw
  into their reach more services than necessary,
  FCC has sought comment as to whether it would be
  useful to divide IP-enabled services into
  discrete categories, and, if so, how it should
  define these categories.
• Should categorization be based on functional
  equivalence to traditional telephony? Economic
  substitutability? Interconnection with PSTN/use
  of NANP numbers? Facilities layer vs.
  applications layer? Something else?

18
In re IP-Enabled Services

• Jurisdiction (NPRM predated Vonage Order)
• Appropriate Legal/Regulatory Framework
  Statutory Classification
• For each category identified, are services
  telecom services? Information services?
• Are existing regulatory interpretations of these
  terms still relevant?
• Impact of judicial decisions (Vonage, Brand X)?

19
In re IP-Enabled Services

• Appropriate Legal/Regulatory Framework
  Statutory Prerogatives
• Notes that Congress has provided the Commission
  with a host of statutory tools that together
  accord some discretion in structuring an
  appropriate approach to IP-enabled services.
• Ancillary jurisdiction
• Forbearance

20
In re IP-Enabled Services

• Appropriate Legal/Regulatory Framework Policy
  Areas
• 911/E911
• Disability accessibility
• Carrier compensation
• Universal service
• Consumer protection
• Economic common carrier regulation
• Law enforcement concerns (wiretapping) are being
  addressed in separate proceeding.

21
In re IP-Enabled Services

• Appropriate Legal/Regulatory Framework Other
  Concerns
• Effect of Title III (wireless)
• Effect of Title VI (cable)
• Rural considerations
• Numbering issues
• International issues
• Open network architecture
• Section 208/enforcement issues

22
Other Pending VoIP Petitions

• SBC Seeks ruling that IP networks, services and
  applications utilizing those networks are
  jurisdictionally interstate and exempt from
  regulation under Title II. Also seeks
  forbearance from application of Title II
  regulation to whatever extent they would
  otherwise apply.
• Level 3 Seeks ruling that Internet-to-PSTN
  calls and PSTN-to-Internet calls are subject to
  reciprocal compensation, not access charges.
• Inflexion Seeks ruling exempting ExtendIP,
  which provides POTS plus more to underserved
  markets, from interstate access charges.