FCC Rules That Vonage is Interstate Service

Today the Federal Communications Commission voted in favor of declaring Vonage’s form of IP-to-PSTN communications an interstate service, asserting their sole jurisdiction over its Internet-based service, and precluding individual States from levying taxes, fees or restrictions on the services provided by Vonage.

According to Vonage CEO Jeffrey A. Citron, “This forward-thinking decision from the FCC assures that competition from VoIP is here to stay. Now we can focus our resources exclusively on building an even better service — rolling out E-911 for all our subscribers, innovating new features and new devices for VoIP, and expanding aggressively around the globe. Because the FCC has acknowledged the reality of the Internet — which knows no state boundaries and no borders — more people will enjoy the benefits of Internet phone service.”

This is a big deal for the VoIP industry. With the FCC keeping the States at bay, IP telephony providers will be able to innovate and grow, all the while free of regulations that would otherwise serve as a chokehold on this nascent industry. It further serves to underline that VoIP is indeed a different animal than traditional TDM-based telecom.

According to TMC columnist and Swidler Berlin Shereff Friedman Partner William Wilhelm, today's ruling is significant.

"The FCC today unambiguously declared VoIP services like Vonage's to be interstate in nature and preempted state utility regulation. This decision is a significant step forward in ensuring that the Internet and Internet applications do not have to bear the burden of complying with 50 different State utility regulations."

When reached for comment, Neal Shact, industry expert and CEO of Communitech said, "This is big step in the right direction. VoIP is a technology that is not restricted by geographical borders. It is going to be hard enough for the federal government to handle appropriately without needlessly subjecting it to 50 additional bureaucracies. This ruling puts the responsibility for nurturing this young industry where it belongs."