NRRI 18-03 IP Oversight

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Oversight of retail wireline telecommunications services in the United States has been reduced over time as a result of increased competition and the transition of end-users from traditional wireline service to the more lightly regulated wireless and voice over internet protocol (VoIP) services. Although traditional regulation has been reduced, the States continue to oversee those functions delegated to them by the 1996 Telecommunications Act, including Intercarrier Agreements (ICAs) and other wholesale services, numbering, the designation of eligible telecommunications carriers (ETCs), the collection and distribution of state and federal universal service funds, Lifeline, basic local service (in some states), carrier of last resort services (in those states that still require it), Telecommunications Relay Services (TRS), etc.
As of December 2017, 35 states had passed legislation limiting direct oversight of the retail wireline telecommunications services provided by the large incumbent price cap service providers. In addition, Iowa, Pennsylvania, New Jersey, and Rhode Island had reduced oversight in either all or part of the state after a formal commission examination and review proceeding. The decision to reduce regulation in these states focuses on the availability of alternative providers and the extent to which competition can reduce or obviate the need for traditional commission oversight.

Twelve states and the District of Columbia continue to exercise traditional oversight of the services provided by the large incumbent providers, although these states, too, have reduced or eliminated many of the requirements of traditional regulation, including tariffs and price regulation.
The map below shows state oversight of wireline telecommunications as of November, 2017.

State legislatures have also actively addressed the question of the regulatory classification of IP-enabled services, including interconnected Voice over Internet Protocol (VoIP) s. Thirty-four states have passed legislation limiting Commission oversight of these services. Arizona House Bill 2106 (pending) would bring that number to 35.
Staff in ten states report that they continue to assert oversight of VoIP carriers. Five states, Alaska, Montana, New Mexico, North Carolina, and Oklahoma, report that state legislation does not limit oversight of VoIP, the Commission has chosen not to not assert jurisdiction over these carriers.
Litigation regarding the proper classification of VoIP as either a telecommunications service or an information service remains pending in Minnesota. The Vermont Public Utility Commission has completed Phase I of its investigation into the proper regulatory designation of VoIP but continues to review oversight requirements, while Oregon continues to explore the legal requirement for VoIP providers to contribute to the state universal service funds.

The map below provides a snapshot of the status of the oversight of IP-enabled services, including VoIP, across the country. Data for the map is based on responses to the 2017 survey, as well as the author's research.

The deregulatory legislation limiting oversight has generally either been based on a presumption that competition reduces the need for regulation or on the idea that oversight should be restricted simply based on the type of technology used to provide the service. For example, Mississippi House Bill 825 (2012) specifies that
Competition or other market forces adequately protect the public interest. Therefore . . . the commission no longer has jurisdiction over the services, other than the provision of intrastate switched access service, provided by such public utilities.
While this legislation limits retail oversight, it maintains the state commission’s jurisdiction over wholesale services and those other services delegated to the States by the Act.
While the sheer volume of deregulatory legislation appears to have significantly reduced or eliminated oversight of both wireline and IP-enabled services, including VoIP, this ten thousand foot view of the regulatory landscape does not fully address the tools that state commissions continue to use to ensure service quality and reliability and to address customer concerns, regardless of the type of service they have chosen. Despite legislation diminishing their direct regulatory jurisdiction, many State commissions continue to oversee such key areas as carrier certification, ETC designation, emergency services, network quality, carrier of last resort obligations (COLR), and consumer complaints for both wireline and VoIP services.
NRRI surveyed the 51 State Public Utility Commissions to identify the areas in which the State Commissions report that they continue to oversee at least some aspect of telecommunications services, even after deregulation. Forty-seven states responded to the survey. The results belie the idea that deregulation means no regulation. Indeed, no state, even those with the most expansive deregulation bills, responded that it had completely lost all jurisdiction over wireline services, despite the broad deregulatory mandate. A significant number of states also asserted that they retain at least some jurisdiction over VoIP carriers, although in more limited areas than wireline.
The results of the survey show that the majority of the states continue to accept complaints about service, billing, and other issues from their constituents, regardless of the technology used to offer the service. They refer these complaints to the provider, track the status, and reserve the right to initiate formal proceedings where necessary and appropriate. The states continue to certificate or register carriers to operate in their jurisdictions, both to ensure that these carriers contribute to Federal and State universal service funds and to identify points of contact for problem resolution. They certify Eligible Telecommunications Carriers (ETCs) and Lifeline providers. They collect and act on outage data and ensure the availability of emergency service.

Reductions in commission oversight of telecommunications through legislation and/or commission action have posed new challenges for state public utility commissions as they seek ways to ensure that communications providers' private goals align with the public interest. This paper explores the ways in which state commissions continue to ensure that telecommunications providers support the public good, even where legislation or the courts have diminished their direct role in this process.
Understanding the limits of the states' jurisdiction over wired and VoIP services will help state commissions and legislators determine whether there are specific areas where competition and customer awareness may not be sufficient to ensure that service levels continue to be acceptable regardless of the technology that provides that service. These areas may require additional commission oversight or support to ensure that consumers continue to enjoy the benefits of their growing communications options. To that end, this paper suggests three areas on which the states should focus to ensure that telecommunications services of all types remain available, reliable, and affordable.

1. Collect and evaluate customer complaint data to identify and resolve problem areas.
2. Broaden outage reporting in order to evaluate and improve service quality and reliability
3. Continue to work with customers and providers to identify and meet their needs.

Recent disasters have again proven the importance of reliable telecommunications services that are widely available. Ensuring this reliability and supporting consumers and businesses remains one of the key functions of the State Public Utility Commissions, despite limitations on oversight and regulation. State Commissions may use the information provided in this paper to help their state legislatures understand this important goal and craft legislation to encourage it.