Calling All States: FCC Preemption of Intrastate ICC Rates

Well, my summer at PSN is over, and here is my summer opus.  It’s definitely my favorite of the many pieces I wrote, and I hope you enjoy it.

Calling All States:

Examining FCC Preemption of State Authority Over Intrastate ICC Rates for VoIP

 By Adam Nelson

I.  Introduction

As telephone penetration in the United States has neared 100% over the past twenty years, the Federal Communication Commission’s (“FCC”) has begun to rethink the role of the Universal Service Fund (“USF”), which was created to increase telecommunications access for those in need.[1] With the rise of broadband as a central mode of communication as well as civic and economic engagement, the FCC is seeking to shift the USF’s purpose away from telephone access and toward broadband. This was the suggestion of the February 9, 2011 Proposed Notice of Rule Making and Further Notice of Proposed Rulemaking (“PNRM”) that proposed changes to the Universal Service Fund (“USF”) and Intercarrier Compensation (“ICC”) regime. Given the complexity and interconnectedness of the system, the FCC is facing numerous challenges and conflicting opinions in its attempts to integrate broadband into USF and find the proper place for Voice over Internet Protocol (“VoIP”) in the mission to create universal communications access in America.

VoIP is the technology through which voice communications can be carried over the Internet rather than through phone lines, as employed by services like Skype and Vonage. VoIP can be “fixed,” meaning tied to a particular location where calls must be placed from, or “nomadic,” meaning that calls can be placed from anywhere using a VoIP account. Because the technology did not exist until recently and uses Internet protocols to transfer information, it does not fall under most definitions of telecommunications even though it performs the same functions as a telephone from a consumer perspective. The FCC, as well as many state public utility commissions (“PUC”), the state agencies designated by state legislatures to regulate utilities and telecommunications, have struggled to redefine telecommunications in a manner consistent with this evolving technology.[2] VoIP has grown tremendously in popularity over the past few years and continues to gain momentum, with cable companies adding 1.01 million new voice subscribers in the first half of 2010 while residential phone line providers lost 2.88 million lines.[3] As a result, there has been both urgency and confusion over how to handle VoIP in the context of a telecommunications regime.

In its proposed reforms to adapt the USF and ICC plans to the modern landscape, the FCC is proposing various ways to include VoIP in the system, including charging USF fees and ICC rates to VoIP providers. USF fees are fees that each telecommunications provider pays into the system, based on a percentage of their retail sales, to help subsidize buildout and service for unserved areas (usually isolated, rural, low-income areas). Intercarrier compensation is the amount of payment that “one carrier makes to another carrier to originate, transport or terminate telephone calls or other communications traffic.”[4] In other words, ICC rates are the amount that local phone companies charge other phone carriers when their local networks are used to connect calls originating from other areas. Interstate rates, or the rates charged to a phone company sending a call to another state, are set by the FCC, while intrastate rates have been determined on a state-by-state basis by the state PUC.[5] With VoIP, especially nomadic VoIP where an account is not fixed to a location, it can be difficult or impossible to tell where a call is originating from or going to, and thus whether it is intrastate or interstate.  As a result, as the FCC attempts to make VoIP a part of the national communication infrastructure, it is proposing to regulate both intrastate and interstate ICC rates and make them nationally uniform. Such changes in the system have potentially wide-ranging consequences, and have provoked responses from state PUCs, national telecommunications providers, rural local exchange carriers, (“LEC”), and many other groups with an interest in the system.

One such proposal is the creation of a uniform national ICC rate for VoIP of $0.0007 per minute, as proposed in the FCC’s PNRM and endorsed by major telecoms like Verizon.[6] Though this idea was proposed as a method of curbing arbitrage and saving money in the system by keeping the ICC rate uniform and low, some have condemned it as a potentially devastating blow to rural broadband providers who require much higher ICC rates to stay in business.[7] The concern is that only large telecoms, taking advantage of economies of scale, can afford to operate with such a low ICC rate, and as a result they will have a monopoly on the market and will choose not to build out in unserved rural areas where the low ICC rate will prevent profit-making business.

A central issue to whether the FCC will set a national ICC rate is whether it in fact has the legal authority to do so. Given that states currently hold this power and currently regulate ICC rates, the FCC would need to preempt state PUC authority. Whether the FCC has the authority to preempt state ICC making authority, and under what grounds, is the issue that this paper sets out to resolve.

II.  History of FCC Authority and State Preemption

The FCC was created in by the Communications Act of 1934 for the purpose of regulating interstate and international communications including radio, television, wire, satellite and cable.[8] Its modern authority comes from the Telecommunications Act of 1996, which grants the FCC jurisdiction over wire and radio communication and commerce with the mission of creating “a rapid, efficient, Nationwide, and world-wide wire and radio communication service with adequate facilities at reasonable charges.”[9] Thus, there is no question that the FCC has authority to regulate national telecommunications issues. The issue gets complicated when the FCC intervenes in matters that may be interpreted as purely intrastate.

The FCC’s authority to preempt states in dealing with USF funds and VoIP was most famously tested in the case of Vonage Holdings Corp. v. Nebraska Public Service Commission in 2009.[10] This conflict began in 2003 when the Minnesota Public Utility Counsel ordered Vonage’s nomadic VoIP service to submit to the same state regulations as any other phone provider. The FCC responded by prohibiting state VoIP regulation and asserting that VoIP regulation should be purely federal territory.[11] The 8th Circuit affirmed that the FCC had the right to preempt state authority because it was impossible to tell which calls on a nomadic VoIP were intrastate and which were interstate, and therefore these calls fell under the FCC interstate authority to make national policies.[12] Despite the fact that states normally have authority over intrastate activities and despite the FCC’s “safe harbor provision” presuming that 64.9% of any customer’s calls could be assumed to be interstate, the 8th Circuit found that FCC preemption of state PUC authority should apply under the “impossibility exception”.[13] This exception requires a finding of two facts in order to allow the FCC to preempt state authority: (1) it must be impossible to separate interstate calls from intrastate calls, and (2) a state charge would interfere with sufficiently federal USF administration were satisfied.[14] The 8th Circuit affirmed both to be the case and the exception to apply.[15]

Shortly thereafter, the Nebraska and Kansas PUCs filed petitions asking for a prospective ruling granting them authority to charge USF fees on intrastate VoIP activity.[16] The FCC complied with their requests in its Declaratory Ruling on November 5, 2010 allowing states to charge USF fees to both fixed and nomadic VoIP services without being preempted by the FCC under two conditions.[17] First, the USF contributions must be “consistent with the FCC’s contribution rules for interconnected VoIP providers”, and second, the state may not “enforce intrastate universal service assessments with respect to revenues associated with nomadic interconnected VoIP services provided in another state,” meaning that states may not double-bill a provider by charging for services that are already being charged for by another state.[18] This way, the PUCs were allowed to collect USF money from VoIP providers with the FCC’s sanction, but the FCC still retained its power to remove that authority when necessary.

The D.C. Circuit case of Core v. FCC “affirms that the FCC has broad authority to set intercarrier compensation rates for traffic within its jurisdiction.”[19] In this case, Core Communications challenged the FCC’s right to set a cap on termination fees for Internet service provider (“ISP”) bound traffic.[20] Core argued that states should have authority over intrastate ISP traffic, whereas the FCC argued that ISP traffic is in the federal jurisdiction because it is necessarily intertwined with interstate transactions.[21] The D.C. circuit rejected Core’s arguments and found that even purely intrastate ISP traffic falls under the FCC’s authority to regulate interstate communication lines.[22] This illustrates one of the key differences between telephone service and broadband: the difficulty in separating what is intrastate from what is interstate when dealing with broadband. Telephone service operates along a wired network that makes it easy to trace where a call begins and ends. Internet protocol, on the other hand, is a point-to-point network that makes it very difficult to tell where a packet of data came from. This is especially true for nomadic VoIP.

The FCC has also made clear in the National Broadband Plan that it intends to reform intercarrier compensation and create a “glide path for reducing per minute charges” in order to reduce arbitrage and other wasteful elements of the ICC process.[23] The FCC has not yet addressed whether VoIP should be subject to the same ICC charges as a conventional telephone service, as argued by incumbent LECs who provide the connections, or whether VoIP is exempt from access charges because of its technological differences, as VoIP providers and their competitive LEC partners argue.[24]

A mirror-image case involved a dispute between a competitive LEC, North County Communications Corp., and a communication mobile radio service, MetroPCS California.[25] North County wanted the California PUC to allow it to charge intrastate ICC rates to MetroPCS, who argued that the FCC had preempted state power to set these rates. The FCC responded that it had not, in fact, preempted state authority to set rates in these types of purely intrastate transactions.[26] The U.S. Court of Appeals, D.C. Circuit, agreed with the FCC that it had not abused its discretion in allowing the California PUC to set its own intrastate ICC rates and emphasized that the courts were obliged to grant deference to the FCC’s interpretations of its own regulations whenever it was not arbitrary, capricious, or an abuse of discretion or the law.[27] The court’s deferential position leaves the control over the balance of power between state and federal USF and ICC charges largely in the FCC’s control.

III.  Applying Preemption Analysis to the PNRM’s ICC Rate Proposal

Underlying the preemption dilemma is a question of what is interstate and what is intrastate. That is, in a nationally integrated network where it may not always be possible to tell where information is coming from or going to, it will not always be possible to classify any transaction as definitely intrastate. According to the Vonage court’s analysis of the impossibility exception, this means that such a regulation should fall under FCC authority so long as it also interferes with valid federal rules or policies.[28] If the FCC considers uniform national $.0007 ICC rates to be a necessary component of its USF and ICC reform and enactment of the National Broadband Plan, it appears that such a decision, and accompanying preemption of state PUC decisions, is within its authority.

It is worth noting that the FCC’s decision not to preempt in this case was based on the existence of a successful “mechanism for separating interstate from intrastate VoIP traffic for USF contribution purposes,” but the FCC was “careful to note” that the order should not be read overly broadly.[29] Although the FCC chose not to preempt state authority to have VoIPs contribute to USF funds in its November 2010 order, it is clear that this grant was at the FCC’s discretion.[30] Contained in the Vonage holding and the FCC’s order was an implicit understanding that the FCC was not obliged to allow state PUCs any regulatory power. This indicates that, although VoIPs may be conducting intrastate business, the FCC has the power to keep them under exclusive jurisdiction as stated in the impossibility exception. This same concern is illustrated in the Core decision’s rationale, which would “give the FCC the authority to set intercarrier compensation rates for, for example, VoIP traffic that the Commission has ruled cannot be segregated into intrastate and interstate traffic.”[31]

A.  The FCC’s Statutory Authority Is Over Interstate Matters Only

A rationale giving the FCC preemption authority over state PUCs in pursuit of an effective national policy is consistent with American legal history, but ultimately prohibited by the narrow statutory authority granted to the FCC. From the early days of American history, the courts have acknowledged that effective national policy cannot be enforced without control over the localized components. In the landmark steamboat regulation case Gibbons v. Ogden in 1824, the Supreme Court acknowledged that the Commerce Clause’s grant of authority over interstate commerce meant little unless it extended to intrastate activities with interstate effects.[32] In more recent jurisprudence, this extension of federal power applies to channels of interstate commerce, instrumentalities of interstate commerce, and activities that substantially affect interstate commerce.[33] There is little question that telecommunications systems, particularly those using the Internet, fall into all three of those categories. This is especially true since the issue in question is commercial, for-profit use of LEC infrastructure and is both an instrumentality or and channel of commerce.

The FCC’s statutory authority extends only as far as Congress granted in in the Communications Act of 1934, which provides regulatory power over interstate telecommunications services and does not grant express jurisdiction over the Internet.[34] When Congress reshaped the FCC with the Telecommunications Act of 1996, it was careful to specify that it granted no implied or express authority to preempt state policies, and cemented the point by stating that “nothing in this Act shall be construed to apply to or give the Commission jurisdiction with respect to (1) charges, classifications, practices, services, facilities, or regulations for or in connection with intrastate communication service by wire or radio of any carrier . . . .”[35] The 1934 Act does broaden the FCC’s scope and allow it to operate efficiently on a national scale by stating that the FCC “may perform any and all acts, make such rules and regulations, and issue such orders, not inconsistent with this chapter, as may be necessary in the execution of its functions.”[36] However, the D.C. Circuit Court of Appeals denied that this grants the FCC authority over Internet Service Providers in Comcast v. FCC, and unambiguously stated that “policy statements along cannot provide the basis for the Commission’s exercise of authority.”[37]

The Supreme Court also denied FCC authority to preempt states’ intrastate authority in Louisiana PSC v. FCC.[38] Although the case was specific to preemption of depreciation practices for intrastate communications, the Court stated broadly that “a federal agency may pre-empt state law only when and if it is acting within the scope of its congressionally delegated authority . . . . we simply cannot accept an argument that the FCC may nevertheless take action which it thinks will best effectuate a federal policy. An agency may not confer power upon itself.”[39] Given that the FCC’s congressional mandate is deliberately constructed to leave intrastate matters in the hands of states, it is clear that preemption of state authority over intrastate communications matters is an overstepping of the FCC’s authority and violation of Supreme Court precedent.

B.  The FCC Likely Has Authority Over Interstate VoIP Services

As for general FCC authority over VoIP, the Commission itself denied that cable Internet service is a telecommunications service included in its primary Title II jurisdiction in its 2002 Cable Modem Order.[40] The Comcast court did not comment on whether the very different and ambiguous case of VoIP, a clearly voice-specific service that uses Internet technology, falls under Title II primary jurisdiction or Title I ancillary jurisdiction. Even the Vonage case, which gave the FCC regulatory power over nomadic VoIP, explicitly did not “decide if VoIP is an information service or a telecommunications service.”[41] This debate remains unsettled and the states are split on how to characterize VoIP.[42] Still, it is highly likely that, absent a court ruling to the contrary, VoIP will continue to exist as telecommunications within the FCC’s Title II jurisdiction because, despite the use of the term “internet protocol” in the name, “cable VoIP calls typically do not traverse the internet but instead are carried over the cable VoIP provider’s managed network.”[43]

The FCC’s term for services that use Internet protocol to connect two-way voice communications via a managed public switched telephone network (“PSTN”) is “interconnected VoIP”.[44] The FCC defines “interconnected VoIP” as a service that “(1) enables real-time, two-way voice communications; (2) requires a broadband connection from the user’s location; (3) requires  Internet protocol-compatible customer premises equipment; and (4) permits users generally to receive calls that originate on the public switched telephone network (PSTN) and to terminate calls to the PSTN.”[45] The FCC has a very strong claim of Title II jurisdiction over these services because, while they do use Internet protocol, they function much closer to telecommunications than to information services. From a user perspective, VoIP is functionally identical to telephone service.

C.  The “Impossibility Exception” Does Not Apply

Although the FCC seems to have a strong claim over VoIP services, it has that claim only on an interstate level. Intrastate activity remains in the jurisdiction of the states. As discussed above, the FCC may preempt that jurisdiction only in the case of the impossibility exception which, despite the 8th Circuit’s ruling on nomadic VoIP in the Vonage case, may not apply to the case of fixed national ICC rates. Both prongs must be satisfied for the impossibility prong to preempt state authority, so each must be carefully examined.

The first prong is either not satisfied for VoIP service. As the Pennsylvania PUC pointed out in comments on the NPRM, “subsequent developments in technology and FCC policy show that it is neither impossible nor burdensome for carriers to separate the interstate and intrastate usage” of interconnected VoIP services.[46] Even if such separation is not always possible, the safe harbor proportions of 64.9% intrastate and 35.1% interstate set out in the FCC’s November 2010 order are a sufficient proxy for the actual proportions of local and interstate calls, and thus charges on the federal and state level. In the case of VoIP service, the impossibility exception should not apply. The Vonage court was not convinced by this argument, but the FCC’s Declaratory Ruling gave three clear methods for states to “separate intrastate and interstate revenues for purposes of determining providers’ contribution amounts” to state and federal USFs.[47] This indicates that the FCC considers the interstate and intrastate calls to be separable, as the FCC stated in its Declaratory Ruling, in which case the impossibility exception should not apply.[48] Even if such calls are not easily separable in all cases, whether the FCC may be able to set a fixed interstate ICC rate while still allowing PUCs to set their own optimal intrastate rate is a technical, empirical question that requires further study (despite the Vonage court’s opinion that this would be a substantial technical obstacle).[49]

The second prong, that localized regulation would interfere with federal rules or policies, also does not clearly cut in favor of FCC preemption. The question here is whether allowing states to set intrastate ICC rates does, in fact, interfere with the FCC’s implementation of the National Broadband Plan and the stated goals of the related NPRM. Strong arguments have been made by rural PUCs that allowing state PUCs, who best know the conditions of their state, to set their own ICC rates may be ultimately more efficient in creating universal broadband access and fostering construction of a strong national infrastructure.[50] For example, in high cost areas where smaller rural LECs make large upfront investments in infrastructure in low population density areas, a higher ICC rate is necessary to keep the business profitable.[51] The low ICC rate of $0.0007 per minute suggested by the FCC may be adequate for denser urban areas where large telecoms can benefit from economies of scale, but may not be sufficient to compensate these rural LECs. Without a higher rate of return per-customer, rural LECs may have little motivation to service these rural, expensive areas. Nor will there be sufficient incentive for larger telecom companies to step into the area and take over service, without a reasonable rate of return.

Beyond the universal access argument, there is no reason to believe that varying ICC rates from state to state would interfere with any other FCC rule or policy. Intrastate activities are the jurisdiction of PUCs and not the FCC, so it is nonsensical that an FCC policy could be reliant upon a state-by-state rate that it lacks the authority to control. Equally, it is a strange proposition that a one-size-fits-all policy is as well suited to creating access in sparse, rural areas as it is in dense, urban areas. As the Pennsylvania PUC put it, “[t]he FCC is simply unable and ill-equipped to address the network management practices and needs of smaller geographic states with sparse population centers on equal terms as large geographic states with concentrated populations . . . . A single forum – namely the FCC – focused on doing all disputes for all parties at all times on every issue in any location is a formula for failure.”[52]

IV.  Conclusion

As the FCC moves forward with its reform of USF and ICC rates, it will consider many ideas and proposals. However, the FCC’s power and jurisdiction is limited and it must pursue its goals in a manner consistent with its Congressional mandate. While that most likely includes regulating VoIP overall, it does not appear that the FCC has the authority to preempt state PUCs in setting a uniform national ICC rate. Based on the fact that VoIP uses PSTN and that it is now possible to separate intrastate and interstate nomadic VoIP traffic in billing for ICC services, there does not seem to be reason for the impossibility exception to apply. Thus, there is no reason to think that the FCC should have preemption authority over such intrastate matters.

At its heart, this is an issue of preserving the delicate balance between the federal and state governments in the United States. While it may be more convenient for the FCC to pursue its goals by setting a national ICC rate, the autonomy of states must be respected. This autonomy reflects the basic idea in our governmental structure that localized institutions are best suited to recognize and address their populations’ needs. There is little reason to believe that the FCC cannot pursue its goals while working in conjunction with the states’ PUCs to craft a sound national policy that also effectively addresses the specific needs of rural populations, urban areas, and everything in between.

References


[1] See FCC, Telephone Subscribership in the United States, (May 2011), available at http://transition.fcc.gov/Daily_Releases/Daily_Business/2011/db0519/DOC-306752A1.pdf (finding that telephone penetration in the U.S. is at 96%, according to data through July 2010).

[2] Public utility commissions can go by different names in different states. For example, New York’s regulatory agency is called the New York Public Service Commission. While each state’s Commission has a slightly different mandate set by their state legislatures, they are generally in charge of overseeing rates, affordability, and access to utilities like electric, gas, steam, water, and telecommunications.

[3] Brian Rankin, Cable Voice Services Review, 2011, 1033 PLI/Pat 593, 598 (February 28-March 1, 2011).

[4] Investigation Regarding Intrastate Access Charges and IntraLATA Toll Rates of Rural Carriers and the Pennsylvania Universal Service Fund, Statement of Chairman Robert F. Powelson, Docket No. I-00040105, 1 (PA Pub. Util. Comm’n 2011).

[5] The FCC gives an explanation of its charging mechanisms on its website, which can be viewed at http://transition.fcc.gov/wcb/ppd/IntercarrierCompensation/. (“Intercarrier compensation refers to the charges that one carrier pays to another carrier to originate, transport, and/or terminate telecommunications traffic… There are two major forms of intercarrier compensation – access charges and reciprocal compensation… Access charges generally apply to calls that begin and end in different local calling areas. Interstate access charges apply to calls that originate and terminate in different states, and intrastate access charges apply to calls that originate and terminate in different local calling areas within the same state. The Commission oversees interstate access charge rates, and the states oversee intrastate access charge rates.  Access charges do not apply to Internet service providers under an exemption for enhanced service providers that use the facilities of local telephone companies. Reciprocal compensation generally applies to calls that begin and end within the same local calling area.”)

[6] See Notice of Proposed Rulemaking and Further Notice of Proposed Rulemaking, FCC 11-13, 196 (rel. Feb. 9, 2011)See also Letter from Tamara Preiss, Vice President, Federal Regulatory, Verizon, to Marlene H. Dortch, Secretary, FCC, CC Docket No. 01-92, WC Docket No. 07-135, 3.

[7] See Teleseminar, Nat’l Regulatory Research Inst., The Federal USF: Structure, Issues, FCC’s Notice of Proposed Rulemaking, and What It All Means For Your State, available at http://nrrionline.org/index.php?main_page=product_music_info&cPath=62&products_id=217&zenid=csjbt32j49sobev1h4301r53d2.

[9] Mathew Lasar, Did Congress really give the FCC power to protect the ‘Net?, available at http://arstechnica.com/tech-policy/news/2009/11/does-the-fcc-have-authority-to-enforce-net-neutrality-rules.ars.

[10] Vonage Holdings Corp. v. Nebraska Public Service Commission; 564 F.3d 900 (8th Cir. 2009).

[11] Vonage Holdings Corporation Petition for Declaratory Ruling Concerning an Order of the Minnesota Public Utilities Commission, WC Docket No. 03-211, Memorandum Opinion and Order, 19 FCC Rcd 22404, 22409, paraa. 11(2004), aff’d, Minn. Pub. Utils. Comm’n v. FCC, 483 F.3d 570 (8th Cir. 2007).

[12] Id. at 904. (“Under the impossibility exception, the FCC may preempt all state regulation of service which would otherwise be subject to dual control if it is impossible or impractical to separate the service’s interstate and intrastate components, and the state regulation interferes with valid federal rules or policies.”)

[13] Id. at 905.

[14] Id.

[15] Id.

[16] Rankin, supra note 3, at 603. See also, FCC Says State May Impose Universal Service Contribution Requirements on Interconnected VoIP Service Providers, Garvey Shubert Barer Legal Update (Nov. 11, 2010),  http://www.gsblaw.com/news/legal_update/fcc_says_states_may_prospectively_impose_universal_service_contribution_requirements_on_nomadic_interconnected_voip_service_providers/.

[17] Declaratory Ruling, WC Docket No. 06-122, FCC 10-185 (rel. Nov. 5, 2010), available at http://transition.fcc.gov/Daily_Releases/Daily_Business/2010/db1105/FCC-10-185A1.pdf.

[18] Rankin, supra note 3, at 602.

[19] John Nakahata, Brita Strandberg, Mark Davis, Linda McReynolds, Kelley Shields, Darah Smith, and Renee Wentzel, The Year in Wireline Telecommunications Regulation September 2009 – September 2010, 1030 PLI/PAT 113, 143 (2010).

[20] See Core Commc’ns, Inc. v. FCC, 592 F.3d 139, 141 (D.C. Cir. 2010).

[21] Nakahata et. al., supra note 16, at 143.

[22] Id.

[23] See Federal Communications Commission’s National Broadband Action Agenda, at 3 (2010), available at http://www.broadband.gov/plan/broadband-action-agenda.html (“Broadband Action Agenda”).

[24] Nakahata et. al., supra note 16, at 142.

[25] North County Commn’ns Corp. v. MetroPCS California, LLC, Order on Review, 24 FCC Rcd 14036 (2009).

[26] MetroPCS California, LLC. V. FCC, Case No. 10-1003 (D.C. Cir. filed July 8, 2010), Final Brief of Respondents at 2.

[27] See MetroPCS California, LLC v. FCC, Case No. 10-1003 (D.C. Cir. 2011).

[28] Vonage, at 904.

[29] Michael H. Pryor, Latest regulatory developments Affecting Cable’s Voice and Wireless Business: Wireline Developments Related to the National Broadband Plan, 1033 PLI/Pat 579, 584 (2011).

[30] See Administrative Procedure Act, 5 U.S.C. 706(2)(A) (stating that only if an agency’s actions are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law” will they be set aside by a court). The MetroPCS court read the statute as interpreted in Chevron U.S.A. Inc. v. Natural Resources DefenseCouncil, Inc., 467 U.S. 837 (1984) to give deference to an agency’s reasonable interpretation of ambiguity.

[31] Nakahata et. al., supra note 16, at 143.

[32] See Gibbons v. Ogden, 22 U.S. 1 (1824).

[33] See, e.g., U.S. v. Lopez, 514 U.S. 549 (1995); Gonzales v. Raich, 545 U.S. 1 (2005).

[34] Comcast Corp. v. FCC, 600 F.3d 642, 645 (D.C. Cir. 2010).

[35] Telecommunications Act of 1996, 47 U.S.C. § 152(b).

[36] Telecommunications Act of 1996, 47 U.S.C. § 154(i).

[37] Comcast at 654.

[38] Louisiana PSC, et al. v. FCC, 476 U.S. 355 (1986).

[39] Id. at 374-75

[40] Id.

[41] Vonage, at 906 n. 5.

[42] Rankin, supra note 3, at 603-4 (stating that Missouri, Wisconsin, Maine, and Vermont held VoIP to be state-regulable telecommunications services, but 16 states and the District of Columbia have decided the opposite, passing laws prohibiting state-level regulation).

[43] Id. at 597.

[44] See, generally, IP-Enabled Services, First Report and Order and Notice of Proposed Rulemaking, 20 FCC Rcd. 10245, 24 (2005) (“VoIP 911 Order ”) (definition codified at 47 CFR §§ 9.3).

[45] Declaratory Ruling, supra note 14, at 2.

[46] Reply Comments of the Pennsylvania Public Utility Commission, 14 (May 23, 2011).

[47] Declaratory Ruling, supra note 14, at 5-6. (“(1) [A]  safe harbor under which 35.1 percent of the provider’s revenues is allocated to the intrastate jurisdiction (calculated by subtracting our interstate safe-harbor of 64.9 percent from 100 percent); (2) the provider’s actual Nebraska intrastate revenues; or (3) the provider’s Nebraska intrastate revenues determined through a Commission-approved traffic study.”)

[48] Id. at 7. (“The Eighth Circuit’s reading of the Vonage Preemption Order rested on the premise that it is impossible to distinguish “between interstate and intrastate nomadic interconnected VoIP usage.” Two years after the Vonage Preemption Order, however, the Commission determined that the interstate and intrastate operations of interconnected VoIP providers can be distinguished for the limited purpose of assessing universal service contributions… The Commission further recognized that some interconnected VoIP providers have the capability to track the jurisdiction of their calls.  It said that those providers could base their federal universal service contributions on their actual interstate revenues.”)

[49] Vonage, at 904. (“The district court found no evidence showing Vonage’s nomadic interconnected VoIP services could be separated into interstate and intrastate components.”)

[50] See, e.g. , Teleseminar, Nat’l Regulatory Research Inst., supra note 7; Comments of the Regulatory Commission of Alaska re FCC 11-13, 25-30 (Apr. 18, 2011); Comments of Public Knowledge and Benton Foundation re FCC 11-13, 23-32 (Apr. 18, 2011); Comments of the Corporation Commission of the State of Kansas on All Sections of the February 9, 2011 NPRM Except Section XV re FCC 11-13, 36-39 (Apr. 18, 2011).

[51] Id.

[52] Reply Comments, supra note 44, at 22.

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About privacyandpiracy

Fordham Law student, Student Association for Law and Entrepreneurship co-founder, I.P. Law Journal staffer, and Center on Law & Information Policy fellow. Look out for my upcoming article on copyright and fair use in the Twittersphere in Fordham's Intellectual Property Law Journal, and let me know if you need a legal intern. Twitter: https://twitter.com/#!/MrAdamN
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