Vonage Says It's Ready for Fight Over VoIP

The VoIP upstart will argue its case against state regulation vs. all comers, its CEO says.

By Colin C. Haley | Posted Dec 30, 2004
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Armed with a growing number of favorable decisions from regulators and judges, Voice over IP provider Vonage is prepared to battle any state over the issue of regulating IP telephony, the company's CEO said.

"If California should proceed with litigation, we would fight that," Jeffrey Citron told internetnews.com. "How many victories do we need before people know this is the way it's going to be?"

Citron was referring to the legal victory Vonage scored this week when a U.S. Court of Appeals for the Eighth Circuit upheld a lower court ruling barring Minnesota from imposing traditional phone rules on Vonage's service.

The ruling, on Tuesday, came a month after the Federal Communications Commission (FCC) exempted VoIP from traditional state public utility regulation.

Citron, CEO of the Edison, N.J.-based Vonage, said the ruling establishes a precedent that states can no more regulate VoIP any more than e-mail.

He's said he's unconcerned with word that California will appeal the FCC 's so-called Vonage order to the U.S. Court of Appeals for the Ninth Circuit.

A California Public Utilities Commission spokesman was not immediately available for comment on the appeal.

VoIP pioneer Jeff Pulver observed in a blog post that he found it curious California's December 22 appeal was filed with the Ninth Circuit.

"It is interesting to put the Ninth Circuit Appeal in perspective with the timely release of the 8th Circuit's Vonage Decision upholding the District Court ruling that prohibits the state of Minnesota from regulating Internet-based phone calling as if it were a traditional telecommunications service," he noted. "That 8th Circuit case comes closer to addressing the more controversial issue over the service category ('telcom service' or information service') of IP-PSTN connected VoIP services," added Pulver, whose Free World Dialup service is exempt from traditional telecom regulation via the FCC's Pulver Order.

It's been a banner year for Vonage outside the courtroom as well. In August, the privately held firm raised $105 million in new venture capital financing, money Citron said is still in the bank.

It's also hiring 600 customer service representatives and expects to round out its staffing. Those jobs will be in New Jersey as opposed to the Southwest or overseas where many firms locate their call centers.

In the meantime, Vonage is expanding in Canada and is poised to launch in the United Kingdom. It's eyeing Asia-Pacific and other possible markets for future growth, Citron said.

And despite competition from cable companies and telecoms including AT&T and Verizon , Citron said the company continues to grow at a steady clip.

As for any plans to go public, Citron, who previously founded the online trading site Datek, played it close to the vest.

"We don't comment on future financial moves," he said.

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