States take a wait-and-see posture toward jurisdiction

On Tuesday, the FCC voted to assert its jurisdictional authority over voice-over-IP services such as those offered by Vonage. Under the ruling, states will be left out of economic-regulation game for VoIP, which most believe is the future of voice communications.

The decision sparked a flurry of comments from just about everyone in the communications sector. One organization that was relatively quiet was the one that arguably had the most to lose from the order: the National Association of Regulatory Utility Commissioners.

As the largest trade association of state regulators, NARUC was expected by many to walk its legal brief challenging the VoIP ruling to the nearest courthouse as soon as the FCC vote was made official. Instead, NARUC leaders made the time-honored "we'll wait until we see the text of the order" statements of noncommitment.

It's hard to blame them. On one hand, the FCC ruling likely eliminates--or greatly diminishes--the decades-long roles state commissions have played in regulating voice communications. Challenging the finding in court seems only natural, especially because a very reasonable case can be made that VoIP is a functional substitute for legacy wireline phone offerings.

However, there definitely are other considerations. Even if successful legally, challenging the FCC decision might not change things much, as Rep. Chip Pickering (R-Miss.) and other lawmakers promise they will pass a law giving the FCC VoIP jurisdiction if any legal problems arise.

And in a regulatory landscape that obviously is evolving quickly, having a legitimate seat at the negotiating table as new rules are made is always an advantageous position. By not litigating this decision, some believe state regulators' concerns may receive a more willing ear from powers inside the Beltway as Congress revisits the 1996 Telecom Act. Others in D.C. say it doesn't matter, because those powers are all savvy enough to separate legal and political arguments.

NARUC officials need to determine is what kind of role they really want in a VoIP world. Absent a court challenge, economic regulation of VoIP is unlikely--and not necessarily wanted, as most state commissions have only sought regulation for the purposes of ensuring that VoIP providers participate fully in the pursuit of social goals such as E-911, universal service and law-enforcement surveillance.

There also are consumer-protection issues, something FCC officials are more than content to let state regulators handle because the states are much better equipped to handle such matters. But how much clout will states have in enforcing consumer protections if they don't have the hammer of economic regulation on their side?

There's no easy answer, but a decision needs to be made during the next couple of months. Stay tuned.

E-mail me at djackson@primediabusiness.com. .