On April 28, 2023, the California Public Utilities Commission (CPUC or Commission) published its Scoping Memo and Ruling, which identified eight key issues for discussion in the ongoing VoIP regulation rulemaking proceeding that began last year. The Scoping Memo also set a deadline of June 30 for the submission of replies. One goal of the rulemaking proceeding is to resolve the regulatory ambiguities and uncertainties that arose from the Commission’s elimination of the simplified interconnected Voice over Internet Protocol (I-VoIP) registration form. The primary issue on the list for discussion is determining the appropriate regulatory framework for telephone corporations providing VoIP service in California, while ensuring compliance with relevant laws and policies.

On June 2, seven industry and advocacy groups submitted comments on the Scoping Memo. Four of these respondents opposed any extension of VoIP regulations or efforts to align VoIP regulation with that of CPCN holding, wireline telephony providers. One respondent addressed a secondary issue that is not directly relevant to VoIP regulation. Two comments advocated for requiring VoIP providers to obtain CPCNs and be regulated in a “technologically neutral” manner, similar to facilities-based telephony providers and wireless providers. These two comments were jointly filed by The Center for Accessible Technology, The Utility Reform Network, and the Communications Workers of America, District 9 (referred to as the “Joint Commenters” or “Joint Consumers”), and by the Small Business Utility Advocates (SBUA).

On June 30, the Cloud Communications Alliance (CCA) submitted Reply Comments to address the latter two responses. In its Reply, CCA argued that imposing increased regulations on VoIP service providers, particularly by applying regulations designed for different technologies and service models, would not yield the desired benefits envisioned by the two proponents of regulation. Instead, it would impede the provision of VoIP services by escalating operating costs and diminishing competition. CCA pointed out that the wireless market is highly consolidated, whereas the VoIP market is characterized by robust competition, thus demonstrating that concerns about wireless market power are not relevant in the more diversified VoIP environment.

“It is CCA’s position that the imposition of additional regulatory burdens on VoIP providers that exclusively service the business community is unnecessary and unsupported by the evidentiary record or actual marketplace experiences. CCA asserts that regulating VoIP on the same basis as wireline telephony (as some commenters suggest), is backwards thinking and unlikely to benefit the businesses which rely on VoIP services, regardless of size – small and medium (“SMB”) or enterprise. In fact, CCA believes quite the opposite is true: more regulatory burdens equal higher costs, greater barriers to market entry, and will inevitably lead to less competition and higher prices. Until actual consumer harm is demonstrated, CCA asserts there is no failure in the market necessitating the heavy hand of government regulation and, therefore, the Commission should disregard the comments of any party seeking greater regulatory impositions absent record evidence of actual marketplace harm.”

CCA further contended in its Reply Comment that augmenting regulatory obligations on VoIP service providers would not lead to the improvement in service quality sought by the Commission. CCA questioned the sufficiency of evidence provided by the proponents of regulation to substantiate their claims of widespread VoIP service issues. Additionally, CCA elucidated how VoIP service problems often stem from factors beyond the control of individual providers. While VoIP-PTSN interconnection remains unregulated, the ability of VoIP providers to deliver their services relies on local internet speeds and existing infrastructure. CCA maintained the position that no regulation imposed on VoIP services could address or mitigate these limitations imposed by third parties.

The Commission has indicated that it will issue a ruling on the VoIP regulatory proceeding by the end of 2023. Marashlian & Donahue, PLLC, The CommLaw Group, will continue to monitor the docket and any subsequent replies, providing updates to the Cloud Communications Alliance on all material developments.