Handing a setback to emerging Internet phone services, the New York State Public Service Commission on Wednesday ruled that Vonage Holdings is a telephone company and thus subject to state regulation.

In a statement announcing its decision, the agency sought to soften the blow, saying that it nevertheless hoped to apply "only minimal regulations to ensure that it does not interfere with the rapid, widespread deployment of new technologies."

Read more: CNet News (http://news.com.com/New+York+classifies+Vonage+as+phone+company/2100-7352_3-5216639.html?tag=nefd.top).