Federal Court Issues Injunction Against MPUC on VoIP


A few weeks ago, I noted that Wisconsin had moves to regulate VoIP provider 8x8. The Minnesota PUC had made a similar move against Vonage. Today a federal court issued a permanent injunction against a recent ruling by the Minnesota Public Utilities Commission to regulate Voice over IP provider Vonage as a telephone company. This is a huge win for VoIP companies (at least in Minnesota) since it gives them a significant pricing advantage over traditional CLECs and ILECs. Here's why:

A traditional ILEC (incumbent local exchange carrier) or CLEC (competitive local exchange carrier) has to pay numerous fees by regulation including universal service fund, e911, etc. Altogether these add up to something like $10 per primary line. This cost is, of course passed onto the customer. One reason that Vonage and 8x8 are able to offer such smoking deals is they don't pay these fees. I've taken to calling these guys NLECs (non-local exchange carriers); maybe there's a better name for them.

Here's a few links to stories on the ruling. A complete rationale for the ruling won't be available until Friday. If you see it before I do, give me a shout.

You can bet the RBOCs (Regional Bell Operating Companies) will be challenging this, so expect an appeal.