At the eleventh hour - plus quite a lot of additional minutes - Level 3 Communications withdrew its December 2003 forbearance petition seeking regulatory clarification on the US status of voice over IP (VoIP) services - and in particular that access charges did not apply to certain classes of this mode of conveyance. The Federal Communications Commission (FCC) had until Tuesday to vote on the issue, a decision that many commentators saw as pivotal to the large scale commercial success of VoIP. In the event Level 3 consigned its request to the bin on Monday night.

There are at least three interpretations of Level 3's rationale for quitting at this late, late juncture.

The official Level 3 rationale is that the new FCC management (click here) might not be up to speed with all the intricacies of the VoIP deal. A statement on the petition withdrawal attributed to Level 3 ceo James Q. Crowe included the following: "Level 3 has withdrawn the petition in deference to the Commission. 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".

It will be interesting to see if Level 3 takes up the cudgels again when it considers that the FCC's management is settled in. This possibility is certainly not discounted. The Level 3 statement continued: "However, there remains a pressing need in the industry for clarity in this area, and Level 3 may elect to re-file the petition or take other appropriate regulatory actions in the future".

A second reason for Level 3's reticence to proceed with its petition may be that the company anticipated that it would get a rebuff now, but that sometime down the line there would compensatory rule changes exempting VoIP from access charges. The other possibility is that the company expected that the forbearance request would be flat-out denied.

Not everyone sees the withdrawal of the Level 3 petition as a negative. The United States Telecom Association (USTA) said that 'facing a unanimous defeat' at the FCC, 'Level 3 withdrew a petition that would have allowed the company to avoid paying what it legally owes for use of local communications networks. If allowed, the petition would have had a crippling effect on rural telecom providers’ ability to deploy advanced services to millions of consumers'.

Walter B. McCormick Jr, USTA president and ceo, added: "Level 3’s retreat ensures that consumers benefit from real competition in today’s vibrant communications market. We applaud the FCC for recognising that it should not take a piecemeal approach to inter-carrier compensation reform and we look forward to working with the Commission on a comprehensive approach to these issues".
John Williamson