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VOIP services

FCC Ruling Favors Cable VOIP

The Federal Communications Commission (FCC) has upheld Time Warner Cable Inc. (NYSE: TWC)'s right to link its VOIP customers to the public switched telephone network (PSTN) through wholesale phone lines.

The FCC approved a year-old request from Time Warner seeking interconnection and traffic exchange rights with incumbent local exchange carriers (ILECs) in rural areas for VOIP calls. The agency overruled two state public service commissions that had denied the large MSO those interconnection rights over the past couple of years.

Time Warner relies on wholesale telecom services from long-distance providers to connect its phone customers to the PSTN through its own deals with ILECs. In South Carolina and Nebraska, officials ruled that rural phone carriers didn't have to grant interconnection rights for Time Warner, because VOIP providers are not "telecommunications carriers" entitled to such privileges.

The issue has been foggy because the FCC has never classified cable-delivered VOIP as either a telecommunications service or an information service. If VOIP were considered a telecommunications service, cable operators would enjoy the legal right to interconnect directly with incumbent carriers.

Time Warner and other big MSOs, as a result, have swung deals with long-distance providers that already have, and can legally demand, interconnection agreements with local phone companies. Cable operators, for instance, have hooked up with Sprint Corp. (NYSE: S), one of the last big independent long-distance carriers.

But, in several areas around the country, rural incumbents have recoiled at the idea of providing links to cable operators seeking to take away their core phone customers. In particular, four LECs in South Carolina and one in Nebraska refused to provide interconnections, prompting Time Warner to petition the FCC.

In its 16-page order, the agency ruled that the Telecom Act "does not differentiate between retail and wholesale services when defining 'telecommunications carrier' or 'telecommunications service' " and that it doesn't matter how VOIP is treated under its regulations.

"Our decision will enhance consumers' choice for phone service by making clear that cable and other VOIP providers must be able to use local phone numbers and be allowed to put calls through to other phone networks," said FCC Commissioner Kevin Martin, in a prepared statement.

— Alan Breznick, Site Editor, Cable Digital News

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