Federal Court Throws Out Minnesota VoIP Regulation

A federal court has issued a permanent injunction against the Minnesota Public Utilities Commission's efforts to regulate Voice over IP provider Vonage as a telephone company. A spokeswoman  for Vonage calls the ruling a "significant victory" for the company and the nascent technology. The ruling could have a significant impact as other states across the country, including California, had started to follow Minnesota's lead by regulating VoIP providers.

A federal court has 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.

The decision by Federal District Court Judge Michael Davis is a "significant victory" for the company and the nascent technology, says Vonage spokeswoman Brooke Schulz.

"We are very pleased with the decision," said Schulz. "It's a positive direction for regulation to take and sets a very strong precedent."

The Minnesota PUC's August decision required Vonage to file with the commission as a telephone company,  to receive official certification from the PUC in order to operate in the state and to begin making payments to support 911 service administration .

Vonage had maintained that it does not provide telephone service. Instead, lawyers for Vonage contended, the company offers data services over the internet.

On a 3-0 vote, the MPUC, noting that in its advertisement Vonage calls itself "a phone company," ruled against the company. At the time of the vote, o­ne commissioner was absent from the meeting, and another commission seat was vacant.

According to MPUC Executive Secretary Burl Haar, the commission will be voting o­n a request by Vonage to stay its previous decision o­n Thursday, Oct. 9th.

"Whether or not that will go forward in light of this decision remains to be seen," said Haar.

Though the court's decision was announced o­n Oct. 7th, the actual ruling will not be publicly available until Friday, Oct. 10th, said a spokeswoman for the court.

The ruling could have a significant impact nationally. Other states across the country, including California, had started to follow Minnesota's lead by trying to regulate VoIP providers.

Ravi Sakaria, CEO and President of VoicePulse, a New Jersey-based provider of VoIP service, is "cautiously optimistic" that the Minnesota ruling could have an impact in California.

"I think the details in the ruling, are just as important as the decision itself," Sakaria, who received a letter in late September from the California PUC demanding that VoicePulse register as a phone company in the state, said. "Hopefully, it will help shift the discussion from 'are we phone companies' to 'do consumers benefit from regulating these companies?'"


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