1. VoIP Regulation: State and Federal Developments LAMPERT & O’CONNOR, P.C. 1776 K Street NW, Suite 700 Washington, DC 20006 (202) 887-6230 www.l-olaw.com oconnor@l-olaw.com MARK J. O’CONNOR Session EI-04 September 12, 2007 12:45 – 1:30 pm

2. MARK J. O’CONNOR  Lampert & O’Connor, P.C.  1776 K Street NW, Suite 700  Washington, DC 20006  (202) 887-6230 tel  www.l-olaw.com1 Introduction  Where is Internet telephony regulation going?  Is the cost of regulation impacting the VoIP bottom-line?  How much more regulation can the industry expect?

3. MARK J. O’CONNOR  Lampert & O’Connor, P.C.  1776 K Street NW, Suite 700  Washington, DC 20006  (202) 887-6230 tel  www.l-olaw.com2 FCC Obligations Imposed on Interconnected VoIP Providers  Title II Regulatory Obligations Imposed on Interconnected VoIP Providers  Supply 911 emergency calling capabilities to customers for services that utilize the PSTN  Contribute to the Universal Service Fund (“USF”)  Comply with the FCC’s customer proprietary network information (“CPNI”) rules  Comply with the FCC’s disability access requirements, including Telecommunications Relay Services (“TRS”) requirements and certain obligations  Contribute to the TRS fund  Comply with the Communications Assistance for Law Enforcement Act (“CALEA”)  FCC Regulatory Classification of VoIP Services  The FCC has not decided the IP-enabled services NPRM, whether IP-enabled services should be classified as information services or telecommunications services. Does this matter?

4. MARK J. O’CONNOR  Lampert & O’Connor, P.C.  1776 K Street NW, Suite 700  Washington, DC 20006  (202) 887-6230 tel  www.l-olaw.com3 States That Tax or Regulate VoIP Service 23 states currently tax or regulate VoIP service

5. MARK J. O’CONNOR  Lampert & O’Connor, P.C.  1776 K Street NW, Suite 700  Washington, DC 20006  (202) 887-6230 tel  www.l-olaw.com4 States That Impose 911 Fees on VoIP Service 13 states currently impose 911 fees on VoIP service Note: Pending legislation could impose 911 fees on VoIP service in California and Pennsylvania

6. MARK J. O’CONNOR  Lampert & O’Connor, P.C.  1776 K Street NW, Suite 700  Washington, DC 20006  (202) 887-6230 tel  www.l-olaw.com5 States That Tax VoIP Service 13 states currently tax VoIP service; 18 states will tax VoIP service by Jan. 1, 2008 Note: Pending legislation could impose VoIP taxes in four additional states Effective Jan. 1, 2008 Effective Oct. 1, 2007 Effective Jan. 1, 2008 Effective Nov. 1, 2007 Effective Jan. 1, 2008

7. MARK J. O’CONNOR  Lampert & O’Connor, P.C.  1776 K Street NW, Suite 700  Washington, DC 20006  (202) 887-6230 tel  www.l-olaw.com6 States with VoIP Consumer Protection Laws Three states currently have VoIP consumer protection laws Effective Nov. 15, 2007 Effective Oct. 1, 2007

8. MARK J. O’CONNOR  Lampert & O’Connor, P.C.  1776 K Street NW, Suite 700  Washington, DC 20006  (202) 887-6230 tel  www.l-olaw.com7 States with Pending VoIP Legislation 14 states have proposed or pending VoIP legislation Effective Jan. 1, 2008 Not yet codified Effective Oct. 1, 2007 Tax Pending; Consumer Protection Effective Nov. 15, 2007 Effective Jan. 1, 2008 Effective Oct. 1, 2007 Effective Nov. 1, 2007 Green = 911 Fee Orange = Tax Purple = Consumer Protection

9. MARK J. O’CONNOR  Lampert & O’Connor, P.C.  1776 K Street NW, Suite 700  Washington, DC 20006  (202) 887-6230 tel  www.l-olaw.com8 FCC Vonage Decision  The FCC preempted state regulation of Vonage’s VoIP service.  The FCC’s decision was upheld by United States Court of Appeals for the Eighth Circuit.

10. MARK J. O’CONNOR  Lampert & O’Connor, P.C.  1776 K Street NW, Suite 700  Washington, DC 20006  (202) 887-6230 tel  www.l-olaw.com9 FCC Vonage Decision: Key Findings  Vonage’s service is geographically undeterminable.  Service is fully portable and numbers are not tied to user’s home or location.  Vonage’s service is integrated, making the FCC’s end-to-end analysis not readily applicable.  Service does not distinguish between local and long-distance minutes of use;  Service offers end users integrated capabilities and features.

11. MARK J. O’CONNOR  Lampert & O’Connor, P.C.  1776 K Street NW, Suite 700  Washington, DC 20006  (202) 887-6230 tel  www.l-olaw.com10 FCC Vonage Decision: Key Findings (cont.)  No practical means to carve out purely intrastate service.  Would require an extensive re-design of Vonage’s service at a substantial cost; and  Such a requirement would be solely for the purpose of enabling state regulation, because Vonage does not have a service-driven reason to make such changes.  Mandating Vonage to undertake changes to separate out intrastate traffic would conflict with the FCC’s policies of promoting innovative services and broadband development and deployment.

12. MARK J. O’CONNOR  Lampert & O’Connor, P.C.  1776 K Street NW, Suite 700  Washington, DC 20006  (202) 887-6230 tel  www.l-olaw.com11 Open Issues  Does FCC Vonage Order preempt current state VoIP laws vis-à-vis “Vonage-style” VoIP providers?  Preemption of state regulation of facilities-based VoIP services  The FCC has not directly addressed preemption of facilities-based VoIP services.  The Eighth Circuit avoided the question of whether the Vonage Order preempts facilities- based VoIP services.  Possible future preemption, litigation over state regulation of facilities-based VoIP services?

13. MARK J. O’CONNOR  Lampert & O’Connor, P.C.  1776 K Street NW, Suite 700  Washington, DC 20006  (202) 887-6230 tel  www.l-olaw.com12 Open Issues (cont.)  Preemption of state regulation of facilities-based VoIP services (cont.)  Not all facilities-based VoIP providers argue that the Vonage Order should be applied to facilities- based VoIP.  In Comcast IP Phone of Missouri v. the Missouri PSC, 2007 U.S. Dist. LEXIS 3628 (D. Mo. 2007) the Court rejected Comcast’s argument that the Missouri PSC is without legal authority to classify Comcast’s VoIP service as a regulated telecommunications service before the FCC makes such a determination. Comcast did not ask the Court to compare Comcast’s VoIP service to the services at issue in the Vonage Order.

14. MARK J. O’CONNOR  Lampert & O’Connor, P.C.  1776 K Street NW, Suite 700  Washington, DC 20006  (202) 887-6230 tel  www.l-olaw.com13 Conclusion  Questions  Contact Information:  Phone: (202) 887-6230  Email: oconnor@l-olaw.comoconnor@l-olaw.com  Website: www.l-olaw.comwww.l-olaw.com