STATEMENT OF THE
NATIONAL ASSOCIATION OF COUNTIES,
NATIONAL ASSOCIATION OF TELECOMMUNICATIONS OFFICERS AND ADVISORS
AND TELECOMMUNITY

BEFORE THE COMMITTEE ON COMMERCE, SCIENCE AND TRANSPORTATION
UNITED STATES SENATE
FEBRUARY 24, 2004
WASHINGTON, D.C.

Mr. Chairman, Ranking Member Hollings and Members of the Committee:

I. INTRODUCTION

The National Association of Counties (NACo), the National Association of Telecommunications Officers and Advisors (NATOA) and TeleCommUnity (collectively "Local Government"), are concerned that the actions of the Federal Communications Commission (FCC or Commission) in a series of Voice over Internet Protocol (VoIP) dockets could frustrate congressionally mandated policies.[1] Local Government, therefore, is very grateful to the Committee for holding this hearing at which Local Government hopes to deliver three messages.

II. EXECUTIVE SUMMARY

• Local Government is enthusiastic about the benefits that VoIP may offer local government and our constituents. Local Government strongly supports competition, the rollout of new services, and the economic growth that accompanies new technological developments.
  
• Policy developments of this magnitude require careful attention to all of the potential ramifications of such developments and attendant regulatory decisions. Local Government has shared these concern with the FCC and is grateful for the opportunity to share this concern with the Congress. Worse, Local Government feels that the regulatory structure envisioned by the FCC is based upon the Commission’s flawed analysis in its Cable Modem order. [2]
  
• Congress, not the FCC, should be making decisions on VoIP as the conclusions on VoIP will result in implications that go far beyond telecommunications policy.

III. LOCAL GOVERNMENTS’ CONCERNS

Local Government is concerned that should the FCC classify VoIP as an interstate information service, social goals and national security safeguards established by the Congress will be undercut. These social concerns include but are by no means limited to:

• The national commitment of ensuring that there is universal access to affordable telecommunications services.
  
• Frustrating the investment by local government public safety agencies to locate those in need by means E-911 services;
  
• Compliance with the Americans with Disabilities Act (Section 255); and
  
• The ability of Federal, state and local law enforcement agencies to protect our national interests by having access to communications networks as established by the Communications Assistance for Law Enforcement Act of 1994. Local government is not alone invoicing these concerns. The responsible agencies have shared their concerns as evidenced in letters from the Department of Justice, and the Federal Bureau of Investigations to FCC.
  

IV. MISSING ISSUES

Local Government also believes that there are a number of issues that have not found their way into the debate as to what the statutory and regulatory paradigm for VoIP should be. Local Governments believes that a fair and effective policy regarding VoIP must consider the following issues:

• Fair Treatment of Consumers -- Local governments are often the consumer regulators of last resort -- when the citizenry requires police power protection not asserted by federal or state authorities, local governments must act. The VoIP proceeding must address and preserve local government authority to provide such protections including guaranteed access to fair services at fair prices.
  
• Fair Treatment as a Consumer -- Local governments are among the largest consumers of electronic communications,both wired and wireless. As consumers, local governments must be guaranteed access to fair services at fair prices.
  
• Fair Compensation -- Local governments provide essential resources to the deployment of VoIP. Local governments should receive adequate compensation for the resources they commit to the provision of VoIP. For example, local governments should receive adequate rent for use of public land or other public resources. And VoIP providers should pay a fair share of taxes in a broad-based taxation system.
  
• Fair Treatment as a Provider-- Many local governments offer traditional Title II [some cities are providing phone and data services for themselves while other localities are providing competitive choice] and Title VI [a growing number of communities are offering a competitive cable service] within their communities. Other local governments have developed significant network capacities on institutional networks or wired infrastructures that could support VoIP services. As the FCC addresses VoIP, it must not take any actions that would limit the ability of local governments to provide such services.
  
• Rights versus Responsibilities of Carriers -- The focus of recent FCC proceedings and legislative debates has been on the regulatory burden borne by Title II and Title VI service providers. Just as important, but often ignored, are the numerous rights and entitlements provided to such providers due to their status as Title II or Title VI providers. If Title II and Title VI entities choose to abandon those offerings, or shift their focus toward providing VoIP services, and away from traditional Title II or Title VI services,they will endanger their special status. Local Government believes that the VoIP proceeding should address this issue to consider the full implications of VoIP.

In support of this concern,Local Government requested that the FCC first complete its work on the overall treatment of VoIP before considering individual petitions. The FCC rejected this request and on February 18, 2004 issued its order in the Pulver "Free World Dial Up" petition.

V. CONGRESS MUST LEAD

Technological changes may have outpaced the statutory and regulatory environment established by the Communications Act. As demonstrated above, VoIP policy is a complex problem, with many interrelated parts. Local Government is therefore very concerned that the piecemeal consideration of VoIP in separate proceedings at the FCC will limit the nation's ability to develop a rational holistic approach to the problems posed by VoIP.

Local Government also believes that the FCC lacks the authority or ability under current law to preserve universal service, to enact consumer safeguards and to address other specific problems that the FCC and parties will identify in the VoIP NPRM docket.

Local Government, therefore,urges the Congress to direct that the FCC refrain from any classification of VoIP as an interstate information service until the Congress may ensure that such a classification does not undermine other national policy goals.

We want to thank the committee for the opportunity to share our views and concerns.

1. In re AT&T Petition for Declaratory Ruling That AT&T’s Phone-to-Phone IP Telephony Services Are Exempt From Access Charges, WC Docket No. 02-361 (filed October 18, 2002); In re Petition for Declaratory Ruling That Pulver.coms Free World Dialup Is Neither Telecommunications Nor a Telecommunications Service, WC Docket No. 03-45 (filed February 5, 2003); In the Matter of Vonage Holdings Corporation Petition for Declaratory Ruling Concerning an Order of the Minnesota Public Utilities Commission, WC Docket No. 03-211 (filed September 22, 2003); In re BellSouth’s Request for Declaratory Ruling that State Commissions May Not Regulate Broadband Internet Access Services by Requiring BellSouth to Provide Such Services to CLEC Voice Customers, WC Docket No. 03-251 (filed December 9, 2003); In re Petition of Level 3 for Forbearance from Assessment of Access Charges on Voice-Embedded IP Communications, WC Docket No. 03-266 (filed December 23, 2003) (collectively, “Pending Proceedings”).
   
2. Local government is not the only party that feels that the Commission’s logic in the Cable Modem matter was erroneous as the 9th Circuit Court of Appeals overturned the decision, yet the Commission continued moving forward in this matter undeterred by the clear statement of the 9th Circuit that cable modem services are telecommunications services subject tot Title II oversight
   
3. Local government would call to your attention the Comments of the Department of Justice and FBI in the various VoIP dockets as well as in the Cable Modem matter currently before the 9th Circuit Court of Appeals.
   
4. While we have not seen the VoIP NPRM, in their comments outlining its contents, the Commissioners did not reference a discussion on any of these items.
   
5. In support of this concern, Local Government requested that the Commission first complete its work on the overall treatment of VoIP before considering individual petitions. The Federal Communications Commission rejected this request and on February 18, 2004 issued its order in the Pulver “Free World Dial Up” petition.