VoIP regulation still a no-go, judge says

In late October, two Minnesota state agencies asked Davis to alter his decision to permanently bar Minnesota from applying traditional telephone rules to Vonage, a pioneer in technology that lets consumers bypass the traditional phone network by making voice calls over a broadband connection. Representatives of these two agencies, the state's public utilities commission and commerce department, could not be immediately reached Wednesday for comment.

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Qwest Communications International also asked Davis to change his mind. But the company has since begun taking advantage of Davis' ruling by selling voice over Internet Protocol (VoIP) services in Minnesota. A Qwest representative had no immediate comment on the possibility that the company would try to drop out of the ongoing legal wrangling.

A Vonage spokeswoman said the company is bracing for an expected appeal to the U.S. Court of Appeals.

Davis' ruling for now frees Vonage and other VoIP providers to sell phone service in Minnesota without obtaining a telephone operator's license or paying fees to support 911 emergency services. State regulators had threatened to stall VoIP's growth by forcing providers to follow the same rules those of traditional phone companies. As a result, the Minnesota suit was being closely watched by VoIP industry executives, consumers and old-line phone service providers.

Vonage sued Minnesota's Public Utilities Commission after the agency, in August, became the first in the United States to claim authority over VoIP. Since Minnesota's order, Wisconsin and California have asserted authority over VoIP providers, and other states say they are reviewing their policies.