Minnesota PUC Defends Ability To Regulate Charter VoIP

Charter and other parties have two weeks to file responses to the objections. The court may "consider under advisement" the magistrate report 14 days after the filing date of the objections. What the court decides could have ramifications for other states with disputes over who may regulate VoIP services (see 1508210040). “The VON Coalition disagrees with the legal conclusions of the Minnesota PUC and hopes that the court will quickly deny the PUC Motion to Dismiss,” said Glenn Richards, executive director of the VON Coalition, which is an intervenor in the Minnesota case. Members of the voice-on-the-net group include AT&T, Google, Microsoft/Skype and Vonage/Vocalocity, its website said. Charter didn’t comment Friday.

Charter’s complaint alleged the Minnesota PUC overstepped its authority by imposing state regulations for traditional phone services on VoIP services. The case began in March 2013, when Charter transferred overnight 100,000 Minnesota customers to an affiliate, Charter Advanced Services, which provided VoIP phone service that wasn't certified by the PUC (see 1508210040). In its motion to dismiss, the Minnesota PUC asked the court to decide Charter Advanced’s VoIP service is a telecom service under the Telecom Act and therefore subject to state regulation. But in her report and recommendation, Magistrate Judge Hildy Bowbeer sided with Charter, saying the court should deny the Minnesota PUC’s motion (see 1604210054).

“The Report fails to give proper deference to State authority and erroneously ignores the plain language of the Telecommunications Act … as well as applicable and binding interpretations of that law by the [FCC],” the Minnesota PUC wrote in its formal objections. The PUC said there are constitutional and statutory presumptions against pre-emption. While the Telecom Act doesn't explicitly say how to classify fixed, interconnected VoIP services like Charter’s, Congress intended with the act to preserve the state role in regulating telecom, it said.

“The weight of FCC precedent strongly supports dismissal,” the Minnesota commission said. “The USF Order, Open Internet Order, and FCC orders discussing the functional approach to service classification all support MPUC’s position that Charter Phone is, as a matter of law, a telecommunications service subject to state regulation.” The 2006 USF order, which required interconnected VoIP carriers to contribute to the Universal Service Fund, made clear that states can regulate interconnected VoIP, the PUC said. “The USF Order plainly declares a fixed, interconnected VoIP provider capable of tracking the jurisdictional confines of customer calls is subject to state regulation. … The USF Order is the most recent and pertinent authority probative of the classification question and it mandates judgment in favor of Defendants.”

Telecommunications becomes a telecom service “when it is offered directly to the public for a fee, regardless of the technology employed to do so,” the Minnesota PUC said. The U.S. Supreme Court confirmed that definition in its 2005 Brand X decision, it said. Also, fixed interconnected VoIP is excluded from the Telecom Act definition of “information service,” which carves out “any use of any such capability for the management, control, or operation of a telecommunications system or the management of a telecommunications service,” the Minnesota regulator said. The FCC confirmed that in its net neutrality order when it “determined that certain capabilities fall within the telecommunications management exception not because they are offered as part of a broadband Internet access service … but instead because these capabilities are incidental to and do not alter the fundamental character of the underlying telecommunications service,” the PUC said.