New VOIP Technology Regulations

The explosive growth of broadband VoIPtechnology has attracted increasing attention from both state andfederal regulators who are trying to figure out how to adaptregulations that govern traditional phone services to the Internet.There are a number of issues to consider. For example, law enforcementagencies are worried about VoIP. Traditional phone companies arerequired by law to guarantee that their lines can be tapped forcriminal investigations. Strictly speaking, VoIP doesn’t fall underthose guidelines causing some concern that it might be used for illegalpurposes with impunity.

On a purely technical level, the 911 service poses a challenge. Ifcurrent regulations don't apply to VoIP systems, are they even requiredto handle 911 calls? On top of that, designing an Internet-ready 911system is tricky because the calls are not restricted to one locationand could be coming from anywhere. Is it reasonable for the governmentto require VoIP operators to do the impossible? Then there’s thequestion of reliability. Traditional phones continue to work whether ornot there is electricity but VoIP requires power. (Some providers areaddressing this concern with battery back-ups.) In addition, even withpower, sometimes the Internet itself isn’t accessible for a variety ofcauses 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 addressthese 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 areliable 911 system. In addition, some legislators have proposedregulatory legislation, because, in the words of U.S. Senator ConradBurn, "The few seconds it takes someone to realize that their broadbandconnection cannot reach 911 can be the difference between life anddeath, and we cannot waste that time during an emergency."

On another front, setting possible precedent, theCanadian-Radio-Television and Communications Commission has officiallyclassified VoIP as a telephone service and has assumed the authority toregulate 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 lawsuitclaiming that Vonage in particular doesn't clearly explain how its 911service differs from what customers are used to. The high-profile Texaslawsuit 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.