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Time Warner Nets VoIP Win at FCC

Time Warner Cable won a regulatory battle at the Federal Communications Commission Thursday over state regulators in Nebraska and South Carolina, which had been frustrating the cable company’s ability to compete in rural phone markets.

In a staff ruling endorsed by FCC chairman Kevin Martin, the agency concluded that Time Warner is allowed to use third-party telecommunications carriers as an indirect means of exchanging voice traffic with market-dominant phone incumbents.

Time Warner offers local phone service by relying on voice-over-Internet-protocol technology. Because the FCC hasn’t classified cable VoIP as a telecommunications service, Time Warner’s VoIP product hasn’t had the federal right to interconnect directly with phone incumbents.

As a result, Time Warner cut deals with telecommunications-service with interconnection rights to ensure that its customers may communicate with customers of phone incumbents.

South Carolina and Nebraska regulators, however, refused to recognize the interconnection rights of wholesales with which Time Warner signed contracts, causing the MSO to seek a ruling from the agency.

In its 16-page decision, the FCC held that states couldn’t nullify Time Warner’s reliance on wholesalers offering telecommunications services.

“By increasing competition in the telephone sector, this action encourages the deployment of broadband facilities and ensures that consumers in all areas of the country reap the benefits of competition in the form of lower prices, innovative services and more choice,” Martin said in a prepared statement.

Although Time Warner won the support of Martin -- who has been a vocal cable critic during his entire time as chairman -- the company had to wait exactly one year for the agency to produce a ruling.

AT&T supported Time Warner’s request.

“This order sends a strong statement that cable's VoIP telephone service must be permitted to deliver to consumers across the country the benefits and savings brought by facilities-based voice competition,” National Cable & Telecommunications Association president Kyle McSlarrow said in a prepared statement.

The FCC has said that VoIP service is an interstate service largely within its jurisdiction. In recent years, the agency has required interconnected VoIP providers like Time Warner to comply with 911 regulations and contribute to the universal-service fund, which keeps phone rates affordable in rural parts of the country.

But the FCC hasn’t taken the step of classifying VoIP as either an information or telecommunications service. If Time Warner’s VoIP product were a telecommunications service, it would have the legal right to interconnect directly with phone incumbents.

“We clarify that the statutory classification of a third-party provider’s VoIP service as an information service or a telecommunications service is irrelevant to the issue of whether a wholesale provider of telecommunications may seek interconnection,” the FCC ruling said.