Charter Advanced Services (MN), LLC; Charter Advanced Services VIII (MN), LLC Plaintiffs - Appellees
Nancy Lange, in her official capacity as Chair of the Minnesota Public Utilities Commission; Dan M. Lipschultz, in his official capacity as Commissioner of the Minnesota Public Utilities Commission; John Tuma, in his official capacity as Commissioner of the Minnesota Public Utilities Commission; Matthew Schuerger, in his official capacity as Commissioner of the Minnesota Public Utilities Commission; Katie Clark Sieben, in her official capacity as Commissioner of the Minnesota Public Utilities Commission Defendants - Appellants Mid-Minnesota Legal Aid; National Association of Regulatory Utility Commissioners; National Association of State Utility Consumer Advocates; AARP; AARP Foundation; Barbara Ann Cherry Amid on Behalf of Appellant(s) Federal Communications Commission; NCTA-The Internet & Television Association; USTelecom; Voice on the Net Coalition; AT&T; Verizon Amici on Behalf of Appellee(s)
Submitted: June 12, 2018
from United States District Court for the District of
Minnesota - Minneapolis
LOKEN, ERICKSON, and GRASZ, Circuit Judges.
ERICKSON, Circuit Judge.
Communications is a provider of video, internet, and voice
communications services. This case arose when Charter
underwent a corporate reorganization in order to segregate
its Voice over Internet Protocol ("VoIP") services
from its regulated wholesale telecommunications services. As
part of the reorganization, Charter moved its VoIP accounts
from "Charter Fiberlink" to a newly created
affiliate named "Charter Advanced." This led the
Minnesota Department of Commerce to lodge a complaint with
the Minnesota Public Utilities Commission ("MPUC")
alleging that Charter had violated various state laws.
Charter responded that state regulation was preempted by the
Telecommunications Act of 1996. The MPUC ruled against
commenced an action in the United States District Court for
the District of Minnesota seeking: 1) declaratory relief
finding that state regulation is preempted, and 2) injunctive
relief prohibiting Defendants from enforcing regulation of
its VoIP services. The district court denied defendants'
motion to dismiss and allowed discovery to proceed. Following
competing motions for summary judgment, the district court
ruled that Charter's VoIP service is an "information
service" under the Telecommunications Act and that state
regulation of Charter's VoIP services was therefore
preempted. Because we agree with the district court, we
Voice is a VoIP service operated by Charter Advanced.
Spectrum Voice offers a voice calling feature that allows
subscribers to exchange calls with traditional telephones,
transmitting voice signals as Internet Protocol
("IP") data packets via a broadband internet
connection. Spectrum Voice is an "interconnected"
VoIP service because of its ability to interface with
traditional or legacy telephone operations. It is also a
"fixed" service because it is tethered to the
Voice subscribers receive an embedded Multimedia Terminal
Adapter ("eMTA") from Charter Advanced. The eMTA is
combined with a modem (for broadband internet access service)
into a single device. The eMTA transforms voice calls from
analog electrical signals into IP "packets," which
are then carried on Charter's network. Under FCC
classifications for hardware, the eMTA is considered Customer
Premises Equipment ("CPE").
order to facilitate Spectrum Voice's interconnected VoIP
service, Charter must interconnect with traditional
providers. Traditional telephone networks (collectively known
as the public switched telephone network or "PSTN")
utilize "circuit switching" technology, which
establishes a dedicated pathway for the duration of a call. A
technique called Time Division Multiplexing ("TDM")
allows multiple circuit-switched calls to share the same
district court stated, "[t]he eMTA alters the format of
voice calls between an analog electrical signal-as
transmitted by the customer's handset-and the IP data
packets transmitted over Charter Advanced's cable network
. . . When a Charter Advanced customer calls or receives a
call from a subscriber of a traditional telecommunications
carrier, the call must be converted between IP and TDM."
Charter Advanced Servs. (MN), LLC v. Lange, 259
F.Supp.3d 980, 982 (D. Minn. 2017). This process is known as
"protocol conversion." Charter accomplishes the
conversion by routing IP-TDM calls through a "Media
Gateway" on Charter Advanced's side of its
connection with a TDM-based network.
Voice provides customers access to additional features. For
example, the service offers: 1) a web portal to access
voicemails as digital files, convert voicemails to text, and
forward them via email; 2) the ability to display caller ID
info on connected cable televisions; 3) a
"softphone" feature to access Spectrum Voice via a
tablet or smartphone app; and other features.
moved its Spectrum Voice offerings from Charter Fiberlink to
Charter Advanced for the purpose of decreasing its state
regulatory burden. Under the Telecommunications Act of 1996,
a "telecommunications service" is "the
offering of telecommunications for a fee directly to the
public, or to such classes of users as to be effectively
available directly to the public, regardless of the
facilities used." 47 U.S.C. § 153(53). An
"information service," by contrast, is "the
offering of a capability for generating, acquiring, storing,
transforming, processing, retrieving, utilizing, or making
available information via telecommunications, . . . but does
not include any use of any such capability for the
management, control, or operation of a telecommunications
system or the management of a telecommunications
service." 47 U.S.C. § 153(24).
service is classified affects a state's ability to
regulate the service. Telecommunications services are
generally subject to "dual state and federal
regulation." See Louisiana Pub. Serv. Comm'n v.
FCC, 476 U.S. 355, 375 (1986). By contrast, "any
state regulation of an information service conflicts with the
federal policy of nonregulation," so that such
regulation is preempted by federal law. See Minnesota
Pub. Utilities Comm'n v. FCC, 483 F.3d 570, 580 (8th
Cir. 2007); see also 47 C.F.R. § 64.702. The
FCC has so far declined to classify VoIP services as either
information or telecommunications services, despite repeated
opportunities to do so.See Clark v. Time Warner Cable,
523 F.3d 1110, 1113 (9th Cir. 2008) (footnotes omitted)
(quoting In re IP-Enabled Services, 19 F.C.C.R.
4863, 4880-81 ¶¶ 26-27, 4886 ...