Comcast Letter Hints at the Potential Common Carrier Regulation of VoIP Service

While the FCC has classified cable modem and DSL Internet access an information services, the Commission has not specified whether VoIP similarly qualifies. On one hand software applications, riding along a cable modem or DSL link, create VoIPs services. But on the other hand high level FCC managers recently noted that when an Internet Service Provider markets VoIP as a facilities-based service separate from Internet access the service constitutes a common carrier, regulated telecommunications service. [1]

The FCC managers made this nonbinding and nonenforceable conclusion in a letter to Comcast Corporation primarily inquiring about potential discriminatory treatment of competitors’ VoIP services vis a vis Comcast’s offering and the apparent nonpayment of interconnection fees to other telecommunications service providers. Having noted violations of its 2005 Internet Policy Statement, [2] the Commission had required Comcast to file a document showing how the company would comply with the duty to operate in a nondiscriminatory manner. [3] In its response Comcast reported that a subscriber would experience a noticeable deterioration in service, including VoIP service not provided by Comcast whenever a subscriber uses 70% of his or her “provisioned bandwidth” for 15 minutes or more when such use causes congestion in the vicinity, labeled as the Cable Modem Termination System Node by Comcast, for more than 15 minutes. Because Comcast separately provisions its VoIP service, a congestion causing subscriber of Comcast’s cable modem service, who also subscribers to Comcast’s VoIP service, would not experience any degradation of the Comcast VoIP service.

The letter to Comcast seeks an explanation for the disparate treatment of VoIP services, particularly in light of Comcast’s assertion that its VoIP service is “facilities-based.” The letter appears to infer that facilities-based means that Comcast physically partitions its data bandwidth, thereby creating for its VoIP service stand alone links. The letter infers that when Comcast by provisions its VoIP service, separate and apart from broadband access, Comcast may be offering a regulated, retail telecommunications service and a largely unregulated information service. [4] In The Letter requests that Comcast explain why it should be regulated as a telephone company and bear conventional common carrier responsibilities including the duty to compensate other carriers for terminating Comcast generated VoIP traffic.

Most analysts have concentrated on the potential that Comcast may not have fully remedied all instances of Internet access discrimination and whether the company may use network management features to create incentives for subscribers to use Comcast VoIP services over competitors. But perhaps more important is the interpretation whether and how a largely unregulated information service provider triggers conventional common carrier telecommunications service regulation when offering a VoIP service.

[1] Letter from Dana R. Shafer, Chief Wireline Competition Bureau and Matthew Berry, General Counsel to Katheryn A. Zachem, Vice President Regulatory Affairs, Comcast Corp. (Jan. 18, 2009); available at: http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-288047A1.pdf [hereinafter cited as Comcast VoIP Letter].

[2] Appropriate Framework for Broadband Access to the Internet over Wireline Facilities, CC Docket No. 02-33, Policy Statement, 20 FCC Rcd. 14986 (2005).

[3] See Formal Complaint of Free Press and Public Knowledge Against Comcast Corporation for Secretly Degrading Peer-to-Peer Applications, File No. EB-08-IH-1518, Memorandum Opinion and Order, FCC 08-183 (rel. Aug. 20, 2008); available at: http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-08-183A1.doc.

[4] “Given that Comcast apparently is maintaining that its VoIP service is a ‘separate facilities-based’ telephone service that is distinct from its broadband service and differs from the service offered by [competing] ‘VoIP providers that reply on delivering calls over the public Internet’ . . . it would appear that Comcast’s VoIP service is a telecommunications service subject to regulation under Title II of the Communications Act of 1934, as amended.” Comcast VoIP Letter at 2.