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Court Backs Mo. Regulators

1/26/2007 7:00 PM Eastern

Missouri utility regulators will pursue action to compel Comcast to apply for an operating certificate for its telephone operation in the state, bolstered by a federal court ruling affirming that state officials have the authority to interpret federal policy on some voice-over-Internet Protocol products.

The ruling, issued Jan. 18 by Judge Nanette Laughrey of U.S. District Court for the Western District of Missouri, came in response to a suit Comcast filed last October to determine if the Missouri Public Service Commission lacked legal authority to classify Comcast's Digital Phone product as a telephone service subject to state authority.

In rejecting the injunction bid, Laughrey said Congress intended to allow states to regulate some telecommunications services.

A Federal Communications Commission rulemaking on the status of voice over Internet Protocol is pending, and the judge said previous FCC rulings on VoIP services have not declared that all such services are “information services,” leaving open the possibility that states may regulate some products.

States can interpret federal statutes unless they are specifically pre-empted from doing so, or faced with a contradictory ruling from a “relevant federal agency,” the judge concluded.

The judge also disagreed with Comcast's assertions that because digital phone service cannot be neatly defined as an interstate or intrastate service, it isn't subject to state regulation.

Comcast would have no comment, said Sena Fitzmaurice, Comcast senior director of communications and government affairs, citing the ongoing dispute with the state. The cable company does have the right to appeal.

Comcast has previously said no other state had tried to assert regulatory authority over its Internet-based cable telephony launches. In fact, in many states, utility regulators have been specifically barred by state law from regulation of VoIP services.

Kevin Thomson, general counsel for the state PSC, lauded Laughrey. “The judge applied the law correctly. Our position — that Comcast needs certification — has been borne out,” he said.

Missouri utility regulators believe cable's digital voice is different from VoIP services such as that of Vonage Holdings, because the cable-serviced calls have a fixed initiation point within the state, whereas Vonage calls can be initiated anywhere the hardware is located.

As previously reported, Time Warner Cable applied for and received operating authority to offer phone service in the state before the 2004 Vonage ruling.

The commission launched a complaint proceeding in September 2006, claiming Comcast IP Phone of Missouri and its other entities began to operate in the state without the necessary certificate of service authority. The commission also said it would seek penalties for failure to obtain the certificate, and gave Comcast 30 days to explain why the business had not applied for permission.

Comcast responded with the federal suit.

Now, the PSC has scheduled testimony from its staff on March 16, with Comcast scheduled to rebut regulators' arguments on May 4. The proceeding will extend into June.

September