Preemption Deal Risks: Vonage and the FCC
Earlier this week, Vonage persuaded a SDNY magistrate judge to stop the state Public Service Commission from treating Vonage like a telephone company. We need to pay attention to this development, because it may put the FCC in a position to require many things of many online services.
The NYPSC had sought to require Vonage to obtain authorization to provide telephone service in New York and to file a schedule of its rates. This is a clear victory for Vonage. For the moment, and for the second time, it has staved off inconsistent state regulation of its services.
The SDNY will keep this injunction in place until January, and the judge indicated that he is trying to give the FCC time to come up with its own rules for IP-enabled services.
In its comments [pdf] to the FCC, Vonage has said that “Vonage's service is an information service because it performs net protocol conversion and because it accesses and processes stored information, which are characteristics of information services.”
Vonage goes on to say,
Thus, as an information service, the Commission should only subject these IP-enabled services to the regulations necessary to protect social goals, but should also recognize that keeping the Internet free from regulation is another important public policy goal.
Vonage is signaling that “social policy” regulation for IP-enabled services — emergency services, access for people with disabilities, contributions to universal service, law enforcement access — may make sense. In its filing, it urges the FCC to “wait to see if the marketplace is able to deliver these social goods without heavy-handed regulation.”
Four questions:
1. In the rush to ensure preemption, will both sides — the FCC and providers of IP-enabled services that happen to concern voice data — make deals about “social policies”? Will FCC tie preemption to a menu of things it may want to ensure – like application of CALEA to IP-enabled services?
Something similar happened when new TLDs wanted to be admitted into the root: ICANN staff created a host of new contractual provisions and requirements as a condition of entry. In the Vonage case, Vonage needs protection from the states in order to survive. (Of course, it also needs protection from slow-moving broadband providers in order to survive.) The same thing happened to the new TLDs: they acceded to the invented ICANN contracts in order to go into business.
2. Does FCC have jurisdiction to impose these “social policies” on IP-enabled services?
3. What is the limit of these policies? So far, the ones listed above are under consideration. What is the principled line between these and other socially desirable policies — such as filtering to identify infringement of intellectual property rights (using watermark systems)?
4. How broadly does the definition of IP-enabled services sweep? Vonage in its filing talks sometimes about services that use the public switched telephone network (as Vonage does), but sometimes about services that don't (like Pulver.com). It identifies both as “IP-enabled services” that are “information services” and thus subject to “light” regulation by the FCC. Why isn't any email application an “IP-enabled service”?