Comcast Files Suit Over Missouri’s VoIP Rules

By Aaron Bailey

A disagreement over whether or not the Missouri Public Service Commission has the authority to regulate a national company’s Internet phone service has spilled over to federal court.

Comcast Corp., a national cable and Internet service provider based in Philadelphia, filed a complaint in federal court in Kansas City against an order from the PSC that Comcast’s Voice over Internet Protocol, or VoIP, service falls under the umbrella of a “fixed telecommunication service” and is subject to an array of state regulations.

Comcast believes the service should be classified as an “informational service,” exempt from state regulatory guidelines.

Comcast Digital Voice allows customers to plug a phone line into the coaxial cable that provides cable television for a residence. Comcast provides the service to several thousand residents and companies in Missouri.

Calls to the attorney who filed the complaint on behalf of Comcast, Mark Johnson of Sonnenschein, Nath & Rosenthal, were not immediately returned Thursday.

William Haas, the PSC’s deputy general counsel, and Kevin Kelly, a PSC spokesman, said they haven’t had enough time to review the complaint to comment. But Haas said that other major companies that offer VoIP service in Missouri — including Time Warner Cable, Mediacom Cable and Charter Communications — have requested and been granted certificates to offer the service. By doing so, the companies are subject to certain regulatory guidelines.

The issue began when PSC staff filed a complaint to the commission in late 2006. They alleged that Comcast’s service violated state law by providing telecommunications services without receiving a certificate of service authority from the commission, according to PSC documents relating to Comcast’s alleged violation.

Comcast’s VoIP service should be classified as a telecommunications service, the PSC staff argued, because the customer is making the call from a fixed location that can be tracked.

Comcast believes their VoIP service isn’t a telecommunication service. Comcast argued that the Federal Communications Act pre- empted state regulatory entities from imposing guidelines on an interstate informational service and asked the PSC to throw out the complaint.

After a flurry of briefs and hearings, the PSC ruled in November 2007 that Comcast’s Digital Voice was subject to the regulations and that the company needed to apply for a certificate of service. The deadline to comply with the order elapsed last month, meaning Comcast could face fines for continuing to offer the service.

In the complaint filed Wednesday, Comcast claims that meeting the PSC’s guidelines for telecommunications services would place financial hardship on the company. For an example, Comcast claims it would cost more than $10 million to upgrade its billing and collections systems to comply with guidelines relating to equal access to its cable lines and Missouri’s billing requirements.

Anita Lamont, a representative for the St. Louis-based Charter Communications that also offers VoIP service, said the regulations have had little effect on Charter since the company built its infrastructure to comply with any state regulations regarding telecommunications service.

Comcast requested in its filings with the federal court a preliminary injunction from the order, injunctive relief for attorney fees and any additional amount deemed appropriate by the court, and a declaratory judgment that the PSC has no jurisdiction issuing the order.

Comcast is subject to fines of not more than $5,000 per day for each time a customer uses the service. But Comcast has filed an application with the PSC to provide the service, requesting a waiver of “numerous regulations with which it either cannot comply or for which compliance would be burdensome,” the complaint states.

Comcast issued a statement Thursday regarding the complaint, pointing to a perceived stifling of the growth of technology by the PSC’s actions.

“The regulations Missouri seeks to impose on Comcast Digital Voice would lead to unnecessary costs and burdens on competitors while potentially slowing the growth of broadband deployment and voice competition which is bringing consumers better prices, innovative services and more choices,” the statement reads.

Connie Murray, a commissioner with the PSC, wrote in her concurring opinion that she “reluctantly” cast her vote that Comcast’s Digital Voice was subject to telecommunications regulations.

“It is my hope that the Missouri legislature will act quickly to change the outdated telecommunications statutes and clarify that VoIP service providers are not subject to state telecommunications requirements …” Murray wrote. “The public is not well served by this outdated regulation.”

Originally published by Aaron Bailey.

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