updated 3/3/2005 8:36:00 PM ET 2005-03-04T01:36:00

In a first-of-its-kind penalty, a telephone company will pay $15,000 to settle allegations that it blocked phone lines that customers used to make calls over the Internet, federal regulators said Thursday.

Madison River Communications, LLC, also must not block Internet calls in the future, according to the Mebane, N.C.-based company’s settlement with the Federal Communications Commission. The company did not admit to violating any rules.

The FCC said it was the first time it had settled allegations that a traditional telephone company has blocked calls using Voice over Internet Protocol, or VoIP.

“We saw a problem, and we acted swiftly to ensure that Internet voice service remains a viable option for consumers,” FCC Chairman Michael Powell said in a statement.

Telephone calls seeking comment from Madison River officials were not immediately returned.

VoIP technology shifts calls away from wires and switches, instead using computers and broadband connections to convert sounds into data and transmit them via the Internet. In many cases, VoIP subscribers use conventional phones connected to a special box and a high-speed connection to make Internet calls.

Powell has said he thinks the fledgling VoIP industry should be “very lightly” regulated.

“The industry must adhere to certain consumer protection norms if the Internet is to remain an open platform for innovation,” Powell said.

Internet calls can often be cheaper than conventional calls in part because they are not subject to government fees to access the traditional phone network, though the FCC is also studying that contentious subject and could issue a ruling later this month.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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