1. Voice over Internet Protocol and its implications in Oregon SOMMER TEMPLET STAFF ATTORNEY JUNE 10, 2013

2. Outline Oregon by the Numbers Is VoIP regulated in Oregon? What would VoIP deregulation mean in Oregon?

3. Oregon by the Numbers As of December 2011, there were 25 CLECs providing VoIP service in Oregon. In 2010, Oregon’s total number of CLEC-provided VoIP lines was 52,185. In 2011, Oregon’s total number of CLEC-provided VoIP lines was 69,909. In just one year (2010 to 2011), the number of VoIP lines in Oregon increased by 34%.

4. Is VoIP regulated in Oregon? The short answer is “we don’t know yet.” Oregon HB 2621  In Oregon’s 2007 legislative session, the Oregon PUC and Qwest supported HB 2621, a bill that would end rate regulation of all telephone rates except basic service but would provide increased consumer protection, allowing the PUC to investigate and address complaints having to do with all voice telephone services, including VoIP.  The proposed bill was in committee upon adjournment.

5. Is VoIP regulated in Oregon? Oregon HB 2405:  In Oregon’s 2009 legislative session, Verizon heavily supported HB 2405, a bill that would have preemptively deregulated VoIP in Oregon:  Intended to prevent all state regulation of VoIP technology including rates, terms and conditions, and entry into market  Also intended to prevent regulation of any service provided over Internet-enabled protocol or any “successor technology”  The proposed bill made it to a vote on the House floor with a “do pass” recommendation, but amidst opposition from CUB, the Oregon Public Utility Commission, the Attorney General and some local governments, the bill was re-referred back to committee, where it remained upon adjournment. No subsequent legislation has been introduced…yet?

6. Is VoIP regulated in Oregon? Oregon Public Utility Commission: The Oregon PUC has not made an affirmative determination about whether it will assert jurisdiction over VoIP providers within the state. Oregon Commission appears to be waiting for the outcome of FCC proceedings.

7. What would VoIP deregulation mean in Oregon? Access to Service Public Safety and Reliability Consumer Protection Funding Implications for Oregon Programs Problems in Rural Oregon

8. Concerns about unregulated VoIP Access to Service  657,905 Oregon residents still rely on landlines to connect with their neighbors, family, and emergency services.  The OPUC still regulates basic dial-tone telephone service, ensuring that the price charged is cost-based.  This service is typically chosen by senior citizens and others who don’t want or need a lot of extras (i.e. call waiting or caller ID), who don’t want a cell phone, or who simply cannot afford an option other than basic service.  Will elderly, low-income, and rural customers be able to afford basic phone service if they are being pushed to “upgrade” to new internet-based telephone services, or if their only option is to purchase phone service through unregulated VoIP?

9. Concerns about unregulated VoIP Public Safety and Reliability  Traditional phone service using copper wire can generally better withstand severe weather without interruption.  When there are outages for regulated services, or when individuals are having problems with their regulated services, Oregon’s administrative rules and statutes establish service quality standards and reporting requirements that ensure carriers will quickly get services back online after outages.  Service outages are more common in rural areas, where service may depend on only one or two providers, and networks may not be fully redundant with the extra connections that prevent network failures.  If VoIP were to be deregulated in Oregon, providers would not be subject to the same administrative rules and statutes for service quality and reporting.

10. Concerns about unregulated VoIP Consumer Protection  If VoIP is deregulated in Oregon, consumers will not be able to turn to the OPUC, as they currently can for traditional basic dial-tone service, for assistance.  There would also be no way for the state or OPUC to set standards for quality or for service in underserved regions of Oregon—meaning that customers could get stuck with exorbitantly high rates or be unable to obtain service at all.  In short, Oregon’s VoIP customers would lose an effective regulator that can enforce consumer rights.

11. Implications for Funding of Oregon’s RSPF and 911 Traditional telecommunications carriers (like ILECs and CLECs), pay into Oregon’s Residential Service Protection Fund (RSPF) and 911 program, which support access and safety for Oregonians. Currently in Oregon, it is a matter of debate whether VoIP providers are “required” to pay into the RSPF and 911 programs. Some carriers opt to pay into both the RSPF and 911 program, others pay into one but not both, and some carriers do not pay into either RSPF or 911. If VoIP were to be deregulated in the state, providers would not be required to pay into these funds.

12. Problems in Rural Oregon There are still rural Oregonians that do not have access to traditional wire line service within the state. With the FCC’s overhaul of the federal USF High- Cost program, shifting support from building out traditional landlines to building out the broadband network, some residents in rural Oregon may find that their only option for phone service is through VoIP. If VoIP is not regulated in Oregon, these customers may not have access to affordable phone service.