Wednesday, November 10, 2004 - The Progress & Freedom Foundation Blog

Cause to complain??

It was with some disappointment -- but little surprise -- that I read in TR Daily (Nov. 9, 2004 [subscription required]) threats of litigation by state commissions in response to the FCC's decision that "voice over Internet" services are inherently interstate, in part, because users' locations are unknown or irrelevant. (The threats are particularly troubling given that the text of the FCC's order has not even been released yet.) To the extent such litigation threats derive from a simple turf battle, the threats make "sense"; declaring these services interstate means that the FCC, and not state commissions, will decide what role states will play in implementing the federal Communications Act. But beyond such arguably petty justifications, the litigation threats remain, at best, mysterious and are probably counterproductive.

States have generally claimed they have no interest in subjecting Internet voice providers to onerous rules that have applied to traditional phone service, such as regulation of rates. Certainly, there is reason to doubt this claim on its face given how active states have already been in this area, not to mention their reliance on the idea that, at base, Internet voice is simply a new type of telephone service.

But leaving aside worries that following a "trust me" approach with states contradicts the facts (or common sense), the FCC expressly declined to preclude them from regulating in many areas that even states admit they want to regulate, primarily intercarrier compensation, universal service, public safety and consumer protection. The Commission's press release this week expressly invites state involvement in addressing public safety, scrupulously avoids preempting state fraud and consumer protection statutes and leaves open the possibility of a state role in deciding or implementing reforms to intercarrier compensation and universal service policies. So if states really do plan to limit their regulation of Internet voice to specified areas, the FCC's decision this week won't complicate that plan.

Which leaves the question: why threaten litigation? Or perhaps more interesting for states trying to decide whether to sign on to the litigation bandwagon: why threaten litigation now, rather than attempt to work cooperatively with the FCC?

Inquiring minds want to know . . .

posted by Kyle Dixon @ 11:43 AM | State Policy , VoIP