Federal Court Throws Out Minnesota VoIP Regulation

An anonymous reader submits: "Voxilla reports that the FCC will announce Friday that 'a federal court has issued a permanent injunction against a recent ruling by the Minnesota Public Utilities Commission to regulate Voice over IP provider Vonage as a telephone company.' This is a significant move towards stopping recent movement by states to regulate VoIP -- most notably, California vs. VoicePulse and Wisconsin vs. Packet8."

Comments

What constitutes a telephone company?

[Max Romantschuk]

What is the fundamental difference between a traditional telephone company and purely VoIP-based companies? VoIP is slowly making it's way into traditional phone companies, does this make them less of a phone company?

I'd say the difference is quite minimal for the end user.

I'm just rambling, but I'd sure like to hear my fellow Slashdotters' thoughts.

Re:What constitutes a telephone company?

[I8TheWorm]

I have to agree a little. The only difference I can see is one is a service you explicitly pay for, and the other is built on a service that you already explicitly pay for.

What's the reason for regulation of regular telephony companies anyway? Rate regulation is one of them, and that wouldn't really apply to VoIP, since the service it flies on is generally already regulated by the FCC (http://www.fcc.gov/broadband/).

I can't see any reason to regulate a service that runs on a regulated service... seems like it's from the Department of Redundancy Department.

Re:What constitutes a telephone company?

[Anonymous Coward]

The main differnce is the infrastructure.
Traditional phone companies, have to run towers, wires and connect the planet. Which usually means that they will completely own the infrastrucute, and thus what can and can't pass through it. Hence you get a monopoly like MaBell. This is why the FCC stepped in originally, to protect the consumer from unfair inflation hikes. How can you have capitislm when you have no option? (That isn't being patriotic, more or less, I like to save money)

VoIP on the other hand is simply more data, on the internet, and since there is a standards (i assume) my VoIP company can interface with your VoIP company, and both of us will be in direct competion. Thus the FCC shouldn't need to regulate based on consumer protection.
The other problem w/ the FCC stepping in is, what determines VoIP? Will my Roger Wilco voice chat's with people in game come under the FCC rulings? Will AOL IM then be under they're control, (that might be a good thing, still waiting for a universial IM system)? Then how long before forum posts like this are considred in the domain of the FCC? (ok that's streching it a little, but you get my point)

Re:What constitutes a telephone company?

[aldousd666]

It's like I said before

General Motors is not a Horse-Drawn Carriage manufacturer, nor is Vonage a phone company.

Just because they serve the same user space as phone companies, doesn't make them the same animal.

Re:What constitutes a telephone company?

[KingJoshi]

I can't see any reason to regulate a service that runs on a regulated service... seems like it's from the Department of Redundancy Department.

My understanding is that there are certain requirements and expectancies from phone companies that aren't expected from ISPs. Services like 911, efforts to maintain uptime and reliability, etc.

One can be rightfully cynical of regulations. But at the same time, one should also note that often without regulations or a lot of external pressure, the companies won't do what's best for the public or customers unless/until it affects their bottom line. But by then, it may be too late and people will complain about how the government didn't do anything to protect the people knowing that companies providing VoIP don't have to live up to the same standards.

Re:What constitutes a telephone company?

[TomV]

I can think of one key way in which the economics could have very nasty consequences:

If unregulated VoIP proves significantly cheaper then regulated telephone service, then one can expect customers to migrate en-masse away from the regulated providers. At some point, it may then become uneconomic for those providers to continue in business, at which point nobody is required to provide 911 service - the new VoIP firms don't because they're not required to, and the old PST firms don't becasue they no longer operate in the telphone business. At which point it becomes necessary to regulate the VoIP providers, in which case it would have made much more sense to do so in the first place, before the problem manifested.

tomV

Re:What constitutes a telephone company?

[Dun Malg]

What's the reason for regulation of regular telephony companies anyway?

The entire justification for regulation is their monopoly status. Because there is only one set of wires carrying dialtone, and they own it, they are regulated. Wireless carriers aren't regulated-- there's a federal law prohibitting it-- because there's no monopoly of the medium. Regular phone companies are subject to regulation based solely on the fact that they own the copper pair, or are resellers of service on that copper pair. Because VoIP is not dependent on a particular delivery medium, nor tied to a particular physical location of delivery, there's absolutely not justification for state regulation.

Re:What constitutes a telephone company?

[Dun Malg]

On the other hand, Vonage isn't a purely VoIP company; they actually connect to the telephone network, and they offer telephone network numbers. They're like a traditional telephone company except for how your call gets to their switch; on the other side, they interact with the phone network like a traditional phone company.

No they're not, and no they don't. They are like any other private company out there with an on-site telephone system using Direct-In-Dial. Let me explain how it works:
With DID, you reserve a block of, say, 250 phone numbers. Not 250 lines, just the numbers. These are purely for addressing. Each extension in your company is assigned one of these numbers. Incoming and outgoing calls are handled by, say, a couple T1's. This gives you a pool of 48 lines for incoming and outgoing calls. Many companies and universities do this, and they aren't phone companies. At UCLA they'll even charge you monthly for the DID line, like a phone company! Vonnage is doing exactly this: selling you the use of an extension on their phone system. The only difference is that the extension isn't in their office, it's delivered over the Internet. Delivering a service over the Internet isn't in itself regulable, nor is selling DID phone service managed by private equipment.

Basically, Vonnage isn't delivering service on monopoly infrastructure, they are simply connecting to it like any other business.

California VOIP regulations?

[Anonymous Coward]

"Total Phonecall!"

"Your connection has been terminated!"

"I'll call you back"

"Hasta la vista, baby bell"

Isn't Echelon enough already?

[jkrise]

Why should there be any more regulation when the very data can be captured easily?

and, on a related note, will Microsoft be compelled to register as a bank? People use their technology to do online banking you see...

-

Re:Calling all the militia

[1lus10n]

give it a few more years. after the average US citizen starts being noticably effected by these (stupid) laws.

and give it a few more years with no more major terrorist attacks (or alot of attacks) and the american public (hopefully) wont be so happy-go-lucky about endorsing things labeled as "security" or "defense" or .... "patriot" "consumer" etc .....

the scary part is the stupid laws are starting to trickle over to the EU .... (see: software patents)

Hmm

[arvindn]

At first I thought its a nice thing that courts and lawmakers at least partially seem to understand that the internet is different from conventional channels, with some hope that in the future they would also understand that software is different from other arts. Then I realized that all this could be merely because there aren't any uber-corporations interested brib^W lobbying politicians to tax the internet the way they do for software patents, ridiculous copyright laws etc.

Shock Horror!

[Anonymous Coward]

You mean instead of suing the competition into oblivion they will have to provide customers with a reason to part with their hard earned dollars?!

This is America, it's our God given right to make money from nothing, you commies!

</SARCASM>

-A

My 73 yo father

[G3ckoG33k]

My 73 yo father switched to broadband (10 Mbit/sec), voip, etc some two years ago. He surfs, reads the news, etc. He also pays all his bills via the net and is fighting hard to get me do it too - "Come on, it's really easy", he says. Not only that, know he wants me to install Linux on his machine so "he can see what all the fuzz is about". No, he never had a technical diploma of any sort.

Now, he bugs me with his fancy new voip connection. But, I am sure he never lobbied in Minnesota for their decision.

Spam/no-call?

[deltagreen]

Vonage had maintained that it does not provide telephone service. Instead, lawyers for Vonage contended, the company offers data services over the internet

Where does this put VoIP with regards to telemarketers? If it's a data service, the FTC no-call list can't be applied, can it? Does this mean a call from a telemarketer to a VoIP-phone could be classified as spam?

this might be bad

[c4ffeine]

What I'm afraid of is politicians that don't understand voip. Knowing them, they'll probably apply a tax to help regular phone companies "remain competitive". They'll then limit this technology, perhaps when the lobbyists demand it, perhaps when they decide that it's a threat to homeland security. Or, the phone companies could sue for some reason- unfair competition? copyright infringement? and kill it that way. I hate to be cynical like this, but politicians are just that way.

Re:this might be bad

[Interruach]

Except you *want* a reliable 911 service, even if you switch to VOIP. All regulation isn't bad, you know.

Re:this might be bad

[fuzzybunny]

Mod parent up, excellent point.

The problem is that VoIP companies don't meet a lot of the service criteria that a POTS company does. Consider the example of making a VoIP call via your cable modem over your local provider's fiber backbone, over a microwave link, connecting to a satellite, to two tin cans tied together with a string somewhere in central Angola. Nowhere in there have you used anything that could be traditionally construed to be a "phone call". Welcome to the information age.

While you're absolutely corect, some regulation is good (especially when guaranteeing the service that you agreed to pay for, etc.) the problem with most regulation attempts of VoIP is that it's approached by PUCs or their equivalents around the world as an "all-or-nothing" issue.

There are loads of taxes and bills and whatnot, most only vaguely related to actual 'phone service', which many politicians would love to attach to your telco bill every month. Agreed, there's a more fundamental issue at stake here (i.e. why should you finance something completely unrelated through an everyday activity such as communication), but on the whole, I would rather not see any form of tax creep hit new technology development. I've had enough bad experiences with traditional telcos in Europe to be very wary of anything which might even vaguely artificially even the playing field for established service providers, even as a side effect of something like making the state's tax bottom line look better.

What I would really like to see is a middle ground, where communications companies can help fund something (a) vitally important, and (b) extremely relevant, such as 911 services. However, I guess I suppose it's naive to believe that this is possible without all kinds of rider charges being levied by your local PUC or board or council or whatever. It's well worth the effort, though, if it helps maintain the services that we all want and need, without weighing on the introduction of new technology.

VoIP is the future

[canolecaptain]

As someone who works in this industry, I thought I'd share some of the future of telecomm for those who aren't 'in the know'. All communication lines going to any endpoint (home, business, sensors, etc) are quickly moving to an IP based data network. Unfortunately, there are two problems that governments and current telephone companies face:
1) Roughly 50% of their voice revenue stream comes from per minute connection charges, other carrier access charges, & regulation charges (govn't). These will evaporate when subscribers move to data driven VoIP (ie: you pay a flat fee for DSL or cable modem bandwidth now, and it can run all your voice calls to anywhere in the world). Eventually the PSTN connection part will no longer be necessary, so Vonage will disappear as we know it today, but it has finally woken up the telcos to what the future will bring.
2) Pretty much the other half of their revenue stream comes from the 'premium' voice feature services (call waiting, text messaging, etc), all of which are quickly moving from the class 5 switch into the phones themselves (aka: free).

What do you do when your primary revenue stream evaporates? Fight it in the courts or with govn't officials. Remember, govn'ts have been taking a nice chunk of that revenue for themselves as well.

We will have to move to a bandwidth & quality of service (QoS) based payment style. A minimum bandwidth is given for a flat rate (which will include -all- voice), and extra bandwidth will be provided on demand at an agreed QoS. The higher the bandwidth & QoS, the higher the fee.

Things to watch out for: VoIP everywhere, SIP phones/services, VoWLAN, current voice carriers moving their infrastructure to their IP networks, and govn't regulations dictating that comm lines (called data services & unregulated) become regulated for QoS.

The companies that move to this model last will not survive. They aren't going to like this. :-)

Where do you draw the line?

[Michael Hunt]

OK, don't get me wrong, i'm not disagreeing with this ruling. Where do you draw the line, though?

Do you tax the providers who provide a circuit switched network, but not those who use a packet switched network? (as seems to be the case here, never mind that a lot of phone companies use ATM/AAL1 on the backhaul anyhow)

Do you tax a provider who provides you with a physical FXS connection, but not a provider who lets you make calls by some other method? (e.g. h.323 to a peering point which connects to a bunch of DS1s)

Do you only tax the incumbents, because their lines are running through public space and were paid for with public money? (this one almost makes sense)

Where do you draw the line?

Re:Where do you draw the line?

[(H)elix1]

Do you tax the...

This is Minnesota we are talking about. Of course the answer is yes.

This would be GREAT

[SCHecklerX]

...if I didn't have to depend on my local phone company for a DSL line in the first place :(

Oh, they understand it all right.

[emil]

I've said a couple of times before that the federal tax that we pay for landline and cellphones was originally a temporary measure in 1898 to finance the Spanish-American War.

VOIP is an opportunity to get out from under all of this stupid infrastructure. Even without 911 service, I am all for it.

Good or Bad? Can't tell yet.

[mjh]

While I'm glad that the MPUC's decision was thrown out, I don't think we know whether or not this is really good or just a speed bump for the MPUC (and by extension all other PUCs).

The problem is that we don't have the actual court ruling. We know that the court issued a permanant injunction agains the MPUC's ruling, but we don't know why. We don't know if it's been thrown out for procedural problems. If so, then MPUC simply corrects that procedural problem, makes a slightly different ruling that has the same effect. But if the ruling agrees with the VoIP providers as to what they're offering and why it's fundamentally different than what the LECs offer, then it sets a strong precedent and it impacts every PUC in the US.

Unfortunately, we don't know yet. And we won't know until the ruling is released on Oct 10. So while I'm cautiously optimistic, that's just me being hopeful. It's not reflective of any evidence.

MCI commercial & VOIP

[dbowden]

Has anyone else noticed that the latest MCI commercials on TV have a closed caption script that's completely different than the voice & video portions of the commercial?

The cc portion is pushing a VOIP company (can't recall the name) which is probably owned by MCI, while the voice & video portions are pushing MCI's latest calling plan. I find it interesting that one commercial appears to be pushing two completely different services.

I've seen two different versions of it too, so it appears not to be an error.