The U.S. Federal Communications Commission has ruled that incumbent local exchange carriers must connect to VOIP (voice over Internet Protocol) services, overruling two state public service commission opinions.

The FCC on Thursday granted a petition from Time Warner Cable Inc., which had complained that the South Carolina and Nebraska public service commissions had allowed rural local exchange carriers to refuse access to wholesale telecom vendors connecting to Time Warner's VOIP service.

The rural carriers had argued that FCC rules don't require them to connect to the wholesale vendors because they don't provide direct voice service to residents.

But the FCC said that argument was a misinterpretation of its rules.

The FCC "must promote competition in every sector it oversees and create a level playing field among service providers," said FCC Chairman Kevin Martin, in a statement. The FCC decision "ensures that consumers in all areas of the country reap the benefits of competition in the form of lower prices, innovative services and more choice," he added.

Time Warner Cable, which was using wholesale transport services from MCI, now part of Verizon Communications Inc., and Sprint Nextel Corp., filed a petition with the FCC last March. The two state commissions had ruled that the services provided by MCI and Sprint did not quality as telecommunications services, and therefore, rural incumbent local exchange carriers were not required to interconnect with them.

But four other states required local carriers to connect with the wholesale vendors, Time Warner argued.

The FCC, in its decision, said interconnection requirements should apply to both retail and wholesale telecom services. "A contrary decision would impede the important development of wholesale telecommunications and facilities-based VoIP competition," the FCC said in its order.

The IDG News Service is a Network World affiliate.