The FCC has denied AT&T's Petition for a Declaratory Ruling that access charges should not apply to phone-to-phone calls with IP transport. While it might have been a good business decision for AT&T to upgrade its network with IP transport from an efficiency standpoint, its decision to stop paying access charges was a regulatory ploy. Chairman Powell noted that AT&T's service does not add any enhanced functionality for consumers, and future classification decisions "may be guided by the consumer's perspective in what they are purchasing, in terms of experience or capability." Added Powell, "[t]o allow a carrier to avoid regulatory obligations simply by dropping a little IP in a network would merely sanction regulatory arbitrage and would collapse the universal service system virtually overnight."

The decision was not a clean sweep for LECs as the FCC took a pass on the issue of retroactive liability. Indeed, this is the only issue discussed in Commissioner Martin's statement, which implies that AT&T should be shielded from paying past access charges. Millions of dollars are at stake, so the lawyers will get to bill a bunch of hours on this one.

The FCC has now clarified its views on two of the "easier" issues in the VoIP debate - today's decision and its prior ruling that pulver.com's FWD is an interstate information service. 4 of 5 FCC members addressed the need for intercarrier compensation reform in today's order. It's go time.