The U.S. Federal Communications Commission (FCC) has rejected a petition from AT&T Corp. that would have allowed the company to avoid paying its telecommunications competitors access charges on telephone calls partly carried on IP (Internet Protocol) networks.

Late Wednesday, the FCC announced its decision that traditional telephone calls that start and end on the public switched telephone network (PSTN), but are carried part of the time on AT&T's Internet backbone, are classified as telecommunications service. Those calls are subject to the access charges that are exchanged when a telephone call made through one carrier ends on another carrier's network.

AT&T had asked the FCC for clarification on whether these phone calls should be classified as information services, like most other Internet-based traffic, and free from most FCC regulation. In February, the FCC decided that another voice over IP (VOIP) service, Free World Dialup, was exempt from most telecommunications regulations. Free World Dialup, a free service, allows members to talk to each other through software installed on their computers. The service does not allow members to place voice calls to nonmembers.

But the FCC said AT&T's service fit squarely into the definitions of a telecommunications service because the phone calls start and end on the PSTN. "Today's decision is correctly decided on very narrow grounds," FCC Chairman Michael Powell said in a statement "A straightforward application of existing law places the long distance telephone service, as it is factually described by AT&T, squarely in the category of a telecommunications service."

A petition by Vonage Holdings Corp. is still pending before the FCC. In Vonage's VOIP service, a customer uses an IP-enabled phone to connect directly to the Internet, but the calls may end on the PSTN, depending on who the customer is calling.

Powell, in his statement, said he continues to believe most VOIP services should be lightly regulated. "I have stated my solid view that VOIP offers enormous potential for consumers and should be very lightly economically regulated," he said. "I remain staunchly committed to that position. VOIP is clearly not your father's telephone service. It represents a uniquely new form of communication that promises to offer dramatic advances in the consumer experience."

An AT&T official said he was disappointed with the FCC's decision Wednesday, saying the decision protects the monopolies of the incumbent local telephone carriers, often called the regional Bell operating companies.

Since AT&T filed its petition with the FCC 18 months ago, "the industry and the public were given repeated public assurances that this commission would protect new investment in technologies, and would especially resist applying legacy regulatory regimes to Internet telephony," Jim Cicconi, AT&T general counsel, said in a statement. "Despite such explicit statements, the FCC ... did a stunning about face and chose instead to protect the monopoly revenues of the Bell companies at the expense of consumers everywhere."

The Information Technology Association of America also expressed disappointment over the FCC's 5-0 vote, saying that the commission needs to reform the access-charge rules so that some VOIP vendors aren't treated differently than others.

IDG News Service

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