VoIP Regulation: State and Federal Developments MARK J. O’CONNOR Lampert, O’Connor & Johnston, P.C. Session EI-05 January 23, :30 – 2:15 pm

January 23-25, 2008 Miami Beach Convention Center Miami, Florida USA MARK J. O’CONNOR  Lampert, O’Connor & Johnston, P.C.  1776 K Street NW, Suite 700  Washington, DC  Introduction Where is Internet telephony regulation going? Is the cost of regulation impacting the VoIP bottom-line? How much more regulation can the industry expect?

January 23-25, 2008 Miami Beach Convention Center Miami, Florida USA MARK J. O’CONNOR  Lampert, O’Connor & Johnston, P.C.  1776 K Street NW, Suite 700  Washington, DC  Interconnected VoIP: FCC Obligations Title II Regulatory Obligations –Supply 911 emergency calling capabilities to customers for services that utilize the PSTN –Contribute to the Universal Service Fund (“USF”), Telecommunications Relay Service (“TRS”), and NANPA funds –Comply with the FCC’s customer proprietary network information (“CPNI”) rules –Comply with the FCC’s disability access requirements, including TRS requirements and certain obligations –Local Number Portability (“LNP”) obligations and rights Comply with the Communications Assistance for Law Enforcement Act (“CALEA”) Regulatory Classification –The FCC has not decided the IP-enabled services NPRM, whether IP-enabled services should be classified as information services or telecommunications services. Does this matter?

January 23-25, 2008 Miami Beach Convention Center Miami, Florida USA MARK J. O’CONNOR  Lampert, O’Connor & Johnston, P.C.  1776 K Street NW, Suite 700  Washington, DC  States That Tax/Regulate VoIP Service as of January 23, states currently tax or regulate VoIP service

January 23-25, 2008 Miami Beach Convention Center Miami, Florida USA MARK J. O’CONNOR  Lampert, O’Connor & Johnston, P.C.  1776 K Street NW, Suite 700  Washington, DC  States That Impose E911 Fees/Taxes on VoIP Service as of January 23, states currently impose E911 fees/taxes on VoIP service Note: Pending legislation could impose E911 fees on VoIP service in California and Pennsylvania

January 23-25, 2008 Miami Beach Convention Center Miami, Florida USA MARK J. O’CONNOR  Lampert, O’Connor & Johnston, P.C.  1776 K Street NW, Suite 700  Washington, DC  States That Impose Non-E911 Fees/Taxes on VoIP Service as of January 23, states currently impose non-E911 fees/taxes on VoIP service Note: Pending legislation could impose non-E911 VoIP fees/taxes in four additional states

January 23-25, 2008 Miami Beach Convention Center Miami, Florida USA MARK J. O’CONNOR  Lampert, O’Connor & Johnston, P.C.  1776 K Street NW, Suite 700  Washington, DC  States with VoIP Consumer Protection Laws as of January 23, 2008 Six states currently have VoIP consumer protection laws

January 23-25, 2008 Miami Beach Convention Center Miami, Florida USA MARK J. O’CONNOR  Lampert, O’Connor & Johnston, P.C.  1776 K Street NW, Suite 700  Washington, DC  States with Proposed/Pending VoIP Legislation as of January 23, states have proposed/pending VoIP legislation Purple = 911 Fee Red = Tax

January 23-25, 2008 Miami Beach Convention Center Miami, Florida USA MARK J. O’CONNOR  Lampert, O’Connor & Johnston, P.C.  1776 K Street NW, Suite 700  Washington, DC  FCC Vonage Decision The FCC preempted state regulation of Vonage’s VoIP service. The FCC’s decision was upheld by United States Court of Appeals for the Eighth Circuit.

January 23-25, 2008 Miami Beach Convention Center Miami, Florida USA MARK J. O’CONNOR  Lampert, O’Connor & Johnston, P.C.  1776 K Street NW, Suite 700  Washington, DC  FCC Vonage Decision: Key Findings Vonage’s service is geographically undeterminable. –Service is fully portable and numbers are not tied to user’s home or location. Vonage’s service is integrated, making the FCC’s end-to-end analysis not readily applicable. –Service does not distinguish between local and long-distance minutes of use; –Service offers end users integrated capabilities and features.

January 23-25, 2008 Miami Beach Convention Center Miami, Florida USA MARK J. O’CONNOR  Lampert, O’Connor & Johnston, P.C.  1776 K Street NW, Suite 700  Washington, DC  FCC Vonage Decision: Key Findings (cont.) No practical means to carve out purely intrastate service. –Would require an extensive re-design of Vonage’s service at a substantial cost; and –Such a requirement would be solely for the purpose of enabling state regulation, because Vonage does not have a service-driven reason to make such changes. Mandating Vonage to undertake changes to separate out intrastate traffic would conflict with the FCC’s policies of promoting innovative services and broadband development and deployment.

January 23-25, 2008 Miami Beach Convention Center Miami, Florida USA MARK J. O’CONNOR  Lampert, O’Connor & Johnston, P.C.  1776 K Street NW, Suite 700  Washington, DC  Open Issues Does FCC Vonage Order preempt current state VoIP laws vis-à-vis “Vonage-style” VoIP providers? Preemption of state regulation of facilities-based VoIP services –The FCC has not directly addressed preemption of facilities-based VoIP services. –The Eighth Circuit avoided the question of whether the Vonage Order preempts facilities-based VoIP services. –Possible future preemption, litigation over state regulation of facilities-based VoIP services?

January 23-25, 2008 Miami Beach Convention Center Miami, Florida USA MARK J. O’CONNOR  Lampert, O’Connor & Johnston, P.C.  1776 K Street NW, Suite 700  Washington, DC  Open Issues (cont.) Preemption of state regulation of facilities-based VoIP services (cont.) –Not all facilities-based VoIP providers argue that the Vonage Order should be applied to facilities- based VoIP. In Comcast IP Phone of Missouri v. the Missouri PSC, 2007 U.S. Dist. LEXIS 3628 (D. Mo. 2007) the Court rejected Comcast’s argument that the Missouri PSC is without legal authority to classify Comcast’s VoIP service as a regulated telecommunications service before the FCC makes such a determination. Comcast did not ask the Court to compare Comcast’s VoIP service to the services at issue in the Vonage Order.

January 23-25, 2008 Miami Beach Convention Center Miami, Florida USA MARK J. O’CONNOR  Lampert, O’Connor & Johnston, P.C.  1776 K Street NW, Suite 700  Washington, DC  Conclusion Questions Contact Information: –Mark J. O’Connor –(202) –