The Future of VoIP Regulation is Uncertain

Although in many ways VoIP looks and feels like the plain old telephone service of old, according the U.S. government, it is quite different.

Indeed, despite serving a more or less identical function, that being voice communication, VoIP is currently classified under “information services,” as opposed to common carrier “telecommunications,” by the Federal Communications Commission. This means that VoIP, unlike the previous iterations of analog voice communication that came before it, is not subject to the same set of regulations that govern the deployment, use, and market structure of traditional telephony. As it stands, information services are exempt from common carrier regulation.

This has led to a slew of carrier conflicts and legal challenges, predictably resulting in several contradictory court rulings and interpretations. Disputes have ranged from to call discrimination to intrastate access charges.

Regarding the latter, attorneys John C. Dodge and Michael C. Sloan of Davis Wright Tremaine LLP explain that the FCC has permitted VoIP providers to connect to the public switched telephone network (PSTN) without paying access charges to the local exchange carrier.

“Although the FCC has never definitively ruled on the question, many state regulators and federal courts have found that VoIP services are information services under federal law,” they wrote in a recent Lexology post. “And because information service providers can avoid access charges under the ESP [enhanced service provider] exemption, some VoIP providers and telecommunications carriers that transport VoIP traffic have taken the position that LECs should not bill access charges for VoIP-originated traffic, even when it is exchanged by carriers in TDM format on the PSTN.”

Recently, the FCC has been called upon by Union Electric Company, prompted by the US District Court for the Eastern District of Missouri, Eastern Division, to issue a declaratory ruling regarding the regulatory classification of VoIP services, this time over the issue of pole attachment rental rates.

“The request for declaratory ruling provides the FCC under new Chairman Tom Wheeler with yet another opportunity to address the statutory classification of VoIP services,” writes Todd D. Daubert and Majorie K. Conner on Lexology. “Consequently, this request for declaratory ruling may prove to be important not only for utilities and VoIP service providers in the pole attachment context, but also generally for all providers and users of VoIP services since the statutory classification of VoIP services determines everything from the need to obtain permission from regulatory authorities before providing VoIP services to the applicability of common carrier rules to VoIP services.”

The FCC, however, may be compelled to make a decision sooner than later. The D.C. Circuit Court of Appeals recently struck down the FCC’s “net neutrality” regulations, which forbade content prioritization, bandwidth throttling and other forms of traffic discrimination on the part of internet service providers (information service providers). Strangely enough, the court ruled that it is precisely the exemption of information service providers from common carrier regulations that limits the FCC’s power in this case.

So, if the FCC hopes to regain its regulatory power over the internet and ISPs, it will need to ultimately reclassify internet services as common carrier telecommunications services—a decision which will undoubtedly have large, spiraling implications for the voice over IP industry.