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A local telco, Madison River Communications Corp., which runs a number of phone companies in rural areas in the south-eastern and mid-western United States, agreed to refrain from blocking VoIP calls and pay a $15,000 dollar fine to the Federal Communications Commission (FCC).

The action is seen as a warning to other telcos not to prevent the growth of VoIP over their networks. Many of these companies see VoIP as a threat to their landline revenues as calls made over the internet can be made

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to anywhere in the world for the price of a local call.

In particular incumbent telcos are concerned that the growth of broadband, plus a new wave of VoIP software from companies like Skype may wipe out their landline business altogether.

The complaint was made to the FCC by two companies Vonage Holdings and Nuvia, which specialise in VoIP services. Vonage said that around 200 of its customers had their calls blocked by Madison River, including many who had switched over to IP telephony entirely. Vonage said that these companies could not even make outgoing emergency calls. Because of the rural nature of Madison's operations, many remote businesses were effectively cut off.

Commenting on the case the FCC Chairman Michael K. Powell said, `the industry must adhere to certain consumer protection norms if the Internet is to remain an open platform for innovation.` He also gave a warning that the FCC will not allow companies to stifle innovation saying that the Commission `acted swiftly to ensure that Internet voice service remains a viable option for consumers`.