Vermont Wants To Regulate Internet Phone Calls

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(Host) Vermont is at the vanguard of states trying to regulate phone calls carried over the Internet. State regulation would first target a popular digital phone service sold by Comcast Cable.

The issue is drawing national attention. Some giants in the industry protest that the state has no oversight role over the industry.

VPR’s John Dillon has more:

(Dillon) More and more consumers are relying on new ways to get their phone service.

That led the Vermont Public Service Board to conclude that it has legal jurisdiction over technology known as "Voice Over Internet Protocol." 

And that could have far-reaching effects on the industry. Comcast has offered the technology locally since 2007. It now provides 100-thousand lines for Vermonters to make their phone calls over Comcast cable via the Internet.

(Porter) "Fundamentally, the department believes that it’s the same service that’s provided by FairPoint for point-to-point telephone service."

(Dillon) James Porter is telecommunications director for the Public Service Department, which represents consumers in utility issues.

(Porter) "From a regulatory perspective, as more and more consumers use the service, it becomes more and more important that their rights are guaranteed for that service."

(Dillon) Porter says the state probably would not control prices of Comcast phone products. But it could oversee and control service quality. And he says the state could also make Comcast pay more into the state’s universal service fund, which helps low-income people get phone service.

But Comcast has resisted the state regulation. And the company has some big allies in the form of an industry coalition called VON, for Voice on the Net.

The trade group represents Google, Skype, AT&T, Microsoft and others. Glenn Richards is VON’s executive director. He says the state is barred by federal law from regulating Internet phone providers. Richards points to a 2004 decision from the Federal Communications Commission, which blocked Minnesota from regulating Vonage, an Internet phone provider.

(Richards) "One of the important factors in that decision was that we wouldn’t have 50 types of state regulation."

(Dillon) Richards argues that phone calls carried over the Internet are defined under federal law as "information services," which states cannot regulate.

(Richards) "Most of these offerings are done by companies that may not even have presence in the state and it seems to me to sort of deter innovation, deter companies from offering services, if they’re going to be subject to various forms of state regulation."

(Dillon) But the state draws a distinction between Internet phone services offered by Skype or Vonage and the product sold by Comcast Cable. The Vonage-type services are called "nomadic" – meaning they can be used on any computer, anywhere. The Comcast product is "fixed" – which means that it’s tied to your phone in your home or office. James Porter with the state Public Service Department says this is a key difference when it comes to state regulation.

(Porter) "In the sense of a cable provider, it is point-to-point which means that you’re able to determine where the call originates and where the call ends and at that level in the technology… it’s identical to the service that FairPoint provides for intrastate telephone service."

(Dillon) But the industry argues that there’s no real difference between nomadic and fixed calls since both are carried with voice over Internet protocol.

The next move in the case is up to the Public Service Board. The board will decide in the next phase of the case how far to extend state regulation.

For VPR News, I’m John Dillon in Montpelier.

(Host) Comcast, by the way, declined to go on tape for this story. But in a statement, the company says it operates as an Internet phone service that’s regulated by the Federal Communications Commission – not state governments.

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