New VOIP Technology Regulations

The explosive growth of broadband VoIP technology has attracted increasing attention from both state and federal regulators who are trying to figure out how to adapt regulations that govern traditional phone services to the Internet. There are a number of issues to consider. For example, law enforcement agencies are worried about VoIP. Traditional phone companies are required by law to guarantee that their lines can be tapped for criminal investigations. Strictly speaking, VoIP doesn’t fall under those guidelines causing some concern that it might be used for illegal purposes with impunity.

On a purely technical level, the 911 service poses a challenge. If current regulations don't apply to VoIP systems, are they even required to handle 911 calls? On top of that, designing an Internet-ready 911 system is tricky because the calls are not restricted to one location and could be coming from anywhere. Is it reasonable for the government to require VoIP operators to do the impossible? Then there’s the question of reliability. Traditional phones continue to work whether or not there is electricity but VoIP requires power. (Some providers are addressing this concern with battery back-ups.) In addition, even with power, sometimes the Internet itself isn’t accessible for a variety of causes outside of the control of the VoIP provider. What then?

FCC Rulings Regarding VoIP

In response to the recent FCC ruling, Vonage, the leading broadband Intenet VoIP provider, has attempted to address these concerns by collaborating with Verizon to solve the 911 problems, while simultaneously exploring a similar arrangement with Qwest.

In the meantime, VoIP providers face lawsuits based on the lack of a reliable 911 system. In addition, some legislators have proposed regulatory legislation, because, in the words of U.S. Senator Conrad Burn, "The few seconds it takes someone to realize that their broadband connection cannot reach 911 can be the difference between life and death, and we cannot waste that time during an emergency."

On another front, setting possible precedent, the Canadian-Radio-Television and Communications Commission has officially classified VoIP as a telephone service and has assumed the authority to regulate it.

In February, the Federal Communications Commission directed Kansas lawmakers to water down proposed legislation aimed at assessing state fees on Internet-based phone services.

In late March, Texas filed a deceptive trade practices lawsuit claiming that Vonage in particular doesn't clearly explain how its 911 service differs from what customers are used to. The high-profile Texas lawsuit against Vonage is generating interest in other states.

The upshot of the legal battles could lead to higher prices and increased regulatory oversight of the industry.