Court Opinion

ID: 1043637
Source: CourtListenerOpinion
Date Created: 2013-10-08 00:24:33.042773+00
Date Added: 2024-06-11T12:30:32.860450
License: Public Domain

2013 VT 23

In re Investigation into
Regulation of Voice Over Internet Protocol (VoIP) Services (2012-109)
 
2013 VT 23
 
[Filed 29-Mar-2013]
 
NOTICE:  This opinion is
subject to motions for reargument under V.R.A.P. 40 as well as formal revision
before publication in the Vermont Reports.  Readers are requested to
notify the Reporter of Decisions by email at: JUD.Reporter@state.vt.us or by
mail at: Vermont Supreme Court, 109 State Street, Montpelier, Vermont
05609-0801, of any errors in order that corrections may be made before this
opinion goes to press.
 
 

2013 VT 23

 

No. 2012-109

 

In re Investigation into
  Regulation of Voice Over Internet Protocol (VoIP) Services

Supreme Court

 

On Appeal from

 

Public Service Board

 

 

 

September Term, 2012

 

 

James
  Volz, Chair

 

Andrew Raubvogel and Karen Tyler of Dunkiel Saunders Elliott
Raubvogel & Hand PLLC, 
  Burlington, and Samuel L. Feder, Luke C. Platzer and
Adam G. Unikowsky of Jenner & Block
  LLP, Washington, D.C., for Appellant Comcast Phone of
Vermont, LLC. 
 
Morris L. Silver, Benson, for Appellee Central Vermont
Public Service Corporation.
 
Megan R. Ludwig, Montpelier, for Appellee Vermont Department
of Public Service.
 
Cassandra LaRae-Perez of Primmer Piper Eggleston &
Cramer PC, Montpelier, for Appellees
  The Eight Vermont Independent Local Exchange
Carriers.
 
Nolan C. Burkhouse and David M. Pocius
of Paul Frank + Collins P.C., Burlington, for 
  Amici Curiae Verizon, AT&T and the Voice on the Net
Coalition. 
 
Glenn S. Richards, Washington, D.C.,
for Amicus Curiae the Voice on the Net Coalition.
 
 Scott H. Angstreich and
Emily J. Kennedy of Kellogg, Huber, Hansen, Todd, Evans & Figel,
   P.L.L.C.,
Washington, D.C., and Alexander W. Moore, Boston, Massachusetts, for Amicus
   Curiae Verizon.
 
James A.
Huttenhower, Chicago, Illinois, for Amicus Curiae AT&T.
 
 
PRESENT:  Reiber, C.J., Dooley, Skoglund and Burgess,
JJ., and Eaton, Supr. J., 
                    
Specially Assigned
 
 
¶ 1.            
REIBER, C.J.   This appeal concerns whether the Vermont
Public Service Board has jurisdiction to regulate interconnected Voice over
Internet Protocol (VoIP) services provided in Vermont.  The Board
concluded that fixed VoIP is a “telecommunications service” under Vermont law
and Vermont regulation of VoIP is not preempted by federal law because
intrastate calls can be separately identified.  The Board deferred
consideration of what type of regulation to impose to a separate phase of the
proceeding.  On appeal, Comcast Phone of Vermont, LLC[1] argues that the Board erred in not
addressing whether interconnected fixed VoIP is an information service or
telecommunications service under federal law because, according to Comcast,
VoIP is an information service and therefore any regulation is preempted by
federal law.  We agree that the Board must reach this question and remand
for further proceedings.
¶ 2.            
Some background is necessary for understanding the issues raised in this
appeal.  Traditional phone service operates on a public switched telephone
network (PSTN).  That network relies on circuit-switched technology, which
sets up a dedicated line between the sender and receiver.  A traditional
telephone converts the caller’s voice into an electrical signal that travels on
a copper line over the PSTN.  When the analog signal reaches the
receiver’s telephone, it is converted back into audible format.  Users on
the network are assigned a ten-digit North American Numbering Plan (NANP)
number that corresponds to their geographic location.
¶ 3.            
VoIP technology is simply another mechanism for delivering voice
communication.  VoIP transmits the voice data over internet protocol (IP)
instead of through traditional telephone lines on the PSTN.  The voice
data is converted into digital bits which are placed in packets and sent over
the same pathways as internet data.  VoIP can be provided over the public
internet or a private IP network.  The packets of information run through
various computers, routers, and switches before they are reconstituted at their
destination.  VoIP-to-VoIP communications are those that originate and
terminate at IP addresses existing in cyberspace without regard to the person’s
geographic location.  Minn. Pub. Utils. Comm’n v. FCC, 483 F.3d
570, 574 (8th Cir. 2007).  In contrast, interconnected VoIP involves
communication of VoIP to or from a traditional PSTN landline connection. 
Interconnected VoIP is defined as a service that provides real-time, two-way
voice communication over a broadband connection from the user’s location using
special equipment that permits the user to receive calls from or terminate
calls on the PSTN.  See 47 C.F.R. § 9.3 (2009).
¶ 4.            
Interconnected VoIP telephony takes different forms.  Nomadic VoIP
service may be used from anywhere a caller can access a broadband connection,
without regard to the identity of the broadband provider.  When nomadic
service is used, it is not possible to determine the specific geographic
endpoints of the call.  Fixed VoIP service originates at a permanent
location known to the user and the provider.  The user places a call with
a telephone by using special equipment that converts the sound into information
that can travel on the IP.  For the user, the experience resembles placing
a call using a traditional telephone. 
¶ 5.            
The service relevant to this appeal is provided by Comcast.[2]  Comcast has a network of cables in Vermont
and using those cables provides high-speed internet, and interconnected VoIP
services called Comcast Digital Voice (CDV).  To use CDV, Comcast leases
to customers an embedded multimedia terminal adaptor (eMTA), which is connected
to the customer’s phone and converts the voice signal into a format that can
travel on the internet over the cable line.  To place a call, the CDV
customer uses a traditional telephone connected to the eMTA.  The eMTA
converts the call to IP in the case of an originating call or from IP in a
terminating call.  CDV calls may terminate in traditional telephone
service subscribers, or may remain entirely on the Comcast network if
terminating to another CDV customer.  Comcast’s CDV VoIP telephony is a
fixed service as it requires the end-user to use it from a specific geographic
location known to Comcast.  The issue before the Board was whether the
Board could regulate this service or if regulation was preempted by federal
law.
¶ 6.            
Regulation of telecommunications is done through a partnership between
federal and state authorities.  In re Verizon New England Inc., 173
Vt. 327, 332, 795 A.2d 1196, 1200-01 (2002).  Under federal law, the
Federal Communications Commission (FCC) has authority to regulate interstate
and foreign telecommunications services, while the states retain jurisdiction over
intrastate services.  47 U.S.C. §§ 151, 152(b).[3]  Over the years, as methods of
communication changed, the FCC sought to apply the terms of the Communications
Act to newer technologies by creating two categories of services—basic and
enhanced.  Petition for Declaratory Ruling that AT&T’s
Phone-to-Phone IP Telephony Servs. are Exempt from Access Charges, 19 FCC
Rcd. 7457, 7459 (April 21, 2004).  The FCC defined basic service as the
transmission of “information without a net change in form or content.”  Id.
 In contrast, enhanced service applied to a service involving any sort of
data alteration or manipulation “that changes the form or content of the
transmitted information.”  Id.  The FCC concluded that
enhanced services were free from Title II regulations that applied to common
carriers to encourage new data processing features.[4]  Id. at 7460.  In 1996,
Congress amended the Act to address new developing technologies and services,
and utilized the terms “telecommunications service” and “information services.”
 See 47 U.S.C. § 153(53), 153(24).  The FCC construed the terms
“telecommunications service” and “information service” as having the same
meanings as basic and enhanced services, respectively.  AT&T’s
Phone-to-Phone IP Telephony Servs., 19 FCC Rcd. at 7460-61.  Thus,
“telecommunications services and information services are separate and distinct
categories, with Title II regulation applying to telecommunications services
but not to information services.”  Id. at 7461.  The result of
designating VoIP as an information service would mean that the regulations in
Title II of the Telecom Act do not apply.  Federal-State Joint Bd. on
Universal Serv., 13 FCC Rcd. 11501, 11507-08 (April 10, 1998). 
¶ 7.            
The 1996 Act, however, preserved the dual-jurisdictional regimen between
federal and statute authorities.  Verizon New England, 173 Vt. at
331, 795 A.2d at 1200.  Thus, Vermont retains authority to regulate
telecommunications within the state as long as such regulation is not
inconsistent with federal law.  Id. at 332, 795 A.2d at
1200-01.  The Legislature has delegated this authority to the Board by
authorizing it to regulate companies “offering telecommunications service to
the public on a common carrier basis.”  30 V.S.A. § 203(5). 
Telecommunications service is broadly defined by Vermont law as “the
transmission of any interactive two-way electromagnetic communications,
including voice, image, data and information.”  Id.  The
statute provides that transmission of electromagnetic communications “includes
the use of any media such as wires, cables, television cables, microwaves,
radio waves, light waves or any combination of those or similar media.”  Id.
¶ 8.            
In April 2007, the Department of Public Service sent a letter to the
Board recommending that it open a generic investigation into VoIP services to
clarify the rights and responsibilities of VoIP service providers in
Vermont.  The Board opened its investigation in May 2007 and appointed a
hearing officer to conduct the proceedings.  Several companies
participated in the proceedings, including Comcast and Verizon.  Several
entities were also permitted intervenor status, including a group of
independent Vermont local exchange carriers, Central Vermont Public Service
Corporation, City of Burlington Electric Department, Stowe VoIP, LLC, and
AT&T.  
¶ 9.            
The parties agreed to divide the proceeding into phases.  In Phase
I, the Board was confined to factfinding and determining the extent of its
jurisdiction, and in Phase II, the Board was supposed to consider to what
extent it should exercise its jurisdiction.  A technical hearing was held
in November 2008.  Before the hearing officer, the Department argued that
VoIP services are telecommunications services under Vermont law, and that fixed
services are intrastate and not preempted by federal law.  Comcast argued
that VoIP is an “information service” as defined by federal law and, thus, the
state is wholly preempted from regulating it.  
¶ 10.        
The hearing officer found, based on the testimony of expert witnesses,
that interconnected VoIP is covered by Vermont’s definition of
“telecommunications services.”  Thus, the hearing officer concluded that
the Board had jurisdiction to regulate the service.  The hearing officer
explained that this made sense as a matter of policy because VoIP services
compete directly with traditional voice services and are marketed to replace
them.  The hearing officer concluded that the Board’s authority to
regulate VoIP was not preempted by federal law to the extent that the provided
service was intrastate—that is for fixed VoIP service.  In contrast, the
hearing officer held that regulation of nomadic service, which could not be
separated into interstate and intrastate components, was preempted by federal
law.  Thus, the hearing officer found that the nomadic service offered by
AT&T was not subject to state regulation, but Comcast’s fixed service
was.  The hearing officer rejected the notion that it needed to determine
whether Comcast’s CDV service was a telecommunications or information service
under federal law.  The hearing officer concluded that this issue was not
relevant in Phase I, which focused generally on the Board’s jurisdiction. 
The hearing officer noted that the question could be addressed in Phase II to
determine whether and to what extent any particular proposed state regulations
conflicted with federal law. 
¶ 11.        
Comcast moved to reopen the record to submit additional evidence from
its expert.  The hearing officer denied the motion, explaining that this
evidence largely was intended to support Comcast’s argument regarding federal
preemption, which the hearing officer had concluded was not relevant in that
stage of the proceeding.  
¶ 12.        
The matter was referred to the entire Board.  The Board adopted the
hearing officer’s findings and conclusions.  For three main reasons, the
Board rejected Comcast’s argument that the Board must first determine whether
VoIP is an “information service” under federal law.  First, the Board
explained that the state has authority to act unless otherwise preempted and
that because CDV offered intrastate service, it was within the Board’s
jurisdiction.  The Board read the FCC’s prior decisions as expressing a
policy against federal preemption for VoIP services that can be separated into
intrastate calls.  Second, the Board found it significant that the FCC had
taken the federal classification under consideration, and wanted to defer a
decision to let the FCC make an initial determination about preemption. 
Finally, the Board explained that in the second phase of the proceedings it
would consider what type of regulations to impose and would at that time
address whether those specific regulations were preempted by federal law. 
Comcast appeals.[5]
¶ 13.        
On appeal, Comcast argues that the Board erred in holding that it could
resolve the jurisdictional issue without first determining whether CDV is an
information or telecommunications service under federal law.  Comcast also
contends that CDV is indeed an information service under 47 U.S.C. § 153(24)
and therefore the service is entirely under the authority of FCC and not
subject to state regulation.  Comcast requests that the matter be remanded
to the Board for a determination of whether CDV is an information service and
to allow Comcast to submit certain excluded evidence.  
¶ 14.        
Thus, the critical question is whether the Board’s authority to regulate
fixed interconnected VoIP telephony is preempted by federal law.  There
are three main situations in which federal law can preempt state law: express
preemption; field preemption; and conflict preemption.  Sw. Bell
Wireless Inc. v. Johnson Cnty. Bd. of Cnty. Comm’rs, 199 F.3d 1185, 1190
(10th Cir. 1999) (explaining different ways state law can be preempted).
 Express preemption occurs when a federal statute explicitly reveals
congressional intent to preempt state law.  Id.  In addition,
federal law can implicitly preempt state law.  Field preemption occurs
when the federal regulatory scheme is so pervasive as to make no room for
concurrent state regulation.  Fidelity Fed. Sav. & Loan Ass’n v. de
la Cuesta, 458 U.S. 141, 153 (1982); see Grice v. Vt. Elec. Power Co.,
2008 VT 64, ¶ 15, 184 Vt. 132, 956 A.2d 561.  Conflict preemption arises
when there is no federal law to wholly supplant state regulation, but the
specific state law obfuscates the purpose or objectives of a federal law. 
Int’l Paper Co. v. Ouellette, 479 U.S. 481, 491-92 (1987); Grice,
2008 VT 64, ¶ 15.  There is a presumption that the power of the state
has not been superseded by a federal act, and “ ‘[t]he party seeking to
overcome this presumption bears a heavy burden.’ ”  Grice,
2008 VT 64, ¶ 15 (quoting In re Vt. Ry., 171 Vt. 496, 500, 769 A.2d
648, 652 (2000)). 
¶ 15.        
The parties disagree about the type of preemption applicable in this
case.  According to Comcast and the amici supporting its case, VoIP is an
information service under federal law and, as such, regulation of VoIP is
expressly preempted by federal law.  Thus, Comcast contends that this
threshold question must be decided.  
¶ 16.        
The Board did not discern any express preemption in the
Telecommunications Act.  The Board considered field preemption and
concluded that because fixed services like CDV can be separated into interstate
and intrastate calls, Congress had not wholly displaced the state’s authority
to regulate the field of VoIP telephony.  The Board recognized that
particular regulations may be precluded by conflict preemption, but concluded
that this question would be addressed during the second phase of the
proceedings when particular regulations were proposed.  The Board
explained:
We have not flatly ruled, as Comcast
Phone claims, that because jurisdictional separation is possible in the case of
fixed VoIP, the FCC has no power at all to preempt our regulation of Comcast
Phone’s CDV service pursuant to Vermont state law. . . . We remain mindful that
conflict preemption may yet attach to bar the exercise of our regulatory
jurisdiction based on Vermont law, in the event that a regulatory proposal is
put forward in Phase II that proves to be “irreconcilable” with pertinent
federal law or lawful FCC regulation.
¶ 17.        
The Board described its analysis as a “two-step approach” mirrored on
the analysis utilized by the FCC in Vonage Holdings Corp., 19 FCC Rcd.
22404 (Nov. 12, 2004).[6] 
In that case, the Minnesota Public Utilities Commission had applied its
traditional telephone company regulations to a VoIP service offered by Vonage
called DigitalVoice.  DigitalVoice provided subscribers with the ability
to originate and receive voice communications over the internet.  The
service assigned subscribers a NANP number that could be used from any location
where the subscriber had access to a broadband connection.  Id. at
22406.  Because the service was portable, Vonage could not isolate where a
subscriber was located when a call was placed.  
¶ 18.        
The FCC concluded that DigitalVoice was a mixed service operating both
interstate and intrastate, but because the two components could not be
separated, state regulation was preempted by federal law.  Id. at
22411.  The FCC noted that allowing state regulation “would thwart federal
law and policy.”  Id.  This was in keeping with the FCC’s
policy that when services are capable of communications between intrastate and
interstate end points, this kind of mixed-use service is subject to dual
federal-state jurisdiction “except where it is impossible or impractical to
separate the service’s intrastate from interstate components and the state
regulation of the intrastate component interferes with valid federal rules or
polices.”  Id. at 22413.  This is referred to as the
impossibility exception under § 152(b) of the Telecom Act.  Id.
at 22414-15; see 47 U.S.C. § 152.
¶ 19.        
The FCC specifically did not reach the question of whether VoIP
telephony like DigitalVoice is a telecommunications or information service
under the Act.  Vonage, 19 FCC Rcd. at 22413.  The
determination was not necessary given the FCC’s resolution of the case on the
impossibility exception.  The FCC explained that “to the extent that other
VoIP services are not the same as Vonage’s but share similar basic
characteristics, we believe it highly unlikely that the Commission would fail
to preempt state regulation of those services to the same extent.”  Id.
at 22405.  Thus, the FCC left open the possibility, though unlikely, that
some other VoIP service—one that did not resemble DigitalVoice—would not be
preempted by federal law.
¶ 20.        
Based on Vonage, the Board resolved the preemption question by
first addressing whether the impossibility exception applied or if CDV could be
separated into interstate and intrastate components.  The Board concluded
that unlike the Vonage VoIP service, Comcast’s VoIP telephony was a fixed
service and Comcast had the ability to discern where calls originated. 
Based on this fact, the Board concluded that the Board’s regulation was not
preempted.  Comcast challenges that decision.
¶ 21.        
On appeal, there is a “strong presumption that orders issued by the
Public Service Board are valid.”  In re E. Ga. Cogeneration Ltd. P’ship,
158 Vt. 525, 531, 614 A.2d 799, 803 (1992).  We accord “great weight to
the Board’s interpretations of its own regulations.”  Id.  The
Board’s determination of issues within its area of particular expertise is
afforded “great deference,” and “[t]he burden of proving that findings and
conclusions of the Board are clearly erroneous falls to the appealing party.” 
Id. at 532, 614 A.2d at 803.
¶ 22.        
Under this backdrop, we examine the Board’s decision.  As an
initial matter, we hold that the Board did not err in concluding that VoIP
telephony, and CDV in particular, falls within the Board’s purview for purposes
of Vermont law because Comcast is “offering telecommunications service to the
public on a common carrier basis.”  30 V.S.A. § 203(5).  Indeed,
the parties do not dispute this point.  In addition, we reject amici’s
argument that the Board erred in concluding that CDV can be separated into
intrastate and interstate components.  This is a factual question. 
The Board has substantial discretion in evidentiary matters, and we will affirm
the Board’s findings “unless clearly erroneous.”  Id. § 11(b); In
re Cent. Vt. Pub. Serv. Corp. for a 6.23% Increase in Rates, 141 Vt. 284,
288, 449 A.2d 904, 907 (1982).  The Board’s finding on this point was
amply supported by evidence in the record demonstrating that CDV calls
originate from a fixed location that can be identified by the provider. 
Thus, there are no grounds to disturb the Board’s finding.  See Minn.
Pub. Utils. Comm’n, 483 F. 3d at 579 (explaining that question of “whether
VoIP services can be separated into interstate and intrastate components is largely
fact-driven inquiry requiring a high level of technical expertise” and
therefore agency making determination is entitled to “high level of
deference”).
¶ 23.        
We also discern no error in the Board’s general approach to the
preemption question.  Comcast argues that the Board should have determined
whether CDV is an information or telecommunications service under federal law
as a threshold matter.  We see no reason why the Board was required to do
this analysis prior to determining if CDV can be separated into distinct
interstate and intrastate components since this issue can also be dispositive
of the preemption question.  See Minn. Pub. Utils. Comm’n, 483 F.3d
at 578 (holding that it was sensible for FCC to address impossibility exception
first since that issue was dispositive of whether FCC has authority to preempt
state regulation of VoIP services).
¶ 24.        
The more difficult issue is whether the Board erred in declining to
reach the question of whether VoIP is an information service or telecommunications
service under federal law.  As explained above, Comcast contends that VoIP
is indeed an information service and, as such, state regulation is expressly
preempted.  While we do not decide the issue of VoIP’s classification, we
disagree with Comcast that the federal designation of VoIP as an information
service would necessarily result in express preemption of all state
regulation.  At a basic level, if VoIP is an information service then the
result is that the regulations in Title II of the Telecom Act do not apply.
 See Federal-State Joint Bd. on Universal Serv., 13 FCC Rcd. at
11543 (noting that information services not subject to Title II
regulations).  Certainly, the FCC has a “long-standing national policy of
nonregulation of information services.”  Vonage Holdings Corp., 19
FCC Rcd. at 22416.  Nonetheless, we disagree with Comcast that designation
of CDV as an information service will result in express or field
preemption.  Information services are not wholly exempt from regulation,
and state regulations are preempted only to the extent they conflict with
federal law or policy.  
¶ 25.        
Along these lines, DPS argues that it is not necessary to reach the
federal question because a determination that CDV is an “information service” will
not automatically preempt the Board’s jurisdiction.  As described above,
we agree as to type of preemption.  Illustrative, as pointed out by DPS,
is the FCC’s decision in Petition for Declaratory Ruling that Pulver.com’s
Free World Dialup is Neither Telecommunications Nor a Telecommunications
Service, 19 FCC Rcd. 3307 (Feb. 19, 2004) [hereinafter Pulver]. 
In Pulver, a company providing a voice-to-voice internet application
called Free World Dialup (FWD) filed a petition with the FCC seeking a
declaration that it was neither a telecommunications service nor
telecommunications as defined in the Act.  Id. at 3307.  The
service provided an internet application that was not dependent on the user’s
location and could be used anywhere there was a broadband internet
connection.  Users downloaded Pulver software and contacted each other
with an assigned FWD number, not a NANP number.  The FCC determined that
the application was not telecommunications or a telecommunications service, but
an information service.  Id. at 3312-13.  In other words, the
FCC made the same determination that Comcast urges in this case.
¶ 26.        
Although the FCC designated FWD as an “information service,” it did not
conclude that any state regulation was preempted through field preemption. 
The FCC described the resulting state preemption in the following manner: “We
determine, consistent with our precedent regarding information services, that
FWD is an unregulated information service and any state regulations that seek
to treat FWD as a telecommunications service or otherwise subject it to
public-utility type regulation would almost certainly pose a conflict with our
policy of nonregulation.”  Id. at 3316.  Thus, the FCC viewed
federal preemption of that information service as a question of conflict
preemption and not express or field preemption.
¶ 27.        
The FCC has on other occasions referred to preemption of information
services as a type of conflict preemption.  In USF, the FCC
explained: 
We have not determined whether interconnected
VoIP services should be classified as telecommunications services or
information services under the Communications Act.  Nor do we see any need
to do so here.  The express obligation of telecommunications carriers
under section 254(f) to support state universal service programs does not limit
state authority to extend contribution requirements on interconnected VoIP
providers, regardless of their classification, so long as such requirements do
not conflict with federal rules and policies.
USF, 25 FCC Rcd. at 15661
n.63 (emphasis added).  Thus, we conclude that the proper lens through
which to view the preemption issue is a conflict preemption analysis.  See
Verizon New England, 173 Vt. at 338, 795 A.2d at 1205 (analyzing whether
state regulation of information service is preempted by conflict with federal
law).
¶ 28.        
Nonetheless, we disagree that the Board can avoid the federal
classification issue.  Even if, as the Board explains, not all
regulations will be preempted by CDV’s designation as an information service,
certainly some amount of preemption will occur, including any Title
II-type regulation.  See Pulver, 19 FCC Rcd. at 3318-19.  This
is an important question that cannot be avoided prior to the Board considering
a regulatory regime in Phase II of this litigation.
¶ 29.        
The reasons stated by the Board for not reaching this question lack
merit.  First, the Board’s reliance on Vonage and USF are
misplaced.  The Board notes correctly that in both cases the FCC did not
reach the question of whether VoIP is an information or telecommunications
service.  But the fact that the FCC did not reach the question in those
cases does not dictate the same outcome in this case because it was not
necessary in either situation.  In Vonage, the FCC concluded that
the impossibility exception applied.  Therefore, preemption was
established, and there was simply no need to delve further into the question of
whether state regulation was preempted through another means.  In
contrast, here Comcast’s service can be separated into a unique
intrastate component; thus, the impossibility exception does not apply and the
preemption issue remains unresolved.  
¶ 30.        
Further, in USF, there was no need for the FCC to reach the
question of whether VoIP services were telecommunications services or
information services because of the unique statutory provisions regarding
universal service fees.  Under 47 U.S.C. § 254(d), universal service
fees may be applied not just to telecommunications services, but also to “[a]ny
other provider of interstate telecommunications . . . if
the public interest so requires.”  Therefore, designation as an
information service was not dispositive.  
¶ 31.        
The Board’s desire to defer the decision to the FCC also does not provide
a reason for avoiding the issue.  To be sure, the Board should defer to
the FCC’s classification decision, if and when the FCC decides the issue. 
As the Board correctly recounted, the FCC began an initiative to address
IP-enabled services, but the FCC has yet to classify interconnected VoIP as
either an information service or telecommunications service.  See IP-Enabled
Servs., 19 FCC Rcd. 4863 (March 10, 2004).  At this time, however,
there is no decision to which the Board can defer.  In the interim, the
Board is fully capable of deciding the scope of federal law and determining
whether that law preempts state regulation, and there is no reason not to do
so.  See Verizon New England, 173 Vt. at 335-38, 795 A.2d at
1203-05 (reviewing Board’s decision that state regulation was not preempted by
federal law).  
¶ 32.        
Finally, we address Comcast’s argument that the record compels a finding
as a matter of law that CDV is an information service.  We decline to
resolve this issue.  The determination involves resolving factual
questions and applying those facts to the statutory language.  The Board
is more properly situated to addressing this question in the first instance,
and therefore we remand the matter to the Board.  
¶ 33.        
Comcast also urges us to vacate the Board’s exclusion of Comcast’s
supplemental post-hearing testimony.  The Board denied this motion on the
grounds that the information related to the federal classification question and
was not necessary to decide the case.  In light of our decision that the
Board must reach the classification question, on remand, the Board should
reconsider whether to grant Comcast’s motion to supplement the evidentiary
record.  
Reversed and remanded for
further proceedings consistent with the views expressed herein. 
 

 

 

FOR THE COURT:

 

 

 

 

 

 

 

 

 

 

 

Chief
  Justice

 

[1] 
Comcast Phone of Vermont, LLC is a Vermont-certified telecommunications carrier
that provides the services for Comcast IP, a retail VoIP service provider that
delivers to customers Comcast Digital Voice (CDV)—a VoIP service.  These
affiliated entities are referred to collectively and individually as Comcast in
this decision.

[2] 
The hearing officer and the Board also considered AT&T’s VoIP
service.  The Board found that this service was nomadic and that AT&T
had no means to verify the location of the users.  The Board determined
that since it was impossible to separate the intrastate and interstate
components of this service, the service was exempt from state regulation. 
This part of the Board’s decision was not appealed.

[3] 
The Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (codified
throughout 47 U.S.C. §§ 151-609), amended the Communications Act of 1934, 48
Stat. 1064, the original legislation establishing the FCC and setting forth the
regulatory scheme.
 

[4] 
Title II of the Telecommunications Act relates to common carrier
regulation.  This is the main source of the FCC’s authority to regulate
telecommunications services.  Under Title I of the Act, the FCC also is
authorized to “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.”  47 U.S.C. § 154(i).  While this
Title I power is not a separate authorization of power to act, it can be used
to regulate areas that are “reasonably ancillary” to its assigned
responsibilities.  United States v. Sw. Cable Co., 392 U.S. 157,
178 (1968).  Although the FCC has not determined that interconnected VoIP
is a telecommunications service, the FCC has used its Title I power to regulate
VoIP services, such as by requiring these providers to have 911-type
services.  IP-Enable Services—E911 Requirements for IP-Enabled Service
Providers, 20 FCC Rcd. 10245, 10262 (June 3, 2005). 

[5] 
The Board issued a final Phase I decision in October 2010.  Comcast filed
a motion to amend that order, which was denied by the Board in February
2011.  Comcast then attempted to appeal the Phase I order to this
Court.  We dismissed the appeal as premature, noting that there was no
final judgment and Comcast had neither requested nor received permission for an
interlocutory appeal.  The parties engaged in negotiations that did not
prove fruitful.  In November 2011, the Department requested that the Board
deem the Phase I Order a final judgment.  The Board granted the motion and
issued an order on February 2, 2012, making the Phase I order issued in October
2010 a final judgment.  This appeal followed.

[6] 
The Board also relied on another FCC decision regarding whether states could
require interconnected VoIP providers to contribute to their Universal Service
Fund (USF).  Universal Serv. Contribution Methodology, 25 FCC Rcd.
15651 (Nov. 5, 2010) (declaratory ruling) [hereinafter USF]. 
Without reaching the question of whether VoIP was an information service, the
FCC concluded that state universal service fund rules for nomadic interconnected
VoIP were not preempted as long as the requirements were not inconsistent with
federal law.  Id. at 15657-58.