Level 3 Withdraws VoIP Fees Petition

With the winds of rumor and innuendo whispering that things might not go its way, Level 3 withdrew a petition regarding Voice over IP traffic and access charges Monday night, just before a legal deadline that would have forced the FCC to make a decision.

Officially, the Broomfield, Colo.-based provider of wholesale Internet and telecommunications services said it withdrew its forbearance petition -- which had asked the FCC to clarify that the company's VoIP-originated calls should not be subject to traditional telephone access charges -- "in deference" to the FCC. But industry observers clearly saw the decision as Level 3 recognizing it was in a clear situation of "don't ask me what I think of you -- I might not give the answer that you want me to."

Given the anointment of Kevin Martin as the commission's new chairman last week, Level 3 CEO James Crowe said in a statement that "we determined it was inappropriate to ask the agency to resolve this important issue in the timeframe required by law."

The withdrawal of the petition was "not a surprise" to the telecom analysts at Legg Mason, who had reported earlier this month that the petition seemed doomed to failure, no matter who was at the FCC's helm. In a note issued Tuesday [March 22], Legg Mason's analysts said that Level 3 and its industry allies, including the VON coalition, "were concerned that a formal FCC denial could weaken their legal position in access-charge disputes with the Bells [meaning SBC, Verizon, BellSouth and Qwest] and other incumbent local exchange carriers."

The VoIP community, Legg Mason's analysts added, "generally believes it should pay reciprocal compensation or other cost-based rates, not access charges, which contain implicit subsidies" and could therefore raise the prices those carriers could charge VoIP providers for carrying their traffic.

VoIP entrepreneur Jeff Pulver posted a blog entry about the news today, in which he voiced the opinion: "I fear that withdrawal of the petition leaves us in that same ambiguous netherland. We have no rules dictating whether and, if so, what compensation might be owing to those last-mile wireline providers that 'ever-so-graciously' connect VoIP providers to their 'ever-so-precious' customers."