Madison River to Pay FCC $15,000 for Port Blocking

In an order that may have effect far beyond the reach of the modest phone company at issue, the FCC late last week said Madison River Telephone Company LLC has agreed to pay the FCC $15,000 to avoid an investigation into the company’s blockage of Vonage VoIP phone services.

It had been widely reported in recent weeks that a broadband service provider was cutting off access to Vonage and other VoIP services by blocking certain IP ports.

The quick action by the FCC suggests the bureau will move against activities that block access to VoIP or other Internet services. In a speech to the Fall Voice on the Net (VON) conference in October 2004, FCC Chairman Michael Powell strongly asserted that consumers should have the right to download material from or subscribe to “any legal service.”

Vonage notified the commission late in 2004 that its services were being blocked by a service provider, and has met with FCC officials at least once on the matter. The company reported that certain IP ports commonly used by VoIP were being blocked. Vonage also said it had established workarounds so customers could access the service.

Following action from the FCC last month, Madison River agreed to stop blocking ports and pay the $15,000, ending the investigation.

Violating the Communications Act?

It was not clear what legal provisions Madison River might have been charged with violating because the FCC terminated its investigation with the consent decree. William Willhelm, a partner in the Washington office of the law firm Swidler Berlin who has represented Vonage, says there were several potential avenues open to the FCC. Speaking to New Telephony, Wilhelm says, “[Blocking ports] is clearly an anticompetitive practice. So it is likely to violate antitrust laws and that is a serious violation.

“[I]n many instances it would violate Title 2 of the Communications Act, which requires common carriers to offer services in a nondiscriminatory and reasonable manner. And it also likely violates Title 1 of the Communication Act, which provides that all common carriers, whether cable or DSL, or other broadband provider to engage in practices that are reasonable. It also vests the FCC with authority to actively regulate providers that interfere with the promotion of a nationwide communication network, which is exactly what port blocking prevents.“

Phone calls to the Madison River headquarters were not returned.

Madison River is a CLEC that provides voice and data services in rural areas of Alabama, Georgia, Illinois and North Carolina, as well as several metropolitan areas, including Raleigh-Durham, N.C.

A recent news article in the Triangle Business Journal, a business publication serving the Raleigh, N.C.-area where the Madison River headquarters are located, said the company is planning at $345 million initial public offering, but has been trying to cut debt that totals more than $600 million. The largest portion of that debt, the article says, is about $400 million in loans from the Rural Telephone Finance Cooperative.