Docstoc

PENNSYLVANIA

Document Sample
PENNSYLVANIA Powered By Docstoc
					                                        PENNSYLVANIA
                                  PUBLIC UTILITY COMMISSION
                                     Harrisburg PA 17105-3265

                                                                Public Meeting held April 15, 2004
Commissioners Present:

         Terrance J. Fitzpatrick, Chairman
         Robert K. Bloom, Vice Chairman
         Glen R. Thomas
         Kim Pizzingrilli
         Wendell F. Holland

Investigation into Voice over Internet                                   Docket No. M-00031707
Protocol as a Jurisdictional Service


                                                      ORDER

BY THE COMMISSION:

         Before the Commission for disposition are the Comments and Reply Comments to
a Commission-initiated investigation into the legal and policy concerns involving Voice
over Internet Protocol (VoIP) in Pennsylvania. VoIP is a term of art that refers to a
technology that provides an instantaneous or slightly-delayed real-time transmission of
voice, data, and audio, or a combination thereof, in a digital format using Internet
Protocol (IP) data packet transmission.1




1
 A packet is the fundamental unit of information transmitted over a digital network or over a digital communication
link. With data packets, data is broken up in small and uniform packets, numbered, and transmitted. Because each
packet is numbered, each packet can travel different paths through the network. Once the packets arrive at the
receiving end, the packets are realigned in numerical order, and the original data is extracted in the original format.
With VoIP, human voice and data are digitalized before the data packets are formed and sent. Then, at the
destination, the VoIP packets are unpacketized, and the digital data stream is reconverted into voice and data. VoIP
data packets use transmission control protocol or IP, like the Internet, as the transport mechanism to reach their
destination. VoIP is digitized although VoIP can be reduced to analog transmission, the predominant technology
used for voice communication over the telephone, using Digital-to-Analog Conversion equipment and technology.
Conversely, analog transmission can be reformulated to digital transmission using Analog Digital Converter (“A to
D” Converter) equipment and technology. See Newton’s Telecommunications Dictionary, (14th Ed: 1998), pp. 49
and 220.
                                 INTRODUCTION AND SUMMARY


           In our May 5, 2003 Investigation Order (May Order), we stated that the
development of VoIP raised numerous issues for regulators. The issues identified for
consideration in the May Order included, but were not limited to, the definition of VoIP,
the provider and end user experience with VoIP, the Commission’s jurisdiction to
regulate VoIP, the extent of Commission jurisdiction over VoIP and the Federal
Communications Commission’s authority to regulate VoIP. The Commission asked for
Comments and Reply Comments from all interested parties. The Commission received
filings from public interest advocates2, private trade associations3, incumbent local
exchange carriers (ILECs)4, competitive local exchange providers (CLECs)5,
Interexchange carriers (IXCs)6 and VoIP providers.7 The Commission thanks all of the
participants for their input. At this time, however, we conclude that it is more prudent for
the Commission to refrain from making jurisdictional conclusions regarding VoIP and to
not impose any regulatory burdens on VoIP providers.


           VoIP is an emerging technology that allows real-time audio (i.e., voice, data or
voice and data), instantaneously or slightly-delayed, to be transmitted and received in a
digital format using Internet Protocol (IP) data packet transmission. A packet is the
fundamental unit of information transmitted over a digital network or over a digital
communication link. IP is standard describing software that keeps track of the Internet

2
    Office of Small Business Advocate (OSBA) and Office of Consumer Advocate (OCA).
3
 Pennsylvania Telephone Association (PTA), Pennsylvania Cable and Telecommunications Association (PCTA)
and the Voice on the Net Coalition (VoIPNET).
4
 Verizon and Verizon North (collectively North), North Pittsburgh and Sprint Communications-United
Telecommunications (Sprint-United).
5
    AT&T Wireless and Level 3 Communications.
6
    MCI WorldCom and AT&T Telecommunications.
7
    Vonage Holdings, Inc. (Vonage), Net2Phone, Inc. (Net) and Comcast Cable (Comcast).



                                                        2
work addresses for different nodes, routes outgoing messages, recognizes incoming
messages and allows a packet to traverse multiple networks on the way to its final
destination.8

           We must determine whether it is appropriate at this time to decide jurisdictional
and policy issues. The policy issues include: (1) the definition of VoIP; (2) the end-user
and provider’s experience with VoIP; and (3) a VoIP provider’s obligations under state
law. State law obligations include Telecommunications Relay Service (TRS), 911
Service, state Universal Service Fund obligations, taxes, assessments, numbering, and
other obligations.


           On the threshold question of jurisdiction, there are two views. The opponents of
state jurisdiction claim that VoIP is not a “message or communication” under Section 102
of the Public Utility Code. 66 Pa.C.S. §102. They claim that VoIP is an “enhanced”
service and cite Second Computer Inquiry, Final Decision, 77 F.C.C.2d 384 (1980);
modified on reconsideration, 84 F.C.C.2d 50 (1980); further modified on reconsideration,
88 F.C.C.2d 512 (1981); aff’d sub. Nom Computer and Communications Industries
Association v. FCC, 693 F.2d 198 (D.C. Cir. 1982), cert denied 461 U.S. 938 (1983) and
Third Computer Inquiry, Phase II, Memorandum and Opinion on Reconsideration, 3
F.C.C. Rcd. 1150 (1988)(Computer Cases) in support of that proposition.9 They also

8
    Newton’s Telecommunications Dictionary, (14th Ed: 1998), p. 383.
9
 The Computer Cases refers to a series of FCC and federal court decisions on telecommunications matters that
preceded enactment of the Telecommunications Act of 1996 (TA-96). The two court decisions are Computer I and
Computer II. In Computer I, the FCC divided federal interstate communications into two categories. The
categories were “data processing,” which was deregulated as an ancillary service under Title I of the 1934 Act, and
“communications” which was subject to regulation as a common carrier under Title II of the 1934 Act. The federal
court affirmed the rules but the FCC’s subsequent undertaking of Computer II superceded the FCC’s
implementation because the categories were deemed obsolete by the time the court issued its legal determination. In
Computer II, the FCC re-divided federal interstate jurisdiction into “Basic” service, which remains subject to
regulation under Title II of the 1934 Act, and “Enhanced” service, which was deregulated as an ancillary service
under Title I of the 1934 Act. Basic services were subject to common carrier regulation under Title II of the Federal
Communications Act of 1934 (the 1934 Act) whereas “enhanced” services were classified as ancillary services
under Title I of the 1934 Act and deregulated because of the competitive marketplace. The federal court affirmed
the FCC’s Computer II decision. See Notice of Inquiry, In re Regulatory and Policy Problems Presented by the
Interdependence of Computer and Communication Services and Facilities, 7 F.C.C.2d 11 (1966); In Re Regulatory


                                                         3
state that VoIP is an “information service” and not “telecommunications” or
“telecommunications service” under TA-96.


        The proponents of state jurisdiction argue that VoIP is a “message or
communication” service under Section 102 of the Public Utility Code. 66 Pa.C.S. §102.
The proponents also claim that VoIP is a “basic” service under the Computer Cases and
that VoIP is “telecommunications” or “telecommunications service” under TA-96.


        On the issue of public policy obligations under state law, there is considerable
dispute. The parties do not agree on whether a VoIP provider must provide TRS, 911 or
if contributions to our state Universal Service Fund, or other obligations are required.
The parties’ disagree over the VoIP providers' access and use of scarce Public Switched
Telecommunications Network (PSTN) resources or facilities, particularly telephone
numbers, that are obtained from other LECs. VoIP providers, unlike the LECs,
apparently do not obtain their telephone numbers from the North American Numbering
Plan Administrator (NANPA). That is because NANPA gives numbers only to state and
federal certificated carriers to ensure their efficient use.


        Finally, we note that there are several cases underway at the FCC, including a
Notice of Proposed Rulemaking involving VoIP.


        For the reasons set forth in more detail below, we determine that it is premature to
make conclusive jurisdictional or policy determinations or to take action until the FCC
provides guidance.



and Policy Problems Presented by Interdependence of Computer and Communication Services and Facilities, 28
F.C.C.2d 291 (1970); GTE Service Corp. v. F.C.C.,, 474 F.2d 724 (2nd Cir. 1973(Computer I); Second Computer
Inquiry, Final Decision, 77 F.C.C.2d 384 (1980); modified on reconsideration, 84 F.C.C.2d 50 (1980); further
modified on reconsideration, 88 F.C.C.2d 512 (1981); aff’d sub. nom Computer and Communications Industries
Association v. FCC, 693 F.2d 198 (D.C. Cir. 1982), cert denied 461 U.S. 938 (1983); Third Computer Inquiry,
Phase II, Memorandum and Opinion on Reconsideration, 3 F.C.C. Rcd. 1150 (1988)(Computer Cases).


                                                       4
                         HISTORY OF THE PROCEEDING


      On May 5, 2003, the Commission entered an Opinion and Order at M-00031707
soliciting public comment on the issues identified with VoIP under state and federal law
(the May Order).


      On May 13, 2004, the Commission published Notice of the May Order at 33
Pa.Bulletin. 2449. The Commission sought comments within 45 days of publication and
reply comments were due no later than 30 days thereafter. The issues identified for
consideration in the May Order included, but were not limited to, the definition of VoIP,
the provider and end user experience with VoIP, the Commission’s jurisdiction to
regulate VoIP service, the extent of Commission jurisdiction over VoIP, and the Federal
Communications Commission’s (FCC) authority to regulate VoIP.


      Public interest advocates, private trade associations, competitive local exchange
providers (CLECs), incumbent local exchange carriers (ILECs), interexchange carriers
(IXCs), and VoIP providers submitted comments. The public interest advocates
submitting comments were the Office of Small Business Advocate (OSBA) and the
Office of Consumer Advocate (OCA). The private trade associations submitting
comments were the Pennsylvania Telephone Association (PTA), the Pennsylvania Cable
and Telecommunications Association (PCTA), and the Voice on the Net Coalition
(VoIPNET). The CLECs submitting comments were AT&T Wireless and Level 3
Communications. The ILECs submitting comments were Verizon Pennsylvania, Inc. and
Verizon North Pennsylvania, Inc. (collectively Verizon), North Pittsburgh, and Sprint
Communications-United Telecommunications (Sprint-United). The IXCs submitting
comments were MCI WorldCom and AT&T Telecommunications. The VoIP providers
submitting comments were Vonage Holdings, Inc. (Vonage), Net2Phone, Inc. (Net), and
Comcast Cable (Comcast).



                                            5
      On July 31, 2003, the Commission received reply comments from public interest
advocates, private trade associations, CLECs, ILECs, IXCs, and VoIP providers. OCA
and OSBA filed as public interest advocates. PTA, PCTA, and VoIPNET filed reply
comments as private trade associations. XO Communications and Level 3
Communications submitted reply comments as CLECs. Verizon and Sprint-United filed
reply comments as ILECs. AT&T and MCI WorldCom filed reply comments as IXCs.
Vonage, Net, and Comcast filed reply comments as VoIP providers.


                                   BACKGROUND
VoIP Technology


      VoIP technology uses digitized packets to provide message and communication
services between a calling and called party. Previously, the public switched
communications network (PSTN), maintained by local exchange carriers (LECs) or
interexchange carriers (IXCs), provided message and communication services under
Section 102 of the Public Utility Code, 66 Pa.C.S. §102. In addition, private networks
such as wide area networks (WAN), local area networks (LAN), or private branch
exchanges (PBXs) also provided message and communication services. The PSTN and
private networks provided local communication, intrastate long distance communication,
and interstate long distance communication.




Other States’ Decisions on VoIP


      Several states have made decisions on whether or not VoIP constitutes a
“telecommunications service” subject to regulation. The states making those
determinations are Alabama, Colorado, Florida, Idaho, California, Minnesota, Nebraska,
New York, Washington, Ohio, Georgia, Kentucky, North Carolina, and Wisconsin.


                                              6
            Of these states, California,10 Minnesota,11 New York,12 and Wisconsin13 classify
VoIP as a “telecommunications service” under state law. California, Minnesota, and
Wisconsin require certification. New York requires the payment of access charges.


            Six of the remaining states did not exercise jurisdiction, are currently examining
the issue, or decided to await future FCC action. These states include Alabama,14 Ohio,15
Nebraska,16 Georgia,17 Kentucky,18 and North Carolina.19

10
 Telecommunications Daily, October 2, 2003, “California PUC Says VoIP Providers Need to Obtain State
Certificates.”
11
  In the Matter of the Complaint of the Minnesota Department of Commerce Against Vonage Holding Corp.
Regarding Lack of Authority to Operate in Minnesota, Docket No. P-6214/C-03-108 (September 11, 2003). A
federal court decision voided this decision with a Preliminary Injunction on October 16, 2003. Vonage Holdings
Corporation v. Minnesota Public Utilities Commission, Civil No. 03-5287 (October 16, 2003). Minnesota.
12
  Complaint of Frontier Telephone of Rochester Against US DataNET Corp. Concerning Alleged Refusal to Pay
Intrastate Carrier Access Charges, Case 01-C-1119, Order Requiring Payment of Intrastate Carrier Access Charges
issued May 31, 2002 at 8-9.
13
     See note 10, which included Wisconsin in the article.
14
  In Re Petition for Arbitration of the Interconnection Agreement between BellSouth Telecommunications, inc. and
Intermedia Communications, Inc. Pursuant to Section 252(b) of the Telecommunications Act of 1996, Arbitration
Panel Recommendation and Proposed Order Regarding Interconnection Agreement, 2001 Ala. PUC Lexis 27, at *83
(AL PUC March 2, 2001). The Alabama Commission declined to rule on VoIP because the FCC has not addressed
the classification of such service.
15
 In Re the Commission’s Investigation Into Voice Services Using Internet Protocol, Entry Case No. 03-950-TP-
COI.
16
  In Re the Commission, On its Own Motion, to Conduct an Investigation of the Interstate or Local Characteristics
Internet Service Providers Traffic, Opinion and Findings, 1999 Neb. PUC Lexis 50, at *1 (NB PSC 1999). The
Commission determined that the Commission had authority over intrastate VoIP services but declined to exercise its
authority at this time for technical and other reasons.
17
 In Re Petition of Sprint Communications Co. L.P. for Arbitration with BellSouth Telecommunications, Inc.
Pursuant to Section 252(b) of the Telecommunications Act of 1996, Order, 2001 Ga.PUC Lexis 55, at *9 (Ga. PSC
2001). The Commission declined to make a determination until the Commission had time to consider the issue
adequately.
18
 In Re Petition by AT&T Communications of the South Central States, Inc. and TCG Ohio for Arbitration of
Certain Terms and Conditions of a Proposed Agreement with BellSouth Telecommunications, Inc. Pursuant to 47
U.S.C. §252, Order, 2001 Ky. PUC Lexis 823, at Issue 13 (KY PUC 2001). The PUC declined to address the issue
because the parties were not exchanging VoIP traffic and they needed more time to consider the matter on a more
complete record.



                                                             7
FCC Proceedings on VoIP


           In addition to these state proceedings, there are several pending proceedings at the
FCC concerning VoIP.20 Additionally, the FCC subsequently convened a public hearing
on VoIP and issued a Notice of Proposed Rulemaking.21


           The first proceeding at the FCC involving VoIP began in September 1999. In that
case, the FCC sought comments on the steps needed to ensure that persons with
disabilities have access to emerging IP telephony services.22 The Commission
incorporated this matter into the pending IP-telephony rulemaking and seeks comments
to refresh the record.23


           The second proceeding began in October 2002. AT&T asked the FCC for a ruling
that its phone-to-phone IP telephony services are exempt from the access charges
assessed on traditional circuit-switched long distance calls. AT&T wants the FCC to
resolve the question of whether access charges should apply to IP telephony24including,


19
  In Re Petition of MCIMetro Access Transmission Services, LLC for Arbitration of Certain Terms and Conditions
of Proposed Agreement with BellSouth Telecommunications, Inc. Concerning Interconnection and Resale Under the
Telecommunications Act of 1996, 2001 N.C. PUC Lexis 821, Paragraph 14 (N.C. PUC 2001). The Commission
declined to classify VoIP for purposes of an interconnection agreement as well as the appropriate Intercarrier
compensation due to uncertainty surrounding the issue.
20
 The Commission has not actively participated in these proceedings. However, the Commission did file a Reply
Comment in the pending Vonage Preemption proceeding.
21
  FCC Will Take Major Look at VoIP Regulation, Telecommunications Reporter Daily, October 1, 2003. Chairman
Powell said the FCC was preparing a major examination of the regulation of VoIP services. A hearing was
scheduled and held in Washington on December 1, 2003; Pleading Cycle Established For Comments in IP-Enabled
Services Rulemaking Proceeding, WC Docket No. 04-36 (March 29, 2004).
22
  In re Implementation of Sections 255 and 251(A)(2) of the Communications Act, WT Dkt. 96-198, Report and
Order and Further Notice of Inquiry at ¶ 175 (released September 29, 1999).
23
     FCC Notice of Proposed Rulemaking on IP-Telephony Services, WC Docket No. 04-36, paragraph 58.



                                                       8
as noted earlier, the popular phone-to-phone VoIP.25 Phone-to-phone VoIP does not
change the form of protocol for providing message or communication service.26 AT&T
claimed that VoIP should not pay access charges under current law.27 In April 2004, the
FCC issued an opinion and order denying AT&T’s Petition and determining that phone-
to-phone VoIP was subject to access charges.28


           On February 5, 2003, pulver.com requested the FCC to issue a declaratory ruling
that pulver.com’s VoIP service “which facilitates point-to-point broadband Internet
protocol voice communications,” is neither “telecommunications” nor a
“telecommunications service” as defined in Section 153 of the TA-96.29 Pulver.com also
wants the FCC to declare that its “broadband Internet protocol voice communications”
service is neither telecommunications nor a telecommunications service under the
Telecommunications Act of 1996 (pulver.com Petition).30




24
  WC Docket No. 02-361, In the Matter of Petition for Declaratory Ruling that AT&T’s Phone-to-Phone IP
Telephony Services are Exempt from Access Charges.
25
     Verizon Comments, p. 4.
26
  The proponents of state jurisdiction claim that the lack of change in form or protocol, such as altering a message or
communication from analog to digital or vice versa, brings this class of VoIP within a state’s authority even if other
forms of VoIP, which do change protocol, may be subject to federal jurisdiction. They also claim that changes in a
message or communication’s form or code that is for the service provider’s management of their network does not
exempt VoIP from state jurisdiction as an “information service” under TA-96. That is because changes in protocol
for a provider’s network management come within the exclusion from information services in TA-96.
27
  See Wireline Competition Bureau Seeks Comment on AT&T’s Petition For Declaratory Ruling That AT&T’s
Phone-To-Phone IP Telephony Services Are Exempt From Access Charges, Public Notice, 17 FCC Rcd 23556
(WCB rel. Nov. 18, 2002).
28
  In the Matter of Petition for a Declaratory Ruling that AT&T’s Phone-to-Phone IP Telephony Services are Exempt
from Access Charges, WC Docket No. 02-361 (April 14, 2004, released April 21, 2004).
29
  Petition for Declaratory Ruling that Pulver.com’s Free World Dialup is Neither Telecommunications Nor a
Telecommunications Service, WC Dkt. 03-45 (filed February 5, 2003). See FCC Public Notice, DA 03-439 (Feb. 14,
2003).
30
  See Pleading Cycle Established for Comments on pulver.com Petition for Declaratory Ruling, Public Notice, DA
03-439, 2003 FCC LEXIS 809 (WCB Feb. 14, 2003).



                                                          9
        On February 19, 2004, the Federal Communications Commission (FCC) issued an
Opinion and Order in the pulver.com proceeding (February Order). In the February
Order, the FCC declared pulver.com’s Free World Dialup (FWD) service to be an
unregulated information service. The holding was limited to pulver.com's present free
service between on-line FWD members that do not involve communications originating
or terminating on the PSTN or are made using dial-up access. 31


        On June 3, 2003, the FCC issued a public notice on another AT&T Petition for
Declaratory Ruling on Enhanced Prepaid Calling Card Services.32 In its Petition, AT&T
wants the FCC to determine that enhanced pre-paid calling card services are interstate
communications. AT&T also asks the Commission to rule that interstate access charges
should apply, and that intrastate access charges should not apply, when an enhanced
services platform that provides stored, non-call information to end users is not located in
the state in which the calling or called parties are located.33 The hybrid form of VoIP
technology discussed above could transmit and store non-call data using a combination of
PSTN and private networks from a payphone. The FCC decision in this matter could
have implications for VoIP generally.


        On September 22, 2003, Vonage petitioned the FCC to preempt the Minnesota
Public Utilities Commission from requiring Vonage to comply with state laws on
providers of telephone services. Vonage claims that VoIP is not a telecommunications
carrier nor is VoIP a common carrier subject to Title II of the Communications Act of


31
  Pulver.com’s Petition for Declaration that pulver.com’s Free World Dialup is Neither Telecommunications nor a
Telecommunications Service, WC Docket No. 03-45, Opinion and Order released February 19, 2004, p. 1-2 and
n. 3. The FCC subsequently established a Comment Deadline of May 28, 2004 and Reply Comment deadline of
June 28, 2004. See note 29 above.


32
  See FCC Public Notice, DA 03-1896 (June 5, 2003). Apparently, the essence of the claim is that pre-paid calling
service requires access to stored information sufficient to make it an information service.
33
  Pleading Cycle Established for AT&T Petition for Declaratory Ruling on Enhanced Prepaid Calling Card
Services, WC Docket No. 03-133, DA 03-1896 (June 5, 2003).


                                                       10
1934. Vonage believes that VoIP is information service.34 This Commission filed a
Reply Comment stating that it would subsequently file a comment reflecting any
determination made in its pending VoIP investigation.


        Finally, on March 10, 2004, the FCC issued a Notice of Proposed Rulemaking
(March NOPR) soliciting comment on how, if at all, the FCC should differentiate among
various IP-enabled services to ensure that any regulations applied to such services are
limited to those cases in which they are appropriate. The FCC’s limited conclusion in the
February Order, that determined that the pulver.com service as currently configured
should be unregulated, is also the subject of comment in the pending NOPR.35


                                              DISCUSSION


The Opponents of State Jurisdiction


        The PCTA, VoIPNET, IXCs, CLECs, and VoIP providers (hereafter collectively
the “opponents of state jurisdiction”) rely on the definitions in Section 153 of the
Telecommunications Act of 1996 (TA-96) and the FCC’s prior distinction between basic
and enhanced services first developed in the Computer Cases.




34
  In the Matter of Vonage Holdings Corporation, Petition for Declaratory Ruling Concerning an Order of the
Minnesota Public Utilities Commission, WC Docket No. 03-211, DA-03-2952, Petition for Declaratory Ruling, p. 1.
The FCC published notice of the proceeding on September 26, 2003. The FCC established a Comment Deadline of
October 27, 2003 and a Reply Comment Deadline of November 24, 2003. Chairman Powell of the FCC
subsequently announced a “Major Examination” of VoIP likely starting with a hearing this fall and a Notice of
Inquiry (NOI). Telecommunications Daily Reporter, October 1, 2003. The FCC set a hearing date of December 1,
2003 and then issued an IP Notice of Proposed Rulemaking (IP-NOPR).
35
  In the Matter of IP-Enabled Services, WC Docket No. 04-36 (March 10, 2004), p. 24, paragraph 35 and pp. 30-31,
paragraphs 42-43.



                                                      11
           The opponents of state jurisdiction claim that: (1) the definitions of “basic” and
“enhanced” services” in the Second Computer Inquiry in 1980 (“Computer II”)36 makes
VoIP an “enhanced” service exempt from regulation; (2) VoIP is an “information
service” under 47 U.S.C.A. §153 and exempt from regulation; (3) The FCC retained and
affirmed the basic/enhanced services dichotomy of the Computer Cases in subsequent
proceedings before enactment of TA-9637 and applies each clause of the definition
against the specific functionalities of the service;38 (4) TA-96’s definitions of
“telecommunications,” “telecommunications service,” and “information service” in 47
U.S.C.A. §153 are dispositive and co-terminus with the “basic” and “enhanced” services
dichotomy of the Computer Cases;39 and that (5) VoIP is an enhanced service not subject
to state jurisdiction based on the FCC’s 1998 Universal Service Report.40


The Proponents of State Jurisdiction


           The ILECs, PTA, and the OCA, (hereafter collectively the “proponents of state
jurisdiction”) review the same language and precedent in conjunction with Section 102 of
the Public Utility Code, 66 P.C.S. §102. They reach an opposite legal view. They
believe that the Commission has, and should exercise, jurisdiction over VoIP.




36
   Second Computer Inquiry, Final Decision, 77 F.C.C.2d 384 (1980); modified on recon. 84 F.C.C.2d 50 (1980);
further modified on recon. 88 F.C.C.2d 512 (1981); aff'd. sub nom. Computer and Communications Industries Ass'n
v. FCC, 693 F.2d 198 (D.C. Cir. 1982), cert. denied 461 U.S. 938 (1983) (“Computer II”).
37
  See Third Computer Inquiry, Phase II, Memorandum Opinion and Order on Reconsideration, 3 FCC Rcd. 1150
(1988) (“Computer III”).
38
  See, e.g., U S West Communications, Inc. Petition for Computer III Waiver, Order, 11 FCC Rcd. 1195 (1995); AT
& T 900 Dial-It Services and Third Party Billing and Collection Services, Memorandum Opinion and Order, 4 FCC
Rcd. 3429 (1989). The service is “enhanced” if it meets the language of one of the three clauses.
39
  In their view, Telecommunications and “telecommunications service” is equivalent to “basic” service and
“information service” is equivalent to “enhanced” service.
40
     In the Matter of Federal-State Joint Board on Universal Service, FCC 98-67 (April 10, 1998).



                                                          12
           The proponents of state jurisdiction claim that (1) VoIP providers convey or
transmit messages or communications by telephone for the public for compensation
under 66 Pa.C.S. §102;41 (2) VoIP providers come within the alternate definition of
“public utility” at 66 Pa.C.S. §2901;42 (3) VoIP providers, and Vonage in particular, are
actively marketing VoIP telephone service to the public for a fee; (4) VoIP is the real-
time transmission and reception of voice messages and communications; (5) a traditional
“telephone” is delivering VoIP providers' services under the Public Utility Code; (6)
VoIP consumers continue to use VoIP telephony in a manner virtually identical to their
traditional telephone service; (7) while the term “telephone” is undefined in the statute,
standard industry parlance defines it to be “a device which converts human voice into
electronic signals for transmission by line, radio or fiber to a distant point where the
signals are reconverted into sound waves;43 and (8) VoIP is not an information service
under federal law and conclude that VoIP is a “message or communication” or
“telecommunications service” within the jurisdiction of the Pennsylvania Commission.




41
     The relevant provisions of Section 102 state as follows:

                    “Public Utility.”
                             (1)       Any person or corporations now or hereafter owning or
                    operating in this Commonwealth equipment or facilities for:
                                                 * * * *
                             (vi)      Conveying or transmitting messages or communications,
                    except as set forth in (2)(iv), by telephone or telegraph or domestic public land
                    mobile radio service including, but not limited to, point-to-point microwave
                    radio service for the public for compensation.
                                                 * * * *
                             (2)       The term does not include:
                                                 * * * *
                             (iv)      Any person or corporation, not otherwise a public utility, who
                    or which furnishes mobile domestic cellular radio telecommunications service.

42
     66 Pa.C.S. §2901.

43
  Telephony’s Dictionary, 2d ed. at 310. See also Newton’s Telecom Dictionary, 14th ed. (“changes…speech into
electrical signals for transmission to someone distant.”)



                                                            13
Disposition


         VoIP presents a world of opportunities for Pennsylvania’s consumers. The
technology will allow for different options and applications that will ultimately give
consumers more control. VoIP also changes the competitive complexion of the market
place in a way that might bring more choices for consumers. Furthermore, this hybrid
technology raises significant issues for regulators including, but not limited to,
jurisdiction, universal service, 911, law enforcement, consumer protection and disability
access.


         However, the federal jurisdictional and regulatory framework remains uncertain,
as the FCC has just issued a notice of proposed rulemaking for IP-enabled services,
including VoIP. As noted earlier, on March 11, 2004, the FCC issued a Notice of
Proposed Rulemaking (NOPR)44 to determine the appropriate regulatory treatment of IP-
enabled services. Specifically, the NOPR asks which regulatory requirements - such as
those relating to E911, disability accessibility, access charges, and universal service-
should be extended to different types of IP-enabled services. In addition, the FCC's
NOPR asks broad questions covering a wide range of services and applications to
differentiate between IP-enabled services and traditional telephony services and to
distinguish among different classes of IP-enabled services. In doing so, the FCC asks
further questions on the legal and regulatory framework for each type of IP-enabled
service and relevant jurisdictional considerations for each category, including whether
VoIP is subject to exclusive federal jurisdiction.45                Under these circumstances, it would
be premature for the Commission to act until the FCC provides guidance on the issues.



44
   The FCC will examine various issues relating to services and applications utilizing the Internet Protocol (IP),
including VoIP services. In the Matter of IP-Enabled Services, WC Docket No. 04-36, Notice of Proposed
Rulemaking, FCC 04-28 (rel. March 10, 2004).
45
   Moreover, there are several other pending cases before the FCC related to VoIP. See discussion on pages 6-11
infra.



                                                         14
        Furthermore, in order to render an informed decision about how to proceed with
the various issues surrounding VoIP technology, we need to understand better the
technology and its various applications. In addition, the “Nascent Service Doctrine”
suggested by one FCC Commissioner is instructive. The Commissioner suggests that
regulators should exercise restraint when faced with new technologies and services. 46 If
regulation is too oppressive while a technology is still developing, it could result in a
dampening of the introduction or growth of that technology. Although there are instances
where regulatory intervention is proper (such as market failure or consumer abuse),
regulatory restraint is more prudent until the technology is understood and viable. This
Commission should not leap into a regulatory scheme until we understand its full impact
on this technology.

        Having reviewed the Comments and Reply Comments it appears as if the
Commission might have grounds under which it could assert jurisdiction and regulation.
Indeed, as this technology is better understood and as the FCC clarifies its jurisdictional
and regulatory approach, it might be appropriate for this Commission to define a
regulatory role. However, at this time, such determinations are premature.


        Finally, the dialogue on VoIP is just beginning. The most prudent course of action
for this Commission is to refrain from reaching any conclusions regarding jurisdictional
and policy issues at this time.


        These considerations lead us to conclude that it is premature to make conclusive
jurisdictional or policy determinations or to take action until the FCC provides guidance.
The Commission also directs Staff to continue to monitor this issue at the state and
federal levels and to make ongoing recommendations to the Commission;
THEREFORE,


46
 The Nascent Services Doctrine, Remarks of FCC Commissioner Kathleen Q. Abernathy Before the Federal
Communications Bar Association, New York Chapter, New York, NY, July 11, 2002.


                                                   15
       IT IS ORDERED:


       1.     That the Commission concludes that it is premature to make conclusive
jurisdictional or policy determinations or to take action until the FCC provides guidance;


       2.     That the Commission staffs continue to monitor the VoIP issue at the state
and federal levels and to make ongoing recommendations to the Commission;


       3.     That the record in Docket M-00031707 be marked closed.




                                                        BY THE COMMISSION,




                                                        James J. McNulty
                                                        Secretary
(SEAL)


ORDER ADOPTED:              April 15, 2004
ORDER ENTERED:              May 24, 2004




                                             16

				
DOCUMENT INFO