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Federal Court Throws Out Minnesota VoIP Regulation 92

An anonymous reader submits: "Voxilla reports that the FCC will announce Friday that 'a federal court has issued a permanent injunction against a recent ruling by the Minnesota Public Utilities Commission to regulate Voice over IP provider Vonage as a telephone company.' This is a significant move towards stopping recent movement by states to regulate VoIP -- most notably, California vs. VoicePulse and Wisconsin vs. Packet8."
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Federal Court Throws Out Minnesota VoIP Regulation

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  • by Max Romantschuk ( 132276 ) <max@romantschuk.fi> on Wednesday October 08, 2003 @06:56AM (#7161642) Homepage
    What is the fundamental difference between a traditional telephone company and purely VoIP-based companies? VoIP is slowly making it's way into traditional phone companies, does this make them less of a phone company?

    I'd say the difference is quite minimal for the end user.

    I'm just rambling, but I'd sure like to hear my fellow Slashdotters' thoughts.
    • by I8TheWorm ( 645702 ) on Wednesday October 08, 2003 @07:12AM (#7161698) Journal
      I have to agree a little. The only difference I can see is one is a service you explicitly pay for, and the other is built on a service that you already explicitly pay for.

      What's the reason for regulation of regular telephony companies anyway? Rate regulation is one of them, and that wouldn't really apply to VoIP, since the service it flies on is generally already regulated by the FCC (http://www.fcc.gov/broadband/).

      I can't see any reason to regulate a service that runs on a regulated service... seems like it's from the Department of Redundancy Department.
      • I can't see any reason to regulate a service that runs on a regulated service... seems like it's from the Department of Redundancy Department.

        My understanding is that there are certain requirements and expectancies from phone companies that aren't expected from ISPs. Services like 911, efforts to maintain uptime and reliability, etc.

        One can be rightfully cynical of regulations. But at the same time, one should also note that often without regulations or a lot of external pressure, the companies won't

        • As I was reading your comment, I kept thinking economics would play in, and any problems would resolve themselves. Then I read the following comment

          by then, it may be too late and people will complain about how the government didn't do anything to protect the people knowing that companies providing VoIP don't have to live up to the same standards

          and realized you're probably right. Although it would be nice to think "If the service isn't good, then people won't pay for it, and companies will have to o
          • I can think of one key way in which the economics could have very nasty consequences:

            If unregulated VoIP proves significantly cheaper then regulated telephone service, then one can expect customers to migrate en-masse away from the regulated providers. At some point, it may then become uneconomic for those providers to continue in business, at which point nobody is required to provide 911 service - the new VoIP firms don't because they're not required to, and the old PST firms don't becasue they no longer
        • "My understanding is that there are certain requirements and expectancies from phone companies that aren't expected from ISPs. Services like 911, efforts to maintain uptime and reliability, etc."

          Sounds good to me. Why don't we want those things? Why is it bad to regulate a telephone company as if it were a telephone company?
          • Because regulation at this point seems more like the entrenched industry trying to kill the upstart, rather than regulation for the sake of public good. I'm sure someday, regulations will require a certain degree of ISP uptime and reliability. Until that happens, though, it would be impossible to force a VoIP company to provide those kind of assurances.

            I'm all for regulating them, but only after the technology develops, and real needs for regulation are identified. Right now, can you say you know what a

            • It's not impossible or even unreasonable to require telephone service providers to conform to telephone service standards. It's unsafe to let them crawl out of support for the 911 system, for example. And remember, the Internet exists because DARPA was charged to create a communication network that would be *more* reliable than the existing telephone lines.

              Some needs for regulation are already identified: features and guarantees that telephone subscribers have come to believe are basic standards.

              We nee
              • And remember, the Internet exists because DARPA was charged to create a communication network that would be *more* reliable than the existing telephone lines.

                More reliable on the whole, not on an individual basis. A DDoS can knock down entire ISPs. Making sure their service is up and running is one thing, but how can they have the same standards of service as telephone companies when the critical bit of infrastructure required for those standards of service are not controlled by them? This would leave

                • "A DDoS can knock down entire ISPs."

                  [Mama Mousekewitz voice] You have only *one* ISP?

                  A critical part of the reliability of a packet network is redundant routes. Anybody who provides an Internet service and has everything running through one pipe, or one upstream provider, needs to rethink his business plan.

                  Now, the *subscriber's* ISP is another story. The path from the subscriber to the VoIP provider is analogous to the cable between the subscriber's phone and the service entrance, where ownership pass
        • My understanding is that there are certain requirements and expectancies from phone companies that aren't expected from ISPs. Services like 911, efforts to maintain uptime and reliability, etc.

          Probably not too far off the mark. Just for fun, let's turn things around about an unregulated service.
          For starters, 911 calls will be blocked
          No listing in the ILEC directories
          No listings on 411
          No enforcement of harassing/obscene phone call laws, conversely what happens when a VoIP customer makes the calls?
          No g

      • What you are talking about is very interesting, but I wonder what would happen if the the following four circumstances occur (and yes, I know it could be a long shot idea):

        1) A few of the VoIPs get bought out or shareholder owned/staked-out by major cable companies.
        2) VoIPs adopts a universal/national standard as a result of a consotium of these companies huddling together "looking for interoperability."
        3) a major cable provider offers/advertises this standardized VoIP service "free with their broadband se
      • What's the reason for regulation of regular telephony companies anyway?

        The entire justification for regulation is their monopoly status. Because there is only one set of wires carrying dialtone, and they own it, they are regulated. Wireless carriers aren't regulated-- there's a federal law prohibitting it-- because there's no monopoly of the medium. Regular phone companies are subject to regulation based solely on the fact that they own the copper pair, or are resellers of service on that copper pair. Bec

      • It occurs to me that there are regulations in place about securing conversations and not letting anyone listen in on those conversations with the Telcoms. It used to be that the Law Enforcement agencies had to get a court order to listen in. I think that those rules have been relaxed in some cases such that it is easier to obtain the court orders, or they can write their own (I think this is true about Treasury getting at banking records).

        So the body of law that would effect the regulated telecommunicatio
    • by Anonymous Coward on Wednesday October 08, 2003 @07:20AM (#7161736)
      The main differnce is the infrastructure.
      Traditional phone companies, have to run towers, wires and connect the planet. Which usually means that they will completely own the infrastrucute, and thus what can and can't pass through it. Hence you get a monopoly like MaBell. This is why the FCC stepped in originally, to protect the consumer from unfair inflation hikes. How can you have capitislm when you have no option? (That isn't being patriotic, more or less, I like to save money)

      VoIP on the other hand is simply more data, on the internet, and since there is a standards (i assume) my VoIP company can interface with your VoIP company, and both of us will be in direct competion. Thus the FCC shouldn't need to regulate based on consumer protection.
      The other problem w/ the FCC stepping in is, what determines VoIP? Will my Roger Wilco voice chat's with people in game come under the FCC rulings? Will AOL IM then be under they're control, (that might be a good thing, still waiting for a universial IM system)? Then how long before forum posts like this are considred in the domain of the FCC? (ok that's streching it a little, but you get my point)

      • I agree that the infrastructure is the main difference, but the problem was and will always be the money. Right now I pay 25% of my phone bill in fees and taxes. There is no way they are going to let go of this money. Look for a new classification, or new fees and taxes, soon.
      • I think there is also Taxes and a body of law governing that are big differences.

        The tax issue is definitily why States are looking into it as it is a loss of revenue stream for them, just as they have gone after Internet shoppers to pay State taxes (some states). This means potentially that they would have to find another tax to impose to keep their er. budgets up. Which is politically unpopular. It is easier to justify have an existing tax chase a scofflaw around, who knows you could be a hero.

        The law g
    • As long as I can use my 28.8 modem, I don't care whether it's via a regular phone line or over a VoIP line!
    • by aldousd666 ( 640240 ) on Wednesday October 08, 2003 @08:01AM (#7161924) Journal
      It's like I said before [slashdot.org]

      General Motors is not a Horse-Drawn Carriage manufacturer, nor is Vonage a phone company.

      Just because they serve the same user space as phone companies, doesn't make them the same animal.

    • Well.

      What is a telephone? ('IS' in the reality AND philosophical sense)

      Answer that, and the answer will be pretty obvious. Rather than all this dicussion about is VoIP phone service, someone should decide what a frickin telephone is first.

      Otherwise, this whole issue is just the 'sound of one hand clapping'. Ok for normal references, but when there are laws about it, that's not good enough anymore.
    • I'd say the difference is quite minimal for the end user.

      No, with VOIP, the marketing will not be as heavy at dinnertime.

    • Purely VoIP-based companies are, in fact, completely different from traditional phone companies. In fact, a purely VoIP-based company would not have a service to sell you, because IP is already sufficient for routing information and there are plenty of protocols for naming another user who may be reached by IP. It's like snail mail versus email; with snail mail, some organization is necessary to actually move letters from place to place, but with email, there's no organization specifically for that purpose.
      • by Dun Malg ( 230075 ) on Wednesday October 08, 2003 @10:18AM (#7163146) Homepage
        On the other hand, Vonage isn't a purely VoIP company; they actually connect to the telephone network, and they offer telephone network numbers. They're like a traditional telephone company except for how your call gets to their switch; on the other side, they interact with the phone network like a traditional phone company.

        No they're not, and no they don't. They are like any other private company out there with an on-site telephone system using Direct-In-Dial. Let me explain how it works:
        With DID, you reserve a block of, say, 250 phone numbers. Not 250 lines, just the numbers. These are purely for addressing. Each extension in your company is assigned one of these numbers. Incoming and outgoing calls are handled by, say, a couple T1's. This gives you a pool of 48 lines for incoming and outgoing calls. Many companies and universities do this, and they aren't phone companies. At UCLA they'll even charge you monthly for the DID line, like a phone company! Vonnage is doing exactly this: selling you the use of an extension on their phone system. The only difference is that the extension isn't in their office, it's delivered over the Internet. Delivering a service over the Internet isn't in itself regulable, nor is selling DID phone service managed by private equipment.

        Basically, Vonnage isn't delivering service on monopoly infrastructure, they are simply connecting to it like any other business.

        • No they're not, and no they don't. They are like any other private company out there with an on-site telephone system using Direct-In-Dial. Let me explain how it works... (much more deleted)

          That's not exactly how it works. If that is how it works, then Vonage would not have been able to transfer my existing phone number to their service that I'd had with the local monopoly for 16 years before that. Surely it is not magically in some block of numbers they have. Their trunks are clearly integrated in the

          • That's not exactly how it works. If that is how it works, then Vonage would not have been able to transfer my existing phone number to their service that I'd had with the local monopoly for 16 years before that. Surely it is not magically in some block of numbers they have. Their trunks are clearly integrated in the routing infrastructure of phone numbers in the local office here, however that works, for one number to be able to re rerouted from the incumbent carrier to them. They clearly are hooked into t
    • Traditional telephone company uses public land for its infrastructure. Public demands something in return (in form of regulation).
      VOIP company doesn't use public resources directly, so the public can not ask for anything.
    • Easy. Traditional company, you get a phone line and you pay taxes/regulatory fees on the phone line. VoIP company, you get a cable connection and you pay taxes/regulatory fees on the cable connection. The idea to tax VoIP separately is double-taxing and double-regulating; the cable connection on your end is already taxed and regulated; the POTS connection on their end is already taxed and regulated; the additional tax and regulation for VoIP is just extra burden that shouldn't be required, unless they're
    • Probably has something to do with the fact that your internet connection is already regulated. If states can regulate Voice over internet then what stops them from regulating http, ftp, etc...
  • by Anonymous Coward
    "Total Phonecall!"

    "Your connection has been terminated!"

    "I'll call you back"

    "Hasta la vista, baby bell"
  • by jkrise ( 535370 ) on Wednesday October 08, 2003 @07:00AM (#7161658) Journal
    Why should there be any more regulation when the very data can be captured easily?

    and, on a related note, will Microsoft be compelled to register as a bank? People use their technology to do online banking you see...

    -
  • Hmm (Score:5, Insightful)

    by arvindn ( 542080 ) on Wednesday October 08, 2003 @07:01AM (#7161662) Homepage Journal
    At first I thought its a nice thing that courts and lawmakers at least partially seem to understand that the internet is different from conventional channels, with some hope that in the future they would also understand that software is different from other arts. Then I realized that all this could be merely because there aren't any uber-corporations interested brib^W lobbying politicians to tax the internet the way they do for software patents, ridiculous copyright laws etc.
  • by Anonymous Coward
    You mean instead of suing the competition into oblivion they will have to provide customers with a reason to part with their hard earned dollars?!

    This is America, it's our God given right to make money from nothing, you commies!

    </SARCASM>

    -A
  • My 73 yo father (Score:5, Interesting)

    by G3ckoG33k ( 647276 ) on Wednesday October 08, 2003 @07:03AM (#7161669)
    My 73 yo father switched to broadband (10 Mbit/sec), voip, etc some two years ago. He surfs, reads the news, etc. He also pays all his bills via the net and is fighting hard to get me do it too - "Come on, it's really easy", he says. Not only that, know he wants me to install Linux on his machine so "he can see what all the fuzz is about". No, he never had a technical diploma of any sort.

    Now, he bugs me with his fancy new voip connection. But, I am sure he never lobbied in Minnesota for their decision.
    • A few years ago, my great-uncle, who was around 80, was talking to my mom. There was some document she needed to send to them. He told her he could fax it or e-mail it. I think my mom almost dropped the phone at hearing that.

      I wish my grandfather (great-uncle's brother) had lived longer - he would have loved all this stuff.

      Anyway, it's always fun finding your older generation keeping up with this stuff, and in some cases surpassing the current generation.
    • Give your father a candybar from me. If the country was full of people hungry for knowledge and technology like him, we'd all live in a happier place with FTTH and flying cars. Right now, the government doesn't care about making us all high tech because they think the people don't care enough to change their votes based on it. It would be great to see more people interested in getting the most in real life out of what's already doable in theory.
      • ...the government doesn't care about making us all high tech..

        Amend that, make it say "the government doesn't care about allowing us to make ourselves high tech."

  • Spam/no-call? (Score:5, Insightful)

    by deltagreen ( 522610 ) on Wednesday October 08, 2003 @07:06AM (#7161683) Homepage

    Vonage had maintained that it does not provide telephone service. Instead, lawyers for Vonage contended, the company offers data services over the internet

    Where does this put VoIP with regards to telemarketers? If it's a data service, the FTC no-call list [slashdot.org] can't be applied, can it? Does this mean a call from a telemarketer to a VoIP-phone could be classified as spam?

    • On the other hand, they can't block caller ID (caller IP, I guess), so Spamhaus type outfits could be created for VoIP. Serious point, though...

      Ibix

    • Technically, they could simply do this for their customer's Because its theirvoIP network, nothing is stopping them from simply not allowing some phone #'s from dialing in.
    • Where does this put VoIP with regards to telemarketers? If it's a data service, the FTC no-call list can't be applied, can it?

      Think of the phone system as a network with each access point given its own 10-dibit address. The DNC list is strictly a list of addresses the telemarketers are not allowed to dial. Doesn't matter what sort of device is on the other end, nor how that device is communicated with (copper loop, wireless, TCP/IP network). They simply cannot call that number.

  • this might be bad (Score:5, Insightful)

    by c4ffeine ( 705293 ) <[moc.liamg] [ta] [enieff4c]> on Wednesday October 08, 2003 @07:23AM (#7161745)
    What I'm afraid of is politicians that don't understand voip. Knowing them, they'll probably apply a tax to help regular phone companies "remain competitive". They'll then limit this technology, perhaps when the lobbyists demand it, perhaps when they decide that it's a threat to homeland security. Or, the phone companies could sue for some reason- unfair competition? copyright infringement? and kill it that way. I hate to be cynical like this, but politicians are just that way.
    • by Interruach ( 680347 ) on Wednesday October 08, 2003 @07:29AM (#7161775) Journal
      Except you *want* a reliable 911 service, even if you switch to VOIP. All regulation isn't bad, you know.

      • Mod parent up, excellent point.

        The problem is that VoIP companies don't meet a lot of the service criteria that a POTS company does. Consider the example of making a VoIP call via your cable modem over your local provider's fiber backbone, over a microwave link, connecting to a satellite, to two tin cans tied together with a string somewhere in central Angola. Nowhere in there have you used anything that could be traditionally construed to be a "phone call". Welcome to the information age.

        While you're
    • I've said a couple of times before that the federal tax that we pay for landline and cellphones was originally a temporary measure in 1898 to finance the Spanish-American War [ecommercecommission.org].

      VOIP is an opportunity to get out from under all of this stupid infrastructure. Even without 911 service, I am all for it.

  • VoIP is the future (Score:4, Interesting)

    by canolecaptain ( 410657 ) on Wednesday October 08, 2003 @08:05AM (#7161941)
    As someone who works in this industry, I thought I'd share some of the future of telecomm for those who aren't 'in the know'. All communication lines going to any endpoint (home, business, sensors, etc) are quickly moving to an IP based data network. Unfortunately, there are two problems that governments and current telephone companies face:
    1) Roughly 50% of their voice revenue stream comes from per minute connection charges, other carrier access charges, & regulation charges (govn't). These will evaporate when subscribers move to data driven VoIP (ie: you pay a flat fee for DSL or cable modem bandwidth now, and it can run all your voice calls to anywhere in the world). Eventually the PSTN connection part will no longer be necessary, so Vonage will disappear as we know it today, but it has finally woken up the telcos to what the future will bring.
    2) Pretty much the other half of their revenue stream comes from the 'premium' voice feature services (call waiting, text messaging, etc), all of which are quickly moving from the class 5 switch into the phones themselves (aka: free).

    What do you do when your primary revenue stream evaporates? Fight it in the courts or with govn't officials. Remember, govn'ts have been taking a nice chunk of that revenue for themselves as well.

    We will have to move to a bandwidth & quality of service (QoS) based payment style. A minimum bandwidth is given for a flat rate (which will include -all- voice), and extra bandwidth will be provided on demand at an agreed QoS. The higher the bandwidth & QoS, the higher the fee.

    Things to watch out for: VoIP everywhere, SIP phones/services, VoWLAN, current voice carriers moving their infrastructure to their IP networks, and govn't regulations dictating that comm lines (called data services & unregulated) become regulated for QoS.

    The companies that move to this model last will not survive. They aren't going to like this. :-)
    • I'm sorry to hear that. I like my consistent circuit-switched connection just fine. I don't need SSB-like fades and dropouts, thank you.

      BTW you missed one thing you can do when your primary revenue stream evaporates: buy a big chunk of the guys who are evaporating it and live off *their* growing revenue stream.

      I'm trying to imagine how the telcos will move their infrastructure to their IP networks, seeing as how their IP networks run on top of the current infrastructure. Voice is *already* data by the
      • I'm sorry to hear that. I like my consistent circuit-switched connection just fine.

        Damn straight. The beauty of the current PSTN is that the technology at the customer end doesn't have to be any more complicated than it was 100 years ago, all centrally powered and battery backed. If everything went VoIP, I'd be OK, 'cause I've got a ridiculous UPS system keeping my router and such alive; but what about, say, my mother? Gimme that 48v loop for reliability.

  • by Michael Hunt ( 585391 ) on Wednesday October 08, 2003 @08:14AM (#7161998) Homepage
    OK, don't get me wrong, i'm not disagreeing with this ruling. Where do you draw the line, though?

    Do you tax the providers who provide a circuit switched network, but not those who use a packet switched network? (as seems to be the case here, never mind that a lot of phone companies use ATM/AAL1 on the backhaul anyhow)

    Do you tax a provider who provides you with a physical FXS connection, but not a provider who lets you make calls by some other method? (e.g. h.323 to a peering point which connects to a bunch of DS1s)

    Do you only tax the incumbents, because their lines are running through public space and were paid for with public money? (this one almost makes sense)

    Where do you draw the line?
    • Do you tax the...

      This is Minnesota we are talking about. Of course the answer is yes.
      • Hey spunky I just moevd here (St Paul) from hel^H^H^HNew York state and you guys have no clue how good you have it in MN. I got my license the other day fo 18$ and in less that 30 minutes! In NY it took me two hours and a buck fifty to return my plates!

        On top of that I am paying much less in income tax despite making 50% more here than I was in NY. I like Pawlenty who just up and cut spending when the state was facing a deficit not raised taxes or sold bonds as is common practice in most states. I pay les

  • by SCHecklerX ( 229973 ) <greg@gksnetworks.com> on Wednesday October 08, 2003 @08:40AM (#7162186) Homepage
    ...if I didn't have to depend on my local phone company for a DSL line in the first place :(
    • ah, but you don't need your local company to provide dsl (well, you might depending on your area) all you need is their wires.. but check with other ISP's in the area. For instance, in quite a bit of NY state, Logical Net [logical.net] provides DSL service, and they simply use verizon's [verizon.net] (or your local bell's) wiring (for a meager fee) and boom, you have lovely DSL [logical.net], without even talking to your all powerful bellco [cedmagazine.com] Then, there's Roadrunner [rr.com], and other cable modems, as you all know, but if you can't get ANY other hig

      • You are missing the point. I have to pay the phone company for phone service in order to get DSL service. Stupid to pay TWICE. Yes, I DO use a DSL provider that IS NOT my phone company. Planetcable.net. They USED to be a cable provider (hence the name), but were forced out of that business model by comcast when they took over the local cable company...so now they provide DSL, thanks to government regulation.
        • Most places I've seen dsl, you don't need to have an active phone line/Phone service.. I had dsl before, even after my phone got disconnected, (oops, forgot about that bill) it mattered not..
          the phone service was never turned back on, even after paying it off, I had a cell I primarily used and never an issue.. I can't say definatively they would have turned it on, without active phone service, but they never asked, any of the times, or companies I've had dsl with (which is many)
  • by mjh ( 57755 ) <mark.hornclan@com> on Wednesday October 08, 2003 @09:01AM (#7162377) Homepage Journal
    While I'm glad that the MPUC's decision was thrown out, I don't think we know whether or not this is really good or just a speed bump for the MPUC (and by extension all other PUCs).

    The problem is that we don't have the actual court ruling. We know that the court issued a permanant injunction agains the MPUC's ruling, but we don't know why. We don't know if it's been thrown out for procedural problems. If so, then MPUC simply corrects that procedural problem, makes a slightly different ruling that has the same effect. But if the ruling agrees with the VoIP providers as to what they're offering and why it's fundamentally different than what the LECs offer, then it sets a strong precedent and it impacts every PUC in the US.

    Unfortunately, we don't know yet. And we won't know until the ruling is released on Oct 10. So while I'm cautiously optimistic, that's just me being hopeful. It's not reflective of any evidence.
  • How long till the annoucement from the Baby Bells that they are all going voice over IP to avoid regulation?

    1. Have regional monolopy with 2 token "competiors"
    2. Change business model to become unregulated.
    3. More Profits by reduced costs!
  • by dbowden ( 249149 ) on Wednesday October 08, 2003 @10:35AM (#7163360)
    Has anyone else noticed that the latest MCI commercials on TV have a closed caption script that's completely different than the voice & video portions of the commercial?

    The cc portion is pushing a VOIP company (can't recall the name) which is probably owned by MCI, while the voice & video portions are pushing MCI's latest calling plan. I find it interesting that one commercial appears to be pushing two completely different services.

    I've seen two different versions of it too, so it appears not to be an error.
  • IANAL, but if non-profit organizations are exempt from this law, then that necessarily includes credit unions, which are non-profit financial institutions run solely for the benefit of their membership. If credit unions as part of the non-profit community, are exempt from this law, then banks can claim unfair competition. Of course the law could exempt all non-profit organizations except credit unions, however that seems to be an option legislators are unhappy with. So, banks get the exemption too.
  • Remember the urban legend crap emails about "Congress is going to start taxing email!!!" Well for the same reason email can't be taxed, this can't be taxed. Let's suppose someone with a VOIP phone calls someone else with a VOIP phone. They are communicating entirely over the internet with no use of any telephone wires. That is almost exactly the same as a voice chat session over AIM, Yahoo IM, etc. except for different software. Congress has already passed a law that they will not tax any communication

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