VZ VoIP Comments 10.10.16.pdf

Verizon

th Floor
IL 60601

Deborah Kuhn

Via E-Mail to [e-mail]
Mr. Joseph W. Cusick
Idaho Public Utilities Commission
472 W. Washington Street
Boise, ID 83702

Re: Legislative Preemption of VoIP/IP Service Regulation

Dear Mr. Cusick:

Pursuant to your October 6, 2016 letter, Verizon offers these comments in support
of the Idaho legislature codifying the state’s existing “hands-off” approach to the
regulation of Voice over Internet Protocol (“VoIP”) and other IP-enabled services.
AT&T and the VON Coalition have already capably detailed the policy bases for
doing so and Verizon agrees with their reasoning.

However, Verizon does not support the approach proposed by some commenters,
which would entangle statutory memorialization of the exemption from regulation
of VoIP/IP-enabled services with an array of other policy issues. This contravenes
the desire for limited review expressed by Senator Hill and Representative Bedke in
their March 28, 2016 letter to Commission Chair Kjellander, which noted that past
legislative consideration has “extended beyond the narrow question of whether
preemption should be enacted and what form it should take.” Some commenters
have gone beyond this scope, urging tying the codification of preemption to reform
of the Idaho Universal Service Fund and Idaho Telecommunications Service
Assistance Program; imposition of an array of new fees on VoIP services; and
assertion of Commission jurisdiction over IP interconnection.1 See, e.g., Comments
of CenturyLink, T-Mobile and Level 3. These proposed actions would increase the
costs of providing VoIP services in Idaho, resulting in higher rates for customers
and potentially driving broadband investment to other states that have already
codified their “hands-off” approach to VoIP, with the attendant lower costs of doing
business there.

1 The FCC has solicited comment on whether the federal Telecommunications Act requires IP
interconnection (and if so, under what provisions thereof), and has made clear that it has not decided
the issue yet. In an October 2015 brief to the D.C. Circuit Court of Appeals, the FCC reiterated that
“[i]t is unsettled whether VoIP providers themselves have a right to interconnection under section 251
of the Communications Act.”1 See FCC’s “Brief for Respondents,” AT&T v FCC, Case No. 15-1059
(D.C. Cir., Oct. 5, 2015) at p. 4. And in a 2015 numbering resources order, the FCC “decline[d] to
mandate [IP VoIP interconnection] arrangements, as the Commission currently is considering the
appropriate policy framework for VoIP interconnection in pending proceedings.” Report and Order,
Numbering Policies for Modern Communications, 30 FCC Rcd 6839, ¶ 50 (2015).
2
For these reasons, Verizon cannot support AT&T’s proposed 2016 legislation as
presently drafted. However, Verizon could support it if the proposed revisions to
Idaho Code 62-610 and the entirety of proposed new Idaho Code 62-618A(5) are
stricken. It is inappropriate to impose a bevy of new regulatory fees on VoIP
services under the guise of exempting it from regulation, and doing so would
discourage the very investment that the legislation aims to incent. Moreover, by
permitting VoIP providers to draw USF subsidies for providing services that are
unsubsidized today, the bill would encourage waste and unnecessarily impose
higher USF fees on Idaho consumers.

Verizon also offers a few comments on the draft report:

 The Vonage Order. The draft report does not discuss the FCC’s seminal Vonage
Order,2 which preempted the application of state telecommunications regulations
to VoIP services. As the VON Coalition noted (VON Comments at 1), this order
precludes Commission regulation of VoIP services and should be discussed in the
report.

 VoIP Is an Information Service Under Federal Law, Preventing State Regulation.
The draft report does not discuss that three federal courts have found that VoIP’s
integrated capabilities and features make it an information service under 47 U.S.C.
§ 153(24) that is not subject to state regulation.3 Specifically, 47 U.S.C. § 153(24)
provides that “[t]he term ‘information service’ means the offering of a capability for
generating, acquiring, storing, transforming, processing, retrieving, utilizing, or
making available information via telecommunications,” but not the use of such
capabilities “for the management, control, or operation of a telecommunications
system or the management of a telecommunications service.” In allowing users to
generate, acquire, store, transform, process, retrieve, utilize or make information
available via telecommunications, VoIP services offer precisely the sorts of
capabilities that are the hallmarks of information services.

For example, VoIP offerings provide users with a suite of such capabilities and
features, including, but not limited to, any-distance calling capability,
“multidirectional voice functionality” and “online account and voicemail
management.” Vonage Order at ¶ 7. Using the technological foundation of the
Internet, VoIP users access their accounts on-line, enabling them to exercise real-
time control over their service and allowing them to configure a variety of service
features and options to interact with voicemail features and functions beyond
merely using their VoIP service to place or receive voice calls. Users can, among

2 See Memorandum Opinion and Order, Vonage Holdings Corp.; Petition for Declaratory Ruling
Concerning an Order of the Minn. Pub. Utils. Comm’n, 19 FCC Rcd 22404 (2004) (“Vonage Order”),
petitions for review denied, Minnesota Pub. Utils. Comm’n v. FCC, 483 F.3d 570 (8th Cir. 2007).
3 See, e.g., PAETEC Communications, Inc. v. CommPartners, LLC, Civ. A. No. 08-0397(JR), 2010 WL
1767193, *2 (D.D.C. Feb. 18, 2010) (“PAETEC”); Southwestern Bell Tel., L.P. v. Missouri Pub. Serv.
Comm’n, 461 F. Supp.2d 1055, 1081-83 (E.D. Mo. 2006), aff’d, 530 F.3d 676 (8th Cir. 2008)
(“Southwestern Bell”), cert. denied, 129 S.Ct. 971 (2009); Vonage Holdings Corp. v. Minn. Pub. Utils.
Comm’n, 290 F. Supp. 2d 993, 999-1001 (D. Minn. 2003), aff’d, 394 F.3d 568 (8th Cir. 2004) (“Vonage
I”).
3
other things, play back voicemail messages on their computers via sound files
and/or forward those sound files as e-mail attachments; forward their calls to
multiple other numbers simultaneously; return a phone call with the click of a
mouse, and so on. For example, a VoIP subscriber can log onto her laptop and
enable “simultaneous ring” capability so that calls to her home number in Idaho ring
simultaneously on her cell phone so she can answer them while on summer
vacation on the east coast, with the associated data packets traversing through
multiple out-of-state servers. These are information services described in 47 U.S.C.
§ 153(24), not telecommunications services. Interconnected VoIP services are also
information services for the independent reason that they offer customers the
capability4 of a net protocol conversion from IP to Time Division Multiplexing
(“TDM”) or from TDM to IP.

 The FCC Defines Interconnected VoIP as a Service, Not a Technology. The draft
report appropriately acknowledges that non-interconnected VoIP is an unregulated
service that does not enable originating or terminating calls to the Public Switched
Telephone Network (“PSTN”), but asserts (citing the FCC and NECA) that “the
almost universally accepted definition of VoIP is that it is a technology, not a unique
service.” Draft Report at 6. Because non-interconnected VoIP not at issue, the sole
focus of the Commission’s report to the Legislature is interconnected VoIP, which
the FCC has indeed defined as a “service,” not a “technology.” See 47 C.F.R. § 9.3
(defining “interconnected VoIP service”). Similarly, the dozens of states that have
already memorialized their preemption of regulation of VoIP and other IP-enabled
services refer to them as “services,” not “technologies.”

 Idaho’s Definition of “Telecommunications Service” Does Not Extend to VoIP.
The definitions of “telecommunications service” in Idaho Code §§ 61-121(2) and 62-
603(13) refer to “switched” services. VoIP services are not switched, and are
instead transmitted via IP. To the extent the draft report implies that VoIP is a
“telecommunications service” under Idaho law (see, e.g., Draft Report at 6), it
should be revised.

 Regulation of Services Provided Over a Broadband Connection Risks
Disincenting Investment in Broadband. The draft report asserts, without citation,
that VoIP does not incent investment; broadband does. Draft Report at 6. This
claim does not recognize that if services provided over a broadband connection are
regulated – even if the broadband connection itself is not – the cost of providing
those services increases, forcing providers either to raise their end-user rates or
consider deploying broadband elsewhere, where the costs of providing services
over that connection are lower. Thus, regulation of VoIP risks disincenting
investment in the broadband connections over which it is provided.

Verizon appreciates the opportunity to comment, and looks forward to the
Commission’s final report.

4 Although no net protocol conversion occurs when traffic between two VoIP customers is exchanged
in IP format, the relevant fact for classification purposes is whether VoIP services include that
capability.
4

Very truly yours,
/s/ Deborah Kuhn
Deborah Kuhn