Level 3 withdraws VOIP petition before FCC

Level 3 Communications on Monday withdrew a petition before the U.S. Federal Communications Commission (FCC) that sought to reduce access charges paid to telecommunications carriers when calls originated over VOIP (voice over Internet Protocol) end on the traditional telephone network.

Level 3 said in a statement it had withdrawn its request because of a leadership change at the FCC. On March 16, U.S. President George Bush named Commissioner Kevin Martin as FCC chairman, replacing Michael Powell, who left the FCC this month.

The FCC was required to rule on the Level 3 petition by Tuesday if commissioners wanted to deny it. If the FCC failed to act, the Level 3 petition would have been automatically granted.

"Given the appointment of new leadership only three business days before the statutory deadline for ruling on the petition, we determined it was inappropriate to ask the agency to resolve this important issue in the timeframe required by law," James Crowe, Level 3's chief executive officer, said in a statement.

Some supporters of the Level 3 petition had expressed concern that the FCC would reject it. Level 3 may refile the petition at a later date, Crowe said in his statement.

The Level 3 petition had asked the FCC to exempt VOIP calls from fees, called access charges, that occur when a call originating from a VOIP provider terminates on the public switched telephone network. Many traditional telecom carriers depend on access charges, typically added to interstate calls, for a large portion of their income.

Instead, Level 3, in an FCC petition filed in December 2003, asked the FCC to allow VOIP providers to instead pay reciprocal compensation rates, typically exchanged between telecom carriers for local and intrastate calls. Level 3 argued that these reciprocal rates, which are lower than access charges, are closer to the actual costs incurred by telecom carriers.

Supporters of Level 3's petition argued that an FCC denial would hinder the growth of VOIP and could lead to higher VOIP prices. "If the FCC denies Level 3's request, VOIP providers, and worse, their customers, will be forced by incumbent carriers to pay significantly higher rates," Jeff Pulver, chief executive officer of VOIP provider Pulver.com Inc., wrote in his Web log earlier this month.

But incumbent telecom carriers, such as Verizon Communications Inc., opposed the Level 3 petition. Verizon had argued that Level 3's petition would create new regulations for VOIP and give VOIP providers preferential treatment over other telecom carriers. Verizon, in a statement Tuesday, cheered Level 3's decision to withdraw the petition, saying an approval of the petition would have confused VOIP regulations only months after the FCC in November ruled that some VOIP service was not subject to state regulations.

The United States Telecom Association (USTA), representing hundreds of rural telecom carriers, argued that the petition would hurt many rural carriers.

USTA applauded the Level 3 withdrawal in a statement Tuesday. "Level 3's retreat ensures that consumers benefit from real competition in today’s vibrant communications market," Walter McCormick Jr., USTA's president and chief executive officer, said in the statement. "We applaud the FCC for recognizing that it should not take a piecemeal approach to intercarrier compensation reform and we look forward to working with the commission on a comprehensive approach to these issues."