September 21, 2018

A firm team won a victory in the U.S. Court of Appeals for the 8th Circuit on behalf of Charter Communications.  At issue was Charter’s argument that its Voice over Internet Protocol (VoIP) service, which it offers under the “Spectrum Voice” brand, should be classified as an “information service” exempt from state public utility regulation.  Charter has been embroiled in a long-running dispute with the Minnesota Public Utilities Commission, which has asserted jurisdiction to regulate Charter’s VoIP offerings and issued an order demanding that Charter offer those services subject to the state’s various regulations governing legacy telephone services.  Charter, represented by Jenner & Block, filed suit in federal district court in Minnesota, arguing that its VoIP service is an “information service” and therefore exempt from state regulation under federal law, specifically the Telecommunications Act of 1996.

The lower court agreed with Charter’s position, but Minnesota appealed, asserting that Charter’s Spectrum Voice service is a “telecommunications service” as defined by the Act and, therefore, subject to state regulation.

Earlier this month, the appellate panel upheld the district court ruling.  Writing for the majority, Judge Ralph R. Erickson held that VoIP service is an “information service” under the Act.  “As the district court put it, ‘the touchstone of the information services inquiry is whether Spectrum Voice acts on the consumer’s information—here a phone call -- in such a way as to ‘transform’ that information,” the judge wrote.  Indeed, he added, information enters Charter’s network in one format and leaves in another.

“Spectrum Voice’s service is an information service because it ‘mak[es] available information via telecommunications’ by providing the capability to transform that information through net protocol conversion,” according to the opinion.

In a statement, FCC Chairman Ajit Pai praised the ruling:  “A patchwork quilt of 50 state laws harms investment and innovation in advanced communications services.  That’s why federal law for decades has recognized that states may not regulate information services.”

Partner Ian Heath Gershengorn, chair of the firm’s Appellate and Supreme Court Practice, argued the case in the Eighth Circuit, and the team representing Charter included Partners David A. Handzo, Luke C. Platzer and Adam G. Unikowsky.