Vonage prevails in Minnesota VoIP regulation case

In a setback for regulators and an advancement for competition on Voice-over- IP telephone services, Vonage has prevailed in a case against the State of Minnesota Public Utility Commission, according to an article from Wired.

The decision from the US District Court for the district of Minnesota on October 16th sets a significant roadblock for regulation of internet telephony by reminding the states that the Congress is trying to keep unnecessary regulation out of the Internet while things settle out.

I must say that I was a bit shocked by the foresight and vehemence of the ruling by the judge in this case, because although it makes sense, it does shut down a source of revenue and supposed protection for the states.

Much more importantly at this phase, though, it protects the up-and-coming VoIP industry during its early stages and may well foster the type of competition necessary to continue to provide lower-cost and higher-quality voice services in all sectors.

The permanent injunction was a slap in the face to regulators in Minnesota, and hopefully will be taken as such by PUCs in other jurisdictions as well, because the last thing this new and vibrant industry needs right now is more regulation or taxation, despite the lobbying by incumbent telecommunications companies to squelch the competition by doing so.

Although part of the case (undoubtedly in there to sow concern amongst the using public) related to 911 services, the complaint on behalf of the Minnesota PUC was weak. Their contention was that the 500-or-so customers in Minnesota were being "harmed" by not automatically having 911 services available to them without registration. Vonage has moved very quickly to implement E911 services wherever available and offers them in almost all states (and definitely in Minnesota). However, due to the nature of VoIP, it is impossible to tell at any single point in time where somebody's VoIP telephone actually resides. Unlike a POTS line, you don't have a physical wire running directly to the user's phone, so you can't just look at that. Instead, a Vonage customer can take their phone device over to a friend's house or off to a foreign country while on a business trip and use it from their. In either of these cases, dispatching emergency services to the billing address would be a waste of public services. Thus, Vonage requires the user to register their current location when they move the phone in order to avail themselves of the 911 services. Pretty reasonable to me.

Nice going Judge Davis.