A federal Court of Appeals in Minnesota heard arguments Wednesday in a regulatory struggle affecting scores of U.S. Internet phone service providers, but the panel isn't expected to rule for at least 90 days. The 8th Circuit Court of Appeals in St. Paul, Minn. is considering whether state utility regulators have jurisdiction over telephone calls that use the Internet rather than traditional local phone lines. States argue the services are identical, so many regulations and taxes do apply. But Net phone providersays there's a key difference: the calls use the Internet, which courts and lawmakers say is off-limits in general to regulation of any kind.
Minnesota utility regulators are appealing a last year that helped launch a wave of cheaper Internet phone services. The Federal Communications Commission has already said phone calls traveling solely over the Internet are off-limits to regulation, and telephone rules do apply to long distance calls that begin and end on local phone lines and use the Internet in between.