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Appeals Court Rules VoIP Can't Be Regulated

The efforts of VoIP providers to keep individual states from regulating their services received another boost Tuesday, when an appeals court agreed with a lower court decision that ruled VoIP is a data service and, as such, can't be regulated by states.

The two-page decision was issued by the U.S. Court of Appeals for the Eighth Circuit in St. Louis. The original decision in support of VoIP provider Vonage was issued in October of 2003 by Federal District Court Judge Michael J. Davis, after the Minnesota Public Utilities Commission (PUC) told Vonage it would have to pony up fees to support the state's 911 services. The PUC also told Vonage it would be required to obtain telephony company business licenses to do business as a telephone operator in Minnesota.

In the appeals case, the PUC petitioned the court to determine whether a recent FCC ruling pre-empted the Minnesota court decision. In Tuesday's decision, the Appeals Court said the FCC supports the lower court decision.

Because Internet telephoning is not considered to be a telephone service, according to the court decisions, states and municipalities will likely be blocked from regulating--and taxing--the service. However, some states may seek to appeal the decision to the U.S. Supreme Court.

In November, the FCC approved a petition from Vonage to approve the Minnesota court's action.