december 16, 2004 1 fcc treatment of voip russ hanser special counsel to the chief competition...

December 16, 2004December 16, 2004 11

FCC Treatment of VoIPFCC Treatment of VoIP

Russ HanserRuss Hanser

Special Counsel to the ChiefSpecial Counsel to the ChiefCompetition Policy DivisionCompetition Policy DivisionWireline Competition BureauWireline Competition Bureau

Federal Communications CommissionFederal Communications Commission


OutlineOutlineLegal Framework/BackgroundLegal Framework/Background

Pulver.comPulver.com

AT&T (brief)AT&T (brief)

CALEA (brief)CALEA (brief)

VonageVonage

IP-Enabled Services NPRMIP-Enabled Services NPRM


Legal Framework: Legal Framework: 1996 Act Definitions1996 Act Definitions

““Telecommunications”:Telecommunications”:– ““[T]he transmission, between or among points specified by the [T]he transmission, between or among points specified by the

user, of information of the user’s choosing, without change in the user, of information of the user’s choosing, without change in the form or content of the information as sent and received.”form or content of the information as sent and received.”

““Telecommunications Service”:Telecommunications Service”:

– ““[T]he offering of telecommunications for a fee directly to the [T]he offering of telecommunications for a fee directly to the public, or to such classes of users as to be effectively available public, or to such classes of users as to be effectively available to the public, regardless of facilities used.”to the public, regardless of facilities used.”

““Information Service”:Information Service”:– ““[T]he offering of a capability for generating, acquiring, storing, [T]he offering of a capability for generating, acquiring, storing,

transforming, processing, retrieving, utilizing, or making available transforming, processing, retrieving, utilizing, or making available information via telecommunications.”information via telecommunications.”


Legal Framework: Legal Framework: Title I & Title II RegulationTitle I & Title II Regulation

Regulation of “Telecommunications Services” Regulation of “Telecommunications Services” (“Title II”):(“Title II”):

– Just, reasonable, nondiscriminatory rates and termsJust, reasonable, nondiscriminatory rates and terms– Certification/discontinuance requirementsCertification/discontinuance requirements– Contribution to universal service fundContribution to universal service fund– Disability accessibility requirementsDisability accessibility requirements– Privacy requirementsPrivacy requirements– Consumer protection requirementsConsumer protection requirements– Interconnection obligations (some carriers)Interconnection obligations (some carriers)– Tariffing requirements (some carriers)Tariffing requirements (some carriers)

(Un)regulation of “Information Services” (“Title I”)(Un)regulation of “Information Services” (“Title I”)


Pulver.com Declaratory RulingPulver.com Declaratory Ruling

FWD only facilitates call set-up; traffic is carried FWD only facilitates call set-up; traffic is carried by the end user’s ISP over existing BB facilities.by the end user’s ISP over existing BB facilities.

As described in petition, only facilitates calls As described in petition, only facilitates calls between members.between members.

Specialized phones, non-NANP numbers.Specialized phones, non-NANP numbers.

Offered for free.Offered for free.

Sought ruling that FWD is neither Sought ruling that FWD is neither “telecommunications” nor a “telecommunications “telecommunications” nor a “telecommunications service.”service.”



FWD is not telecommunications.FWD is not telecommunications.– ““[T]he heart of ‘telecommunications’ is [T]he heart of ‘telecommunications’ is

transmission…. Pulver neither offers nor provides transmission…. Pulver neither offers nor provides transmission.”transmission.”

– Information FWD provides is “not ‘information of the Information FWD provides is “not ‘information of the user’s choosing, without change in the form or content user’s choosing, without change in the form or content of the information as sent and received.’ Instead, of the information as sent and received.’ Instead, FWD provides new information: whether other FWD FWD provides new information: whether other FWD members are present; at what IP address a member members are present; at what IP address a member may be reached; or, in some cases, a voicemail or an may be reached; or, in some cases, a voicemail or an email response.”email response.”

– Use of telecommunications does not mean that Pulver Use of telecommunications does not mean that Pulver offers or provides telecommunications.offers or provides telecommunications.



FWD is not a telecommunications service.FWD is not a telecommunications service.

– Must Must offer offer (not simply (not simply useuse) ) “telecommunications” to be a “telecommunications” to be a telecommunications service. Pulver does not. telecommunications service. Pulver does not.

– Must be offered for a fee to be a Must be offered for a fee to be a telecommunications service. Free World telecommunications service. Free World Dialup is free.Dialup is free.



FWD is an information service.FWD is an information service.

– Enables members to Enables members to acquireacquire information regarding information regarding online presence of other members.online presence of other members.

– Stores Stores member information, voicemail messagesmember information, voicemail messages– Provides passwords and numbers that members Provides passwords and numbers that members

utilizeutilize..– Processes Processes the SIP invite to initiate a call.the SIP invite to initiate a call.– Makes available Makes available SIP invite to recipient.SIP invite to recipient.– Allows member to Allows member to retrieve retrieve information.information.– Transforms Transforms erroneous address information.erroneous address information.


Pulver.com Declaratory RulingPulver.com Declaratory RulingFWD is subject to federal jurisdiction.FWD is subject to federal jurisdiction.

– Preeminence of federal authority in the area of the Preeminence of federal authority in the area of the Internet.Internet.

– Congressional preference for unregulation.Congressional preference for unregulation.

– End-to-end analysis inapplicable w/r/t Internet-based End-to-end analysis inapplicable w/r/t Internet-based services.services.

– Commerce Clause prescribes preeminent federal role over Commerce Clause prescribes preeminent federal role over interstate commerce.interstate commerce.

– No definitive statement regarding role of the states, but No definitive statement regarding role of the states, but “[a]ny state regulations that seek to treat FWD as a “[a]ny state regulations that seek to treat FWD as a telecommunications service or otherwise subject it to telecommunications service or otherwise subject it to public-utility type regulation would almost certainly pose a public-utility type regulation would almost certainly pose a conflict with our policy of nonregulation.”conflict with our policy of nonregulation.”


AT&T Declaratory RulingAT&T Declaratory RulingUnder current rules (subject to change in other Under current rules (subject to change in other proceedings), an interexchange service using IP proceedings), an interexchange service using IP is still subject to the access charge regime if…is still subject to the access charge regime if…– Uses ordinary CPE with no enhanced functionalityUses ordinary CPE with no enhanced functionality– Calls originate and terminate on PSTNCalls originate and terminate on PSTN– Service offers no enhanced functionality and Service offers no enhanced functionality and

message undergoes no net protocol conversion.message undergoes no net protocol conversion.

Such service is the offering of Such service is the offering of telecommunications, and thus, when provided telecommunications, and thus, when provided for a fee, is “telecommunications service,” for a fee, is “telecommunications service,” subject to access charges under current rules.subject to access charges under current rules.


Communications Assistance For Communications Assistance For Law Enforcement (CALEA)Law Enforcement (CALEA)

CALEA requires certain service providers to incorporate CALEA requires certain service providers to incorporate into their networks, facilities and services certain into their networks, facilities and services certain technical capabilities to assist law enforcement in technical capabilities to assist law enforcement in conducting authorized electronic surveillance.conducting authorized electronic surveillance.

Law enforcement community is concerned about the Law enforcement community is concerned about the extent to which IP-Enabled services, especially VoIP, are extent to which IP-Enabled services, especially VoIP, are subject to CALEA. subject to CALEA.

Law enforcement agencies have sought clarification, and Law enforcement agencies have sought clarification, and FCC has begun to review application of CALEA FCC has begun to review application of CALEA requirements to IP-enabled services.requirements to IP-enabled services.


CALEA Cont’dCALEA Cont’d

FCC has tentatively concluded that CALEA applies to FCC has tentatively concluded that CALEA applies to facilities-based providers of any type of broadband facilities-based providers of any type of broadband Internet access service – including wireline, cable Internet access service – including wireline, cable modem, satellite, wireless, and BPL – and to managed modem, satellite, wireless, and BPL – and to managed or mediated VoIP services.or mediated VoIP services.

Key questions: Under CALEA (which employs Key questions: Under CALEA (which employs definitions differing from those in the Communications definitions differing from those in the Communications Act), are VoIP providers “telecommunications carriers,” Act), are VoIP providers “telecommunications carriers,” or do they provide “information services”? Even if VoIP or do they provide “information services”? Even if VoIP services are “information services” under CALEA, does services are “information services” under CALEA, does “replacement for a substantial portion of the local “replacement for a substantial portion of the local telephone exchange service” language apply? telephone exchange service” language apply?


Vonage Declaratory RulingVonage Declaratory Ruling

Vonage provides “DigitalVoice,” a VoIP service Vonage provides “DigitalVoice,” a VoIP service that:that:– requires the use of a third-party broadband requires the use of a third-party broadband

connectionconnection– requires the customer to have a multimedia terminal requires the customer to have a multimedia terminal

adapter, IP phone, or computer with peripheralsadapter, IP phone, or computer with peripherals– provides calling, web-based personalization and provides calling, web-based personalization and

control, voicemail management, and other featurescontrol, voicemail management, and other features– is accessible from any broadband connection in the is accessible from any broadband connection in the

world.world.



In 2003, Minnesota PUC exerted jurisdiction In 2003, Minnesota PUC exerted jurisdiction over DigitalVoice service, attempted to regulate over DigitalVoice service, attempted to regulate as telephone service.as telephone service.Vonage appealed in federal court, sought ruling Vonage appealed in federal court, sought ruling before FCC. In both cases, sought ruling that before FCC. In both cases, sought ruling that DigitalVoice was an information service and that DigitalVoice was an information service and that it was jurisdictionally interstate. it was jurisdictionally interstate. Federal District Court agreed with Vonage. PUC Federal District Court agreed with Vonage. PUC appealed. Oral argument before court of appealed. Oral argument before court of appeals was held on November 17th.appeals was held on November 17th.



On November 9, 2004, the FCC preempted the On November 9, 2004, the FCC preempted the Minnesota Commission’s order in various Minnesota Commission’s order in various respects:respects:– Preempted Minnesota’s requirement that Vonage get Preempted Minnesota’s requirement that Vonage get

a certificate.a certificate.– Preempted Minnesota’s tariffing requirement.Preempted Minnesota’s tariffing requirement.– Preempted Minnesota’s 911 requirement only to the Preempted Minnesota’s 911 requirement only to the

extent it operated as a condition to entry (i.e. was tied extent it operated as a condition to entry (i.e. was tied to the certification process) and noted that Vonage to the certification process) and noted that Vonage currently provides an interim 911 solution.currently provides an interim 911 solution.


Vonage Declaratory RulingVonage Declaratory RulingIf DV is a telecommunications service, Vonage would be a nondominant provider, not subject to entry regulations, tariffing, and other requirements of the type set out in the MPUC order.

If information service, MPUC order is inconsistent with federal policy and subject to preemption, b/c cannot separate interstate and intrastate components and federal policy favors nonregulation of information services (note sections 230 and 706).

Multiple state regulatory regimes would also likely violate the Commerce Clause, because of the unavoidable effect that regulation on an intrastate component would have on interstate use or use of the service within other states.

Other types of IP-enabled services that have basic characteristics similar to DigitalVoice, such as those offered by cable companies, are also not subject to traditional state public utility regulation.

States will retain their important role in matters of consumer protection and States will retain their important role in matters of consumer protection and enforcing laws of general applicability.enforcing laws of general applicability.


In re: IP-Enabled ServicesIn re: IP-Enabled ServicesNPRM’s scope is broad; addresses “services” (communications NPRM’s scope is broad; addresses “services” (communications capabilities using IP) as well as “applications” (software-based capabilities using IP) as well as “applications” (software-based functionalities using these communications capabilities).functionalities using these communications capabilities).

To ensure that any regulations applied are tailored as narrowly To ensure that any regulations applied are tailored as narrowly as possible, and do not draw into their reach more services than as possible, and do not draw into their reach more services than necessary, FCC has sought comment as to whether it would be necessary, FCC has sought comment as to whether it would be useful to divide IP-enabled services into discrete categories, and, useful to divide IP-enabled services into discrete categories, and, if so, how it should define these categories. if so, how it should define these categories.

Should categorization be based on functional equivalence to Should categorization be based on functional equivalence to traditional telephony? Economic substitutability? traditional telephony? Economic substitutability? Interconnection with PSTN/use of NANP numbers? Facilities Interconnection with PSTN/use of NANP numbers? Facilities layer vs. applications layer? Something else?layer vs. applications layer? Something else?


In re: IP-Enabled ServicesIn re: IP-Enabled Services

Jurisdiction (NPRM predated Jurisdiction (NPRM predated Vonage Vonage OrderOrder))

Appropriate Legal/Regulatory Framework: Appropriate Legal/Regulatory Framework: Statutory ClassificationStatutory Classification

– For each category identified, are services For each category identified, are services “telecom services”? “Information services”?“telecom services”? “Information services”?

Are existing regulatory interpretations of these Are existing regulatory interpretations of these terms still relevant?terms still relevant?

Impact of judicial decisions (Vonage, Brand X)?Impact of judicial decisions (Vonage, Brand X)?



Appropriate Legal/Regulatory Framework: Appropriate Legal/Regulatory Framework: Statutory PrerogativesStatutory Prerogatives

– Notes that Congress has provided the Commission Notes that Congress has provided the Commission with a host of statutory tools that together accord with a host of statutory tools that together accord some discretion in structuring an appropriate some discretion in structuring an appropriate approach to IP-enabled services.approach to IP-enabled services.

Ancillary jurisdictionAncillary jurisdiction

ForbearanceForbearance



Appropriate Legal/Regulatory Framework: Appropriate Legal/Regulatory Framework: Policy AreasPolicy Areas

– 911/E911911/E911– Disability accessibilityDisability accessibility– Carrier compensationCarrier compensation– Universal serviceUniversal service– Consumer protectionConsumer protection– Economic common carrier regulationEconomic common carrier regulation– Law enforcement concerns (wiretapping) are being Law enforcement concerns (wiretapping) are being

addressed in separate proceeding.addressed in separate proceeding.



Appropriate Legal/Regulatory Framework: Appropriate Legal/Regulatory Framework: Other ConcernsOther Concerns

– Effect of Title III (wireless)Effect of Title III (wireless)– Effect of Title VI (cable)Effect of Title VI (cable)– Rural considerationsRural considerations– Numbering issuesNumbering issues– International issuesInternational issues– Open network architectureOpen network architecture– Section 208/enforcement issues Section 208/enforcement issues


Other Pending VoIP PetitionsOther Pending VoIP Petitions

SBC: Seeks ruling that IP networks, services and SBC: Seeks ruling that IP networks, services and applications utilizing those networks are jurisdictionally applications utilizing those networks are jurisdictionally interstate and exempt from regulation under Title II. Also interstate and exempt from regulation under Title II. Also seeks forbearance from application of Title II regulation seeks forbearance from application of Title II regulation to whatever extent they would otherwise apply.to whatever extent they would otherwise apply.

Level 3: Seeks ruling that Internet-to-PSTN calls and Level 3: Seeks ruling that Internet-to-PSTN calls and PSTN-to-Internet calls are subject to reciprocal PSTN-to-Internet calls are subject to reciprocal compensation, not access charges. compensation, not access charges.

Inflexion: Seeks ruling exempting “ExtendIP,” which Inflexion: Seeks ruling exempting “ExtendIP,” which provides “POTS plus more” to underserved markets, provides “POTS plus more” to underserved markets, from interstate access charges.from interstate access charges.

december 16, 2004 1 fcc treatment of voip russ hanser special counsel to the chief competition...

Documents

information fwd

available information

offering of telecommunications

use of telecommunications

new information

heart of telecommunications

stores member information

erroneous address information