Carlisle Targets VoIP Jurisdiction, E-Rate Abuses

Investment in IP-enabled services has been held up by questions of regulatory jurisdiction, Carlisle said. “We could either say it’s purely federal or purely state,” but the bottom line is ground rules must be set, he said. Carlisle said there are 2 ways the agency could go procedurally: It could propose a first report and order as an outgrowth of the IP Enabled proceeding dealing with jurisdiction for such services. “We have the record in the NPRM [Notice of Proposed Rulemaking], so there is nothing technically stopping us from doing that,” he said. “The other way of doing it is to address one or more of the petitions we've got in front of us” -- one submitted by SBC, and the other by Vonage that deal with jurisdiction. No decision has been made, he said: “It all depends on the comfort level of the chairman’s office.”

The IP-Enabled proceeding was one of 5 issues Carlisle listed as the bureau’s priorities this year after consulting with commissioners and bureau staff. Others: (1) Universal service and especially the E-rate program, hit by scandal involving fraud by contractors and recipients. The bureau is working with the agency’s Inspector Gen. to make improvements in auditing E-rate grants, he said. “That will take a lot of our time.” (2) Permanent UNE rules, required because of the court remand of last year’s Triennial Review Order. (3) Intercarrier compensation. “I think we absolutely need to make this a priority and move forward with it so you somehow can rationalize the system,” Carlisle said. “It is an industry priority to get some clarity as to how intercarrier compensation works.” (4) Building up the bureau staff, which Carlisle said has dropped because of advancement opportunities in other bureaus and moves to industry jobs as the economy has improved.

Other universal service issues -- particularly the development of a new method of collecting contributions -- are obviously important, he said: “There are much broader issues in universal service than E-rate but I think it is important to have as one of our primary focuses E-rate for the next few months.” Congress is interested in the issue “for good reason,” Carlisle said: “There are people who have done wrong by the program and taken money that they shouldn’t have taken. It’s our responsibility to work with USAC [Universal Service Administrative Co.] and the inspector general to try to get that money back and also put processes in place to make sure the same abuses don’t occur… I'm highlighting it so it gets the appropriate amount of attention and is taken seriously by the bureau as a whole. It’s sad really… It’s kind of like ripping off school lunch money… The E-rate program is something that directly affects kids.”

Carlisle -- who will remain acting bureau chief for a few weeks during the transition from former chief William Maher -- has starting making some changes, beginning with Michelle Carey, who moves from chief of the bureau’s Competition Policy Div. to deputy chief of the bureau, and Tom Navin, who moves from deputy chief of the Policy Div. to acting chief.

He said although he expected the Bureau to move forward on the jurisdictional issue in its IP-enabled services proceeding this year, he wasn’t sure the Commission would resolve the issue that quickly. At least, he said “we'll send something up to the Commission; whether they'll do it by the end of the year, it’s up to them.” Carlisle said addressing the jurisdiction would set the “ground rules” for VoIP technology: “Even though it is the hardest question, I think it’s the most fundamental and until we get past it, first of all it’s going to be hard for us to do anything else, and second, it’s going to be hard for the industry to really receive the investment this technology needs.”

Carlisle said he believed bringing regulatory clarity to the market would boost investment in IP-enabled services. “You can argue that big telephone… and cable companies are investing in this technology -- and that’s fantastic,” he said: “But I think there is… a lot of money sitting on the sidelines that could be coming [from] even more competitors and more innovators in this space. And the only reason it’s not coming in is because of the issues of jurisdiction are unsettled.”

Carlisle expressed concern that the absence of “ground rules” on the jurisdictional nature of VoIP services was leaving it to the courts to determine. For example, the U.S. Dist. Court, N.Y., issued a preliminary injunction against the N.Y. PSC in one Vonage case addressing jurisdiction, and the U.S. Dist. Court, St. Paul, issued a permanent injunction against Minn. PUC in another one. A decision in the appeal before the U.S. Appeals Court, St. Louis, could set a precedent for the FCC in acting on the issue, and is expected this year. Carlisle said by not acting, “we are sort of opening it up to being determined by all sorts of district courts. I don’t think we want to be in a long run in that position. So, it’s the most important [issue], but it’s also the one that demands attention first.”

He said unlike petitions on the jurisdictional issue, VoIP petitions by Level 3 and Inflexion addressing access charges “really require making much more specific decisions.” The Level 3 petition has a statutory deadline in Dec., which can be extended by the FCC till March. Carlisle said the agency would act on it “at such time as the statutory deadline comes up, most likely.” The Inflexion petition doesn’t have a statutory deadline. Carlisle said decisions on “the very broad questions, such as classification and regulatory applications” addressed in the NPRM probably wouldn’t be made until first quarter or early 2nd quarter of 2005.

Asked about the SBC numbering petition, Carlisle said the question was “whether we believe that the current protections against numbering exhaust, if applied to [VoIP providers], are sufficient to prevent some sort of problem down the road.” SBC asked the FCC to let it get numbering resources directly from the N. American Numbering Plan Administration or the Pooling Administration to provide IP- enabled services, including VoIP, pending Commission action in the IP-Enabled Services rulemaking. But some states asked the agency to require that VoIP providers, like phone companies, go through certification in to obtain numbers. Carlisle said he believed there should be “minimal regulatory requirements applied to VoIP providers and specifically economic common carrier regulations that require tariffing and certification.” He said the SBC petition was “an example of a situation where they need a resource, they may be willing to work within the constraints imposed on this resource. I would prefer not to see… a whole bunch of other regulatory requirements [imposed] just for the purpose of them getting the resource when the certification requirement doesn’t necessarily have any relationship to what they are asking for… It’s really a question of whether we believe [VoIP providers] are going to accelerate exhaust [numbering resources] or not, and whether there are some ways that we can ensure that states are at least somewhat comfortable with this concept.”

Asked about the Global IP Alliance being set up by Pulver.com (CD Aug 20 p2), Carlisle said: “I think it has a tremendous amount of potential value… I think it should be taken seriously. I think as they get more providers around the world, it will be taken seriously over time.” He said while there were a lot of VoIP coalitions globally that were “very specific to countries… there is very little that can actually be called a global interest group of companies bending together to say, ‘This is a global technology, and we need some sort of global standards to make sure that it works and that governments feel comfortable enough to allow it operate within their countries.'”