Vonage Holdings won injunctive relief this week from the U.S. District Court for the District of Nebraska, which determined that the Nebraska Public Service Commission (NPSC) is preempted from requiring interconnected voice-over-Internet protocol (VoIP) providers such as Vonage to remit universal service fund (USF) fees to the state. Nebraska is one of several states that require VoIP providers to contribute to state USF funds. The case at hand concerns the decision of the NPSC to impose state USF contribution requirements on that portion of a VoIP provider’s revenue that is not subject to federal USF charges under the FCC’s VoIP “preemption” order. Although the NPSC maintained that the FCC’s ruling left open the possibility that states may regulate VoIP services under certain conditions, Vonage refused to comply with the NPSC directive and opted instead to challenge the ruling in court. Observing that “it is very likely that Vonage will succeed on the merits of its case,” District Court Judge Laurie Smith Camp granted Vonage’s motion for a preliminary injunction, as the court continues to consider Vonage’s petition for review. While admitting that the FCC’s VoIP preemption order does not specifically address state USF, the court cited FCC findings that “Vonage’s service is fully portable” and that “customers may use the service anywhere in the world where they can find a broadband connection to the Internet.” Accordingly, the court agreed with Vonage’s contention that the NPSC is preempted by the FCC from imposing a state USF funding requirement because there is no reliable way of distinguishing between interstate traffic which falls under FCC jurisdiction and intrastate calls that are under state domain.
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Court grants Vonage relief from state USF requirement
- Paul, Weiss, Rifkind, Wharton & Garrison LLP
- Patrick S. Campbell
- March 7 2008
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