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1 BEFORE THE PENNSYLVANIA PUBLIC UTILITY COMMISSION Investigation into Voice over Internet : Protocol as a Jurisdictional Service : : Docket No. M : OFFICE OF CONSUMER ADVOCATE S COMMENTS Office of Consumer Advocate 555 Walnut Street, Forum Place, 5th Floor Harrisburg, PA (717) Dated: July 1, 2003 Philip F. McClelland Senior Assistant Consumer Advocate Shaun A. Sparks Assistant Consumer Advocate Counsel for: Irwin A. Popowsky Consumer Advocate

2 I. Introduction The question in this investigation is this: should the Commission exercise its jurisdiction over telephone service and recognize that Voice over Internet Protocol service providers offer public utility service in Pennsylvania? The OCA would answer in the affirmative because ensuring adequate and reasonable telephone service is the primary purpose of the Commission s jurisdiction over telephone service. 1 The technology through which wireline providers deliver telephone service is a secondary concern. It is essential that the Commission evaluate all methods of delivering telephone service in a forward-looking manner. To do otherwise risks allowing technology to cause the Commission to forsake its legal responsibilities. This particular investigation concerns VoIP, and it appears that the Commission employs the term VoIP in a general sense, as a short-hand for telephone service delivered via digital packet technology. It is important to note that there are multiple methods with which to provide telephone service via packet technology. While many of these methods are similar in terms of packet technology, they may be functionally different, and therefore, could be subject to random categorization for regulatory purposes. That outcome would not be desirable; the Commission should not seek to regulate the various technologies though which telephone service is delivered, but instead should regulate the ultimate telephone service regardless of how it is delivered to consumers. For example, it would appear that the Commission would group SIP, H.323, and packetcable all under the same umbrella heading of VoIP. Regarding the delivery of telephone service, this grouping is workable. All these different methods are capable of delivering telephone service to end-users. That is true even though technically speaking; Session Initiation 1 66 Pa.C.S

3 Protocol ( SIP ) is different from H.323, which is different from packetcable. However, all these methods may be used to provide telephone services via a packet technology. VoIP is the delivery of telephone service, and not the delivery of technology. The Commission must focus on telephone service, and not the technology that providers use to deliver that service. This approach is essential because the General Assembly has not charged the Commission with regulating telephone service based upon the technology used. Such an approach is all the more important where VoIP providers will originate calls that terminate on the Public Switched Telephone Network ( PSTN ) and receive calls that originate on the PSTN. The Commission regulates telephone service because it is affected with the public interest; the Commonwealth depends on telephone service that is functional and affordable. Technology is merely the method used to arrive at the goal of adequate and reasonable telephone service. Over the 100 plus years of telephone service in Pennsylvania, various technologies have developed, subsequently become obsolete, and replaced by other technologies. By remaining focused on the ultimate service, and not on the electronic protocols that provide that service, the Commission can ensure that the Commonwealth will have adequate telephone service well into the future. Likewise, a new method of delivering the telephone service does not alter the fact that the Commission s focus must remain upon assuring universal access to reliable and affordable telephone service. It is inevitable that technology will change, and that the pace of change will accelerate. In this regard, a technology-based regulatory approach will ultimately fail because regulation will constantly lag technology. Instead, the Commission should focus its attention on the core requirements, the essentials, of adequate and reasonable telephone service, regardless of the technology used to provide that service. 2

4 The following responses to the Commission s questions in this investigation suggest that the Commission should regulate those services used to convey or transmit messages or communications to the public for compensation, regardless of which technology that a provider chooses to deploy those services. II. COMMENTS Defining VoIP Service 1. How do you define VoIP service? Voice over Internet Protocol is a generic name for the real-time transmission and reception of voice messages using Internet Protocol logic over either a private Internet network, the public Internet network, or the public switched telephone network, either singly or in combination, whereby discrete packets of digital information are routed in a transmission path that may not be fixed over a dedicated circuit for the entire transmission path. When the OCA uses the acronym VoIP in these Comments, it intends the above definition. The Commission should note that there are various protocols that may be used to provide VoIP services. Therefore, a protocol-based definition is not desirable. For example, VoIP services may be provided through protocols such as Session Initiation Protocol ( SIP ) or H.323 (and its related protocols of H.248, IPDC, SGCP, or Megaco), or via packetcable. 2 For example, even though Vonage is commonly referred to as a VoIP provider, Vonage employs SIP to deliver its services as opposed to H.323, one of the original VoIP protocols. 3 2 Jonathan D. Rosenberg and Richard Shockey, The Session Initiation Protocol (SIP): A Key Component for Internet Telephony, 8 Computer Telephony 6, 132 (June 14, 2000), at 3

5 The OCA cautions against using any regulatory definition that focuses on the method used to achieve IP telephony that may arbitrarily place some providers outside the definition, and others inside, even though those providers offer the exact same services to end user customers. In addition, a protocol-based definition will quickly become outdated as technology advances. A protocol-based definition may also create regulatory uncertainty as a mere upgrade in facilities and change of protocols may cause entities to become public utilities, or potentially exempt utilities from the jurisdiction of the Commission. Rather than look to any particular protocol or transmission method for defining a public utility, the OCA suggests that the Commission instead focus on the ultimate nature of VoIP service, i.e., what consumers are actually doing with VoIP. As an example, it has come to the attention of the OCA that Sprint has announced that it will begin using packet technology to transmit calls between central offices. 4 If the Commission were to decide that VoIP communications were outside of its jurisdiction, would that then remove Sprint from the Commission s jurisdiction? Would it be subject to the Commission s assessments? Would Sprint continue to be able to receive Pennsylvania USF revenues? Indeed, this definitional reasoning is employed at the federal level. In its 1998 report to Congress, the Federal-State Joint Board wrote that [w]e are mindful that, in order to promote equity and efficiency, we should avoid creating regulatory distinctions based purely on technology. Congress did not limit "telecommunications" to circuit-switched wireline 3 Vonage, Vonage Becomes First Broadband Telephony Provider to Activate 30,000 Lines (June 16, 2003), available at 4 Mark Berniker, Sprint Migrating to Packet-Switched Network, (May 27, 2003) available at 4

6 transmission, but instead defined that term on the basis of the essential functionality provided to users Are there different types of VoIP service? Yes. There are many different types of VoIP service. The distinguishing factor is the method of transmission i.e., SIP or H.323 or packetcable. 6 While it is important that the Commission recognize that there are different methods of transmitting VoIP telephone calls, the Commission should not establish a regulatory architecture based upon protocol distinctions. Again, the Commission should regulate the reasonableness and adequacy of telephone service in the ultimate sense, and refrain from regulating the various technological configurations that providers may use to provide telephone services. 3. With the different types of VoIP service, is it the technology, i.e., the type of network used for transport that distinguishes them? Do you agree with the differences in CommWeb's definitions of ''VoIP'' and ''IP telephony'' used in footnote two below? Please explain. First, it is important to note that this question assumes that there are different types of VoIP service. For regulatory purposes, that may not be the case. Next, Internet Protocol, or IP Telephony, is a synonym for VoIP. CommWeb s attempt to delineate a private/public distinction within those terms is unnecessary and confusing. The two terms have the same meaning. It is important to note that the type of network used to transmit VoIP does not alter the fundamental character of VoIP service, which is voice communication between and 5 In the Matter of Federal-State Joint Board on Universal Service, FCC 98-67, 1 (April 10, 1998). 6 Jonathan D. Rosenberg and Richard Shockey, The Session Initiation Protocol (SIP): A Key Component for Internet Telephony, 8 Computer Telephony 6, 132 (June 14, 2000), at (While some of these protocols are similar, they are not identical. This raises questions of using any of them to define VoIP service.) 5

7 among calling parties utilizing a packet-based logical transport mechanism for some portion of the transport path. Provider and End User Experience with VoIP Service 4. As a provider, do you offer VoIP service to the public in Pennsylvania or in other jurisdictions? If so, what type of VoIP service do you provide and where? If not, do you intend to offer VoIP service to the public in Pennsylvania or in any other jurisdiction? If so, what type of VoIP service do you intend to offer and where? N/A 5. As a provider, have you conducted or do you intend to conduct any VoIP service trials in Pennsylvania or elsewhere? Please provide the details of any trials (when the trial occurred, who participated, the results, et al.) that have been conducted in Pennsylvania or in any other jurisdiction or that you plan on conducting in Pennsylvania. N/A 6. As a user, have you participated in or been solicited to participate in a VoIP service trial? If so, what was your experience? Did you retain your wireline and/or wireless service while using VoIP service? N/A 7. From the end user's perspective, what are the advantages, if any, of VoIP service as compared to traditional wireline and/or wireless communication voice services? What, if any, are the disadvantages? It is clear that lower prices are the chief advantage of VoIP service. On its website, Vonage offers unlimited local and regional toll calling plus 500 long distance minutes for $25.99 per month, inclusive. 7 Vonage stresses that it is a low-cost telephone service provider by offering customer testimonials that state that Vonage has no long distance charges and is a good way to save money. 8 An additional testimonial states I was looking to try a new phone service as my Verizon bill was too high. Then I cut off Verizon entirely after I started using 7 8 Vonage available at (last visited June 27, 2003). Id. 6

8 Vonage. 9 In addition, Vonage offers a plethora of vertical services to its customers for that same flat-rate price. For example, it offers voic , call waiting, and call forwarding as part of its standard package. 10 Vonage is clearly offered as a substitute for POTS telephone service. However, VoIP providers are different in other respects. VoIP carriers do not make contributions to the 911 emergency dialing systems, nor do they collect universal service support fees. In addition, it would appear that they tend to collect few taxes. Vonage collects only federal excise taxes and in some instances, state tax. 11 VoIP providers also offer virtual area codes. That is, a customer in Harrisburg may obtain a Manhattan telephone number, and all calls from Manhattan will be local for that number. While this feature offers great benefit to consumers, it also may present problems in regard to 911 emergency dialing, and may pose problems with proper cost allocations under the current access charge and jurisdictional separations regime. Another advantage is the portability of VoIP equipment. In the case of Vonage, for example, a Vonage customer may carry their Vonage analog to digital converter (a Cisco 186 ATA, which is about the size of a portable CD player) with them to another state or even to a foreign country. All that is necessary for that customer to place and receive calls is to find a broadband Internet connection. Thus, using our Harrisburg example, once plugged in, that customer could place and receive phone calls from her Harrisburg telephone number while she is physically located in a hotel in Hong Kong. Calls that originate in Harrisburg, but terminate in Id. Id. Id. 7

9 Hong Kong would be treated as local to those Harrisburg callers. Thus, while not mobile in the same sense as CMRS, VoIP appears to be portable. However, the PUC should be aware that VoIP providers may not offer true 911 emergency services. Telephone consumers, and for that matter, the public in general, have come to expect 911 services to operate from any telephone, and it is not clear that these services will function at all over a VoIP service. It also appears that VoIP service may lack privacy protection for customer communications, although the OCA does understand that intercepting VoIP voice communications would be somewhat difficult. As an example, VoIP provider Vonage requires that consumers waive privacy expectations as a condition of receiving service from Vonage. 12 In addition to other privacy protections contained in Pennsylvania law, the regulations of the Commission found at et seq. safeguard consumer privacy in regard to customer communications. There also appears to be a total lack of consumer disconnect and termination protections provided by some VoIP providers. If VoIP providers need not adhere to the guidelines of the Public Utility Code, customers may not have regulatory protections otherwise available. For example, in its customer service agreement, VoIP provider Vonage reserves the right to terminate service at will, without explanation or cause. In addition, Vonage provides that if the customer chooses to terminate Vonage service, the customer is required to pay a $39.00 disconnect fee. 13 Vonage also states in its customer service agreement that, if the customer s 12 Vonage: Terms of Service, 1(c), available at (last visited June 27, 2003). 13 Vonage: Terms of Service, 1(c), available at (last visited June 27, 2003). 8

10 account is not paid in full, then Vonage will not port a customer s number to a new provider. 14 The Commission should note that the regulations found in Chapter 64 generally prohibit certificated carriers terminating residential service at will. VoIP providers cannot provide service in the event of power outage. Thus, unlike traditional telephone service, VoIP will not operate whenever electric service is interrupted. 8. Does VoIP service require access to the Network Interface Device (NID) or other demarcation device that is typically installed at the customer's premises? If not, what type of equipment is installed at the customer interface to provide VoIP service and how is such equipment powered? In regard to VoIP providers, it does not appear that VoIP service requires access to the NID. See the OCA s answer to question 9, infra, for equipment and power configurations. 9. What type of equipment does a VoIP end-user need to make calls? Is such equipment commercially available through only the VoIP provider or is it available elsewhere as well? The underlying requirement for VoIP service is a broadband Internet connection and a modem. The type of broadband connection is immaterial. VoIP will function over DSL and cable modem service. The OCA understands that VoIP will also function over a Broadband Wireless Fidelity ( Wi-Fi ) link. Next, a router is required if the consumer intends to use a computer on the same broadband connection as VoIP service. 15 The use of a router allows packets or data to flow to the appropriate device. VoIP provider Vonage sells routers to its customers over its website, ). Id. at 1(i). Vonage: Learning Center, available at (last visited June 27, 9

11 Next, an analog to digital telephone converter is necessary. This device serves as the link between analog CPE and the digital signal required for VoIP. This is situated between the router and the telephone handset. 16 The OCA understands that any telephone handset will interface with the analog to digital converter provided by Vonage. Household current powers all these devices, and unlike the PSTN, in the event of a power outage, VoIP service will fail. While these devices may be available elsewhere, customers are likely to obtain them from the customer s VoIP provider. In the case of Vonage, the Vonage website indicates that Vonage programs the converters it provides to its customers such that the converters are essentially plug and play. 17 Commission Jurisdiction to Regulate VoIP Service 10. Are VoIP services the ''conveying or transmitting messages or communications by telephone or telegraph or domestic public land mobile radio service for the public for compensation'' pursuant to 66 Pa.C.S. 102? Please explain. Yes. VoIP services convey or transmit messages or communications by telephone service for the public for compensation pursuant to 66 Pa. C.S Also, in regard to being a public utility, VoIP providers fall under the definition of public utility as established in section 2901 of the Code. 18 First, VoIP service providers like Vonage are actively marketing VoIP telephone service to the public for a fee. VoIP service is not free or otherwise without cost to consumers. Therefore, it is being sold to the public for compensation within the purview of section Vonage provides the customer with a programmed Cisco 186 ATA (Analog Telephone Adapter). This device changes the electrical voice signal delivered from the handset from analog to digital thus enabling the customer to use the web to transmit calls. The ATA device is different from a router which provides the ability to link or share devices among computers or networks Vonage: Learning Center, available at (last visited June 27, 2003). 66 Pa.C.S

12 Next, VoIP is the real-time transmission and reception of voice messages. In terms of its core function, it is no different from POTS. There can be no debate that the real-time communication of voice by VoIP providers is the ''conveying or transmitting messages or communications. Next, VoIP service is clearly delivered by telephone. In fact, Vonage suggests that its VoIP service may be purchased as a substitute for traditional POTS. On its website, Vonage writes that Vonage DigitalVoice is an all-inclusive home phone service that replaces your current phone company. This is like the home phone service you have today - only better! 19 Vonage describes itself to investors are being telephone service. 20 Consumers that choose VoIP service will continue to use their telephones in a manner that is identical to their traditional telephone service. When picking up a VoIP handset, a consumer hears a dial tone, and dials in the traditional manner. A person without knowledge that a particular telephone was a VoIP telephone would have no outward indication that her call was being transmitted via packets instead of through a POTS based dedicated circuit What is the relationship, if any, between VoIP services and mobile domestic radio telecommunications service'' exempted from PUC regulation at 66 Pa.C.S. 102? Please explain. There is no relationship between the two. Although these two services share some similarities in that either may serve, to some degree, as a substitute for POTS, there is no relationship per se between ''mobile domestic cellular radio telecommunications service and 19 Vonage, available at (last visited June 27, 2003). 20 Vonage: Press Release. VoIP Conference Call with Matthew Bartlett of Banc of America Securities and Jeffrey Citron CEO of Vonage (May 20, 2003) (available at 21 The OCA also understands that various types of VoIP may also be used to deliver two-way voice service through equipment other than telephones. Through these comments the OCA only addresses VoIP service through telephone equipment. 11

13 VoIP service. This does not mean, of course, that a call originating on a cellular telephone cannot terminate on a VoIP telephone, or vice-versa. Vonage equipment, while not mobile, is portable. That is a Vonage customer could carry their Cisco 186 ATA with them to another state or even to a foreign country. All that is necessary for that customer to place and receive calls is to find a broadband Internet connection. Thus, while not mobile in the same sense as a CMRS, VoIP appears to be only portable. Mobile domestic radio telecommunications service allows consumers to place calls from special mobile radio equipment, e.g. cellular handsets, anywhere within a served territory provided there are adequate serving towers. VoIP does not use radio technology and requires broadband Internet access to function. In regard to how those similarities might exempt VoIP from the jurisdiction of the Commission, while mobile domestic cellular radio telecommunications services are now specifically exempted by statute, VoIP is not. The General Assembly has specifically exempted mobile domestic cellular radio telecommunications service at 66 Pa. C.S. 102 Public Utility (2) (iv). If the General Assembly wishes to create specific exemptions, it is clearly able to do so. The OCA cautions that the Commission may not apply public utility exemptions that have not been created by the General Assembly. 12. Or, is VoIP service an ''information service'' pursuant to 47 U.S.C. 153? If so, what are the regulatory implications of such a classification and how do you reconcile it with the fact that VoIP service originates as voice and terminates as voice? VoIP service is not an information service as that term is defined at 47 U.S.C That section of the 96 Act provides that: 12

14 [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, and includes electronic publishing, but does not include any such use of any such capability for the management, control, or operation of a telecommunications system or the management of a telecommunications service. VoIP service does none of the things addressed by that portion of the statute describing the characteristics of an information service. In fact, to the extent that VoIP would exhibit any of the characteristics of an information service, it would appear that VoIP service is expressly exempted from the definition of an information service because any transforming, processing, retrieving, or utilizing of information that a VoIP service may do is done expressly to manage, control, or operate its telecommunications system or to manage its telecommunications service. That is true because the analog to digital conversions, the routing of packets, and the databases used for IP address-to-nanp number conversions (and vice-versa) are all designed to deliver voice communications in a manner that is transparent to the dialing or dialed party. In fact, vendors of VoIP service equipment devote substantial resources to ensure that VoIP service is wholly invisible to those persons engaged in a conversation over VoIP service. The fact that a telephone call completed over a VoIP service is transparent to the retail end user (VoIP provider Vonage makes much of this fact in its marketing materials) argues for VoIP service to be a telecommunications service under the 96 Act. First, the 96 Act defines a telecommunications service as the offering of telecommunications for a fee directly to the public, or to such classes of users as to be effectively available directly to the public, regardless of the facilities used. 47 C.F.R. 3 (51). The Act defines telecommunications as the transmission, between or among points specified by the user, of information of the user s 13

15 choosing, without change in the form or content of the information as sent and received. 47 C.F.R. 3 (48). In its Cable Modem Order, the FCC wrote that the statutory definitions and distinctions between information services and telecommunications services rest on function, not on facilities. 22 The FCC developed that reasoning from the Universal Service Report where it noted that Congress provided specific direction that the classification of a provider should not rely on what type of facilities a provider used, but instead on the nature of the service that the provider offers to consumers. 23 To distinguish cable modem service as an information service, the FCC wrote that [w]e are not aware of any cable modem service provider that has made a stand-alone offering of transmission for a fee directly to the public 24 VoIP services may thus be neatly distinguished from information services precisely because VoIP services are a standalone offering of transmission for a fee directly to the public. In addition, VoIP services cannot be both a telecommunications service and an information service because those two categories are mutually exclusive. 25 VoIP service is not an information service because it does not fit that definition as discussed by the foregoing. Therefore, VoIP services must be telecommunications services. The Federal-State Joint board on Universal Service has also addressed the distinction between information services and telecommunications services in regard to IP Telephony. That report stated that certain forms of phone-to-phone IP telephony services Internet Over Cable Declaratory Ruling, FCC 02-77, 35 (March 15, 2002). Id. at 35, n Id. at 40. Id. at

16 lack the characteristics that would render then information services within the meaning of the statute, and instead bear the characteristics of telecommunications services. 26 VoIP service neatly and easily fits the definition of a telecommunications service because it is the transmission of voice communications, without alteration, and in real time, between the dialing party and the dialed party, for a fee. The fact that VoIP providers accomplish this by placing call management CPE at one end of the transmission is irrelevant to the determination that VoIP is a telecommunications service. In addition, VoIP service providers are not the equivalent of Internet Service Providers ( ISP. ) The most obvious reason that this is true is because VoIP providers depend on the customer having broadband access through an ISP to function at all. 27 Next, in regard to the transmission of voice messages, VoIP providers do none of the things that ISPs do in regard to digital information. They provide no content processing, information storage, etcetera, in regard to the transmission of voice messages. In point of fact, the VoIP providers go to great lengths to make certain that their services are totally transparent to the end user, as discussed above. Thus, VoIP providers cannot be placed within the same category as ISPs. Regarding protocol processing, the fact that such processing takes place incident to placing a VoIP telephone call does not render VoIP telephone service an information service. The Report to Congress stated that [t]he protocol processing that takes place incident to phoneto-phone IP telephony does not affect the classification of the service, under the Commission's current approach, because it results in no net protocol conversion to the end user ). 28 In the Matter of Federal-State Joint Board on Universal Service, FCC 98-67, 14 (April 10, 1998). See Vonage: Learning Center, available at (last visited June 27, In the Matter of Federal-State Joint Board on Universal Service, FCC 98-67, 52 (April 10, 1998). 15

17 Finally, the Report to Congress reasoned that: We have singled out IP telephony services for discussion in this Report. As discussed above, users of certain forms of phone-to-phone IP telephony appear to pay fees for the sole purpose of obtaining transmission of information without change in form or content. Indeed, from the end-user perspective, these types of phone-to-phone IP telephony service providers seem virtually identical to traditional circuit-switched carriers. The record currently before us suggests that these services lack the characteristics that would render them information services within the meaning of the statute, and instead bear the characteristics of telecommunications services. 29 Thus, it is clear that VoIP phone-to-phone communications are not information services, but instead are telecommunications services that are properly regulated by the Pennsylvania Commission. 13. Have any other states addressed state jurisdiction over VoIP service? Please cite and discuss any proceedings that have concluded and/or are currently pending in other states that address or relate to state jurisdiction to regulate VoIP service. Yes, other states have addressed this issue. In regard to other states, the Public Utilities Commission of the State of Colorado has initiated a proceeding to investigate the nature of VoIP service similar to the instant proceeding. 30 That proceeding is in its initial stages and has yet to produce any decisions or reports. The Florida Public Service Commission conducted an undocketed workshop on VoIP issues in January of It appears that the Florida Commission has not issued any decisions regarding the regulatory classification of VoIP services. 29 Id. at In The Matter of the Investigation into Voice over Internet Protocol (VoIP) Services, Docket No. 03M- 220T (May 21, 2003). 31 Florida Public Service Commission, Voice Over Internet Protocol Staff Workshop, January 27, 2003 available at 16

18 The Nebraska Public Service Commission has conducted workshops on VoIP and related issues in the recent past, but it too has not produced any definitive materials regarding its classification of VoIP services. 32 The New York Public Service Commission has reasoned that VoIP services are telecommunications services by virtue of the fact that that the FCC concluded that VoIP telephone services have a simple, transparent transmission path and do not offer enhanced functionality, and thus, were telecommunications. 33 The NY PSC also noted the FCC s comments that the some types of telecommunications that involve protocol processing provide no net protocol conversion to the end user, and thus, those services are not information services, but are telecommunications services Assuming arguendo that the Commission possesses jurisdiction over VoIP service, should it exercise such jurisdiction? Please explain why or why not. The answer is yes. As an initial matter, The Commission cannot decide to waive its statutory role. If the Commission has jurisdiction over VoIP services, or over some VoIP service providers, it must regulate those entities in some manner. 35 The Commission cannot regulate some of the entities under its jurisdiction and ignore others. Section 501 of the Code clearly establishes that it is the duty of the Commission to regulate those entities that fall within the statutory definition of a public utility. 36 In regard to telephone utilities, Title 66 section Communications Technologies and Convergence Issues, Application No. C-2067/PI-29 (NE P.S.C. June 22, 1999). 33 Frontier Telephone of Rochester v. US DataNet Corp, No. 01-C-119, 2002 WL , at 6 (NY P.S.C. May 31, 2002) Id. 66 Pa.C.S Id. 17

19 clearly defines which providers of telephone services are public utilities, and that definition is echoed in section 2901 of Title 66. In addition, section 3009(b) further defines the role of the Commission in regard regulated telephone utilities. The Commission cannot simply refrain from regulating those entities that it is under a statutory obligation to regulate in the public interest. Thus, the answer to this question cannot be anything other than an unequivocal yes. Aside from the above, the Commission should exercise jurisdiction over VoIP service because it is in the public interest to do so. The Commission must protect the public interest in regard to essential services. The Commission cannot shy away from exercising its jurisdiction over telephone services like VoIP just because those services are offered in conjunction with the Internet or some other technology. Although there is a general reluctance on the part of regulators to subject the Internet to regulations, there is no justification to refrain from regulating local telephone service because it may use some IP functionality. Where VoIP service providers seek to function like traditional telephone service providers, the VoIP providers must also bear the same public obligations of traditional telephone service providers. VoIP service, which is held out to consumers as a substitute for traditional telephone service is not a new service. In fact, it is a new way to deliver Plain Old Telephone Service ( POTS ). While it is true that VoIP service may come equipped with a host of vertical services, no customer could or would purchase those services without the underlying basic telephone service component. VoIP service is a telephone service of the type that the Commission is obligated to regulate and has regulated for years. VoIP service is no less affected with the public interest than any other regulated telephone service. VoIP service is simply another means of offering local, regional toll, and long distance service to Pennsylvania s telecommunications consumers. VoIP service offers an 18

20 alternative to ILEC telephone service to those consumers with access to a broadband connection. The numbers of consumers with access to broadband connections, or something like what we now call broadband, will grow over time. That growth favors VoIP-type services becoming substitutes for traditional telephone service. The Extent of Commission Jurisdiction Over VoIP Service 15. Would a VoIP service provider be subject to the same certification and tariff requirements that exist for traditional wireline carriers? Would a VoIP provider be required to file with the Commission for entrance into the market as a CLEC or other authority? The legislature has already determined that it is unlawful for a public utility to offer, render, furnish or supply service without first obtaining a certificate of public convenience from the Commission. 66 Pa. C.S In addition, the legislature requires all public utilities to file tariffs with the Commission stating the rates they intend to collect for their services. 66 Pa. C.S This matter is settled law in Pennsylvania. VoIP providers should be subject to the same certification and tariff requirements that exist for CLECs and resellers. First, VoIP providers should be certificated because those providers fit the definition of a regulated utility within sections 102 and 2901, 66 Pa. C.S. 102, Next, on a practical level, VoIP providers most closely resemble CLECs or resellers. Finally, VoIP providers should be certificated because the Commission cannot engage in effective market monitoring if it has no idea what competitors exist, what those competitors are doing, and what charges they apply for their services. VoIP providers, like Vonage, for example, are functionally the equivalent of a CLEC. As far as the type of regulation that should be applied, OCA suggests that VoIP providers can be regulated similarly to how CLECs are regulated. The OCA will discuss this issue further below. 19