VON Oct 2016 Comments.pdf

4815-9118-5211.v1
October 26, 2016 Re: Comments on Draft Report to Idaho Legislature Regarding Proposed VoIP
Legislation
Dear Mr. Cusick:

The Voice on the Net Coalition (“VON”)1 submits these comments in response to your
draft report to the Idaho Legislature pertaining to legislation that would exempt Voice over
Internet Protocol (“VoIP”) from regulation by the Idaho Public Utilities Commission (“PUC”). VON believes that the draft report does not adequately explain the status of VoIP under federal
law, and minimizes the positive impact that a regulatory safe-harbor for VoIP would have on
economic investment in Idaho.

The draft report’s discussion of the regulatory status of VoIP ignores that state regulation of VoIP is preempted under the Vonage Preemption Order.2 In Vonage, the FCC preempted the
application of Minnesota’s “traditional ‘telephone company’ regulations” to Vonage’s Digital
Voice service because it was impossible to separate the intrastate and interstate components and the
state regulation of the intrastate component interfered with valid federal rules and policies.3
The Vonage Preemption Order extended to both nomadic and non-nomadic VoIP offerings.
The FCC noted that the same integrated capabilities and features were available for most, if not all,
IP-based services, including those offered by facilities-based providers.4 The FCC added,
“Accordingly, to the extent other entities, such as cable companies, provide VoIP services, we
would preempt state regulation to an extent comparable to what we have done in this Order.”5 Twelve years later, this landmark decision remains largely undisturbed and has led to substantial
growth in the adoption of VoIP and other IP services. As a result of the Vonage Preemption Order,
there is a single national policy for IP communications and state regulation of VoIP providers is
preempted by federal law.
Regulatory uncertainty would decrease as a result of enacting a VoIP safe-harbor. The
draft report states that, the “lack of [FCC] action [on the regulatory status of VoIP] has caused
uncertainty in the market . . .”6 However, the report fails to explain that economic uncertainty
1 The VON Coalition works to advance regulatory policies that enable Americans to take advantage of the promise and
potential of IP enabled communications. VON Coalition members are developing and delivering voice and other
communications applications that may be used over the Internet. For more information, see www.von.org. 2 Memorandum Opinion and Order, Vonage Holdings Corp. Petition for Declaratory Ruling Concerning an Order of the Minnesota Public Utilities Commission, 19 FCC Rcd 22404 (2004), petitions for review denied, Minnesota Pub.
Utils. Comm’n v. FCC, 483 F.3d 570 (8th Cir. 2007). 3 Id. 4 19 FCC Rcd 22404 n.93. 5 Id. ¶ 32. 6 Draft Report at 3 (Sept. 2016).

2
4815-9118-5211.v1
would decrease as a result of enacting a regulatory safe-harbor for VoIP, and does not adequately
explain that a significant reason the 36 states mentioned in the report have deregulated VoIP is to
eliminate uncertainty and potential loss of investment.
Instead, the report provides a blanket statement that “VoIP is not the service that will
provide that [investment] incentive,” and focuses on the impact that a regulatory safe-harbor for
VoIP would have on broadband deployment in Idaho. Indeed, the discussion simply brushes aside
the argument that a regulatory safe-harbor would provide regulatory certainty and positively impact
investment without sufficient analysis of VoIP itself. The discussion is limited to VoIP offerings by cable companies to residential customers, and how such offerings are “almost a giveaway.”7 It
ignores the fact that many VoIP providers are not cable companies that do not bundle VoIP with
TV and Internet, and that many VoIP customers are businesses.

In addition, by focusing the economic discussion around the impact on broadband deployment, the draft report goes beyond the scope of the request made in the Legislature’s letter.
The legislature’s letter requested that the review be limited to “the question of preemption of
regulation for VoIP and IP-Enabled Services” and the effect on other Idaho statutes.8 The letter did
not request an analysis of the impact of a VoIP safe-harbor on broadband deployment. However,
the reality is that the availability of VoIP encourages broadband deployment and adoption, since VoIP cannot be provisioned without broadband access.

Furthermore, while the draft report mentions that 36 states have deregulated VoIP, it does
not discuss why these states have deregulated VoIP, and fails to note that no state has repealed such
laws once enacted. These states understand there is no benefit to imposing legacy telephone regulations on VoIP, and that investment will be lost and competition restrained if regulatory
ambiguities are allowed to remain in place.

Finally, the draft report does not include VON’s comments in its summary of industry
views.
Respectfully submitted,
/s/
Glenn S. Richards
Executive Director

7 Id. at 6. 8 Letter from Senator Brent Hill and Representative Scott Bedke to Commissioner Kjellander at 1 (March 8, 2016), available at http://www.puc.idaho.gov/telecom/VoIP/Bedke%20and%20Hill%20Letter%20re%20VoIP.pdf.