FCC Issues Notice of Proposed Rulemaking on IP-Enabled Services (Update)

UPDATE

The dates for Comments and Reply Comments in the FCC's landmark "VoIP" rulemaking have been established: Initial Comments are due on May 28, and Reply Comments are due on June 28. As described in the article below, this proceeding is extremely important in that it will determine the degree to which VoIP and other "IP-enabled" services and technologies—which are rapidly replacing legacy, public switched network-based forms of transmission—will be subjected to federal and/or state regulation. We strongly advise you to consider participation in this far-reaching rulemaking proceeding. Please contact one of the DWT attorneys listed below for further information.

On March 10, 2004, the FCC released its long-anticipated Notice of Proposed Rulemaking (NPRM) on “IP-Enabled Services,” including voice-over-IP (VoIP) services. While the NPRM is long on legal and policy inquiries, it is short on “tentative conclusions” and therefore provides little guidance on where the FCC stands on the myriad of issues raised in the NPRM. Reading between the lines, the FCC appears inclined to refrain (as possible) from applying to IP-enabled services economic regulation traditionally applied to legacy telecommunications services in a monopoly environment, and more likely to apply in some manner regulations designed to promote public safety and consumer protection—including provisions to ensure disability access, consumer protection, emergency 911 service, law enforcement access, and consumer privacy. Indeed, acknowledging the cost and technological benefits of VoIP services for providers and consumers alike, the FCC states that it aims to facilitate the transition to IP-enabled services “relying wherever possible on competition and applying discrete regulatory requirements only where such requirements are necessary to fulfill important policy objectives.”

The FCC states that it is not “prejudging” these issues, but rather seeks to build a comprehensive record from which to make its determinations. With respect to the applicability of access charges to VoIP services, however, the FCC stated that, “[a]s a policy matter, we believe that any service provider that sends traffic to the PSTN should be subject to similar compensation obligations, irrespective of whether the traffic originates on the PSTN, an IP network, or on a cable network.” This statement could suggest that the FCC may be prejudging whether access charges should apply to VoIP services, an issue currently pending before the FCC in other related proceedings. At the least, it suggests that all technologies, to the extent that they use the PSTN, should have equal obligations to pay compensation, though not necessarily at the level of current interexchange access charges.

Categories of IP-Enabled Services. The FCC inquires as to whether it should differentiate among various IP-enabled services to ensure that any regulation applied to such services is limited only to those circumstances where such regulation is appropriate. For purposes of analysis, the FCC proffers the following nonexhaustive list of categories, which are designed to distinguish services that might be viewed as replacements for traditional voice telephony (and which therefore raise social policy concerns) from other services (which may not raise the same policy concerns):

• Functional equivalence to traditional telephony—whether services should be classified based on whether end users expect the IP-enabled service to resemble traditional wireline telephony.
  
  
• Substitutability—whether regulation should be reserved for IP-enabled services that are replacements for, rather than additions to, traditional telephony. 
  
  
• Interconnection with the PSTN and use of the NANPA—whether the FCC should distinguish between services that incorporate interconnection with the PSTN and/or utilize traditional NANPA-administered telephone numbers from those that do not. 
  
  
• Peer-to-peer communications vs. network services—whether the FCC should distinguish between offerings that facilitate disintermediated peer-to-peer services (such as that offered by Pulver) from services relying on a provider’s centralized services (such as that offered by Vonage). 
  
  
• Facility layer vs. protocol layer vs. application layer—whether the FCC should differentiate among various aspects of a particular offerings, including the underlying transmission facility, the communications protocols used to transmit information over that facility, or the applications used by the end user to issue and receive information. 
  
  
• Others—whether the FC should distinguish among services on other grounds (e.g., private vs. common carriage; primary line vs. nonprimary line; phone-to-phone vs. computer-to-computer or computer-to-phone; wireline vs. wireless vs. cable vs. satellite).

Jurisdictional Considerations. The FCC seeks comment on the appropriate basis for asserting federal jurisdiction over the various categories of IP-enabled services and, specifically, whether the FCC should extend its findings from the Pulver Declaratory Ruling—that Free World Dialup is an unregulated information service subject only to federal jurisdiction—to other IP-enabled services. The FCC also seeks comment on whether its end-to-end analysis is inappropriate for IP-enabled services and whether it should exercise exclusive jurisdiction over IP-enabled services.

Appropriate Legal and Regulatory Framework. For each category of IP-enabled services, the FCC seeks comment on whether the service should be classified as a “telecommunications service” (subject to greater regulation) or an “information service” (subject to lesser or no regulation) Parties should comment on the effect of judicial decisions—Brand X Internet Services v. FCC and Vonage Holdings Corp. v. Minnesota Pub. Utils. Comm’n—on such an analysis. The FCC will also examine the continued applicability of the “telecommunications services” and “information services” distinction to IP-enabled services.

Applicability of Social Policy and Consumer Protection Obligations. The FCC seeks comment on the following public safety, social policy, and consumer protection implications of IP technologies:

• 911/E911—the applicability of 911/E911 to VoIP and other IP-enabled services and whether IP-enabled service or IP protocols may enhance the capabilities of PSAPs and first responders. Parties should address technological and operational impediments. 
  
  
• Disability Access—how the FCC should apply Sections 255 and 251(a)(2) to providers of VoIP or other IP-enabled services and how migration to IP-enabled services will affect the statutory obligation of ensuring the availability of TRS services.
  
  
• Universal Service—how the regulatory classification of IP-enabled services, including VoIP, would affect the FCC’s ability to fund universal service. On this issue, parties are encouraged to incorporate into this docket prior filings from the Wireline Broadband NPRM. 
  
  
• Consumer Protection—whether it is necessary to extend CPNI customer-privacy requirements and other consumer protections—including anti-slamming regulations, truth-in-billing obligations and 214 authority requirements—to subscribers of VoIP or other IP-enabled services. 
  
  
• CALEA—The FCC has decided to address law enforcement issues in a separate rulemaking.

Carrier Compensation. The FCC inquires as to the extent to which access charges should apply to VoIP or other IP-enabled services and, if so, whether different access charges should apply to these services or whether there are any special considerations for rural carriers. With respect to the first inquiry, the FCC states that, as a policy matter, any service provider that sends traffic to the PSTN should be subject to similar compensation obligations, irrespective of whether the traffic originates on the PSTN, on an IP network, or on a cable network.

IP-Enabled Services over Wireless Platforms (Title III). The FCC will examine the effect of Title III on the provision or regulation of IP-enabled services provided over, in whole or in part, a wireless platform and whether any distinctions are appropriate among wireless providers of IP-enabled services based on the nature of their spectrum (e.g., fixed/mobile, licensed/unlicensed).

IP-Enabled Services over Cable Platforms (Title VI). The FCC seeks comment on what impact, if any, the provision of broadband over cable plant should have on the FCC’s treatment of IP-enabled services and whether the FCC should exercise its ancillary jurisdiction to apply certain regulatory requirements on IP-enabled services provided over cable platforms.

Other Considerations. The FCC acknowledges that VoIP services are not necessarily mere substitutes for traditional telephony services and that IP networks are technically and administratively different than the PSTN. The FCC also seeks comment on the international implications raised by IP-enabled services (e.g., the potential impact on international settlement rates and the ability of consumers to take their IP CPE overseas and continue to make and receive calls), the impact on available numbering resources and the availability of complaint proceedings and enforcement actions against IP service providers.

Effect of Pending VoIP Proceedings. The FCC incorporated the records in the pending AT&T, Vonage, and Level 3 petitions and noted that the record developed in the NPRM could influence disposition of those proceedings.

Timing. Comments on the NPRM are due 60 days after Federal Register publication of the NPRM and Reply Comments are due 90 days after Federal Register publication. We will inform you when these “clocks” begin to run.