Don’t look now but deregulation of voice services is coming to a state near you. How so? The reason is that multiple states have passed, are considering, or plan to consider requests by Voice over IP (VoIP) service providers that their services be considered as information services and thus exempt from traditional common carrier regulation. The latest instance is going on in New Hampshire. It relates to a continuing battle between Comcast and the New Hampshire Public Utilities Commission over the subject, now muddied by the passage of a bill that has yet to be signed into law, which would exempt Comcast from regulation of its VoIP and IP-enabled services.

Without going into the history of all the petitions, rulings and remands, the one that matters most is New Hampshire PUC Order #25,542, issued on July 9, COMCAST PHONE OF NEW HAMPSHIRE, LLC AND COMCAST IP PHONE II, LLC: Effect of SB 48 on VoIP and IP-Enabled Services, Order Suspending Order on Remand for Further Consideration Pursuant to RSA 541:5.  

Here is the language that is most relevant from the Order:

HB 542, if it is enacted into law, would exclude VoIP and IP-enabled service providers from the definition of a public utility under RSA 362:2 and the definition of an ELEC under RSA 362:7, I(c). The RLECs have requested that the Commission consider the prospective potential effects of HB 542 on these proceedings, should it become law, and Comcast has indicated in its motion and cover letter that it may also seek to have the Commission consider this new legislation.

Should HB 542 become law, the Commission believes its consideration of the effects of HB 542 as part of its decision on the merits of Comcast’s motion for rehearing would serve the interests of judicial economy and administrative efficiency and would clarify the effect of this recent legislation on the Commission’s prior determinations. We believe our consideration of HB 542 in such context falls within the spirit if not the letter of the Court’s remand order dated October 12, 2012.

The Commission has notified the Court today of its interest in considering the effects of HB 542 in this docket and has informed the Court of its intent to reconsider its prior orders, including Order No. 25,513, in light of the passage of HB 542, should it become law, in connection with its decision on the merits of Comcast’s motion for rehearing….Based upon the foregoing, it is hereby ORDERED, that Order No. 25,513, the Order on Remand issued in this docket, is herebysuspended pending further consideration pursuant to RSA 541:5.

That is the long way of saying that if it becomes the law of New Hampshire that VoIP and IP-enabled services are henceforth not to be regulated, then the PUC will have to reconsider its decisions that found Comcast to be offering services the PUC felt were common carriage.

Major ramifications are afoot

It should be self-evident why all of this is non-trivial. As VoIP becomes the dominant means of voice communication for customers of companies offering communications services over fixed lines, a pandora’s box of state vs. federal jurisdictional issues will have to be confronted, not the least of which are:

• What is the definition of “basic” service?
• What is the relevance of universal service and how can it be provided?
• How is the U.S. going to get to universal broadband coverage and close the “digital divide” when there is no obligation to be a provider of last resort?

Indeed, with the death of the public switched telephone network (PSTN), by the Federal Communications Commission’s (FCC’s) own admission, now looming large in the window (as in, before the start of the next decade), all of this calls into question the role of communications services regulation at all levels. 

The history of the telecommunications industry in the U.S., going all the way back, involved policy-maker concerns that only the “haves” would have service, and that was not in the public interest. It was a major, if not the major, reason Congress passed the Communications Act of 1934 which created the FCC with a mandate to oversee the industry so that all citizens had access to basic services at reasonable prices. 

Ironically, it was the FCC that, in no small measure, sowed the seeds for the current problems. During its Computer Inquiries, which started in 1966 and went through to the 1980’s, the Commission attempted to set rules and policies for regulating telecommunications and computer services under a regime that imposed restrictions that best promoted competition and protected ratepayers from improperly being assessed the cost of competitive activities. The FCC tried in vain to draw bright lines between what were competitive services versus what should remain regulated utility services. Technology had a nasty habit of re-drawing the lines. The advent of the Internet and VoIP, in fact, destroyed those lines and threw things into a cocked hat that does not fit modern realities.

How does this all end? This is a great question with no clear answer. However, we can all be sure of two things: First, VoIP service providers of all persuasions are going to press regulators and policy-makers at all levels for deregulation. Second, assuming Thomas Wheeler becomes the next head of the FCC, this is something that is going to have to be on the Commission’s agenda. 

It would be a gross understatement to say there is a lot at stake here. New Hampshire is known as “The Granite State,” and its motto is “Live Free or Die!” How solid the law is and how appropriate that motto becomes, in terms of the economic future of industry players and the customers they serve, makes this possibly precedent setting and clearly one to watch.