California regulators ponder VoIP

California public utility regulators will meet Thursday in a much-anticipated showdown with Internet phone providers.

At the meeting, the five-member California Public Utilities Commission (CPUC) for the first time will hear details from a report that commission staff prepared on the issue, which is expected to heavily sway future decisions.

The commission will also come face-to-face with a lawyer for voice over Internet Protocol (VoIP) provider Vonage, one of six VoIP providers the state has asked to seek a traditional telephone license. A Vonage spokesman said one of its attorneys will read a prepared statement to the commission.

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"We welcome them to an open dialogue," a Vonage spokesman said Wednesday.

California is one of a dozen states that favor imposing traditional phone rules on VoIP providers. Some states, such as California, have already begun regulating VoIP providers, while others, including New York, have just begun exploring the issue. In a move largely backed by traditional phone companies, states want to regulate VoIP providers because it generates much-needed fees to fund necessary phone services like 911. But VoIP providers say their rules apply only to calls that travel over a traditional phone network. VoIP calls use the Internet instead.

At stake is a key distinction between voice services, which have in the past used the Public Switched Telephone Network, and data services such as the Internet. Unlike phone networks, data networks have been left largely unregulated and untaxed to help spur growth. This has raised concerns for groups such as the Multistate Tax Commission that Internet-style services could jeopardize billions of dollars in state funding for programs including universal telephone service, 911 emergency services and the E-Rate school technology fund.