Brand X Decision Stokes VOIP Worries

Some VOIP providers worry that the decision might embolden cable companies to hinder or block VOIP traffic

July 1, 2005

4 Min Read
Brand X Decision Stokes VOIP Worries

Will the VOIP industry be punished following the Supreme Court's Brand X decision?

That's what some are wondering after the court's classification of cable broadband as an “information service" rather than a "telecommunications service." The worry: The classification may limit what VOIP providers can do if their service is blocked by a broadband provider (see Supremes Sing Cable's Praises).

The last time a VOIP service was blocked by a broadband provider (Madison River), the Federal Communications Commission (FCC) ruled that a "telecommunications service" must remain neutral to all consumer applications flowing over it (see Vonage Victorious in Blocking Case). But not all phone calls are considered part of a "telecommunications service" in the cable world, and they likely won't remain so in the telecom world either.

The Supreme Court in the Brand X decision reaffirmed the FCC’s earlier contention that a broadband “transport” service is indistinguishable from the services (like VOIP) that run over it, and as such must be classified as one thing -- an information service.

This kind of talk has some legal types in the VOIP community worried (see Vonage Hits ISP Resistance).

The Voice On the Net (VON) Coalition's Staci Pies, for one, thinks this may take away some of the legal leverage a "bring-your-own-access" VOIP provider like Vonage Holdings Corp. might need to effectively seek relief through the FCC.

“The negative here is that it may be easier for the owners of that [broadband] facility -- the ILEC or the cable company -- to discriminate against traffic coming from unaffiliated providers, whether that’s VOIP traffic or some other kind of data,” Pies says. “When there is a problem, there’s very little recourse now to seek an enforcement action.”

Now that many of the same companies that offer broadband service are launching their own vertically integrated VOIP services, the financial incentive to block or tamper with unaffiliated VOIP provider traffic becomes clear (see Does VOIP Business Add Up?).

Vonage remains concerned about VOIP port blocking but plays down the importance of how the courts or the FCC classify broadband service. As such, Vonage believes the Brand X decision will have “no material effect” on its business.

“A lot of people are trying to tie the neutrality issue to telecommunication services law, and we honestly view the [broadband provider] neutrality issue as a separate and distinct issue from what classification your service is,” says Vonage spokeswoman Brooke Schulz.

“The broadband consumer should have a threshold set of assurances that they can rely upon to make sure that their traffic isn’t tampered with,” Schulz says.

But no such set of assurances exists today. While the FCC acted quickly and decisively to stop Madison River from blocking Vonage traffic, the agency has not issued a ruling specifying that broadband providers remain “neutral” and do not discriminate against information services like VOIP.

VOIP service provider Nuvio Corp. last year filed an ex-parte letter with the FCC asking for exactly that sort of thing. In the letter, Nuvio says the FCC should use its Title I authority to prohibit broadband providers from hindering the traffic of unaffiliated VOIP providers.

“Vertically integrated broadband and voice providers have every incentive to discriminate against unaffiliated VOIP providers,” Nuvio CEO Jason Talley states in the letter. “By blocking or degrading access to unaffiliated VOIP services, the vertically integrated firm can create a quality difference in favor of its affiliated voice service.”

“If these vertically integrated firms are allowed to discriminate against unaffiliated VOIP providers, they will almost surely garner the majority share of the VOIP market, and in doing so drive smaller unaffiliated VOIP providers out of the market,” the letter states. Washington telecommunications attorney Dana Frix says folks may be reading too much into the FCC's intent. “These are really just technicalities,” Frix says.

Frix points out that while the Supreme Court in Brand X calls broadband an information service, it also deferred to the FCC as the best possible authority to rule on such issues.

"The questions the Commission resolved in the order under review involve a “subject matter [that] is technical, complex, and dynamic," Justice Clarence Thomas said in the Brand X decision. “The Commission is in a far better position to address these questions than we are.”

"The FCC could take a look tomorrow and say, 'That thing that we called an information service is in fact going to be called a telecommunications service or is a kangaroo service,' or whatever the hell it wants to call it,” Frix says.

For the past five years, Frix points out, the commission has been very friendly to unaffiliated players like Vonage, consistently enforcing maintenance of the free flow of Internet traffic.

“We’ve got to stay focused on the bigger picture here,” Frix says. “Believe me -- if a cable operator were to block Vonage traffic, the FCC would smack them down immediately.”

— Mark Sullivan, Reporter, Light Reading

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