Vonage Wins Another Round

Vonage Holdings Corp., the much-publicized consumer VOIP service provider, has won another, temporary round in its fight to avoid telecom regulation by the states. On Wednesday, the U.S. District Court, Southern District of New York, overturned the New York Public Service Commission's determination regulating Vonage. Magistrate Judge Douglas Eaton will consider the merits of a permanent injunction next January. The reversal is a repeat of Vonage's experience in Minnesota in May, where a similar attempt by that state was overturned. "We are satisfied with the court's decision and believe this is a positive step forward for New Yorkers and the industry," said Jeffrey Citron, chairman and CEO of Vonage. "Vonage remains eager and committed to working with the states, Congress and the FCC [Federal Communications Commission] to create a national framework for this emerging industry." The decision clearly reflects the wishes of FCC Chairman Michael Powell, who has publicly stated his desire to promote voice-over-IP carriers' development by clearing them of regulatory (read: tax, formal rate filing and Universal Service Fee) expenses. To date, much of the VOIP services' large price advantages over traditional local and long-distance carriers have been based on their freedom from these charges. Ultimate policy toward IP-based voice service is still undetermined, however. The FCC has been soliciting industry comment with a Notice of Proposed Rulemaking, before coming up with permanent decisions on VOIP carrier classifications and obligations.