The growing popularity of VoIP has resulted in the rise of national and international issues surrounding its use including how VoIP should be regulated in the U.S., privacy concerns, emergency call services and its presence in other countries. If you are a company considering the implementation of VoIP, it is important to take into consideration legal as well as technological issues that will arise.

U.S. Regulation

In the U.S., the increased usage of VoIP in personal and corporate settings has led many to believe that regulation of this service has finally become necessary. In the past, the U.S. has left the Internet largely unregulated. However, VoIP is blurring the lines between traditional telephone services and information services. It has changed the game of communications and therefore, needs to be considered carefully. If left unregulated, phone companies stand to lose millions of dollars. In addition, a decrease in regular telephone services will cause a decline in tax revenues that provide services to remote and, therefore, costly areas of the U.S. (1) According to John Todd, networking and VoIP consultant, “technology is driven by investment, and regulation scares investment; therefore, regulation impedes technology”. In other words, regulation restricts progress in this developing technology. Another issue regarding regulation in the U.S. is whether the FCC, Congress or individual states should be responsible for regulation. (2) For example, individual states want to treat VoIP as a traditional telephone services because of tax implications. If states treat VoIP services as traditional phone servicse, they can levy taxes which would increase the tax base of the state. However, there are approximately 7,000 taxing jurisdictions and levying taxes on developing technology will also hinder its progress. (3) While there are downsides to regulation, issues such as privacy, wire tapping and liability that arise with the use of VoIP has made some sort of regulating framework necessary for VoIP.

Privacy Concerns

On August 5, 2005, the FCC extended CALEA (Communications Assistance for Law Enforcement Act of 1994) to include Internet-based communications. This allows law-enforcement agencies to wire-tap any VoIP user. From a business perspective, the ability to wire-tap raises the cost of VoIP, which is passed on to businesses and consumers. In addition,
wire-tapping is an extra barrier to entry. The setup in the VoIP infrastructure that allows for tapping is also vulnerable to hackers. Thus, extending CALEA raises issues regarding privacy. (4) Because VoIP does not have a uniform standard, all uses of VoIP must be monitored. This means that federal authorities have the power to monitor any and all data transmissions over broadband services, including phone calls, business, medical and other privileged information. (5) Another implication in extending CALEA to VoIP use is the possibility that it will expand into other areas of Internet-based communication such as email and instant messenger. (4)

Emergency Call Services

In 2005, the FCC set rules requiring VoIP providers to offer 911 services to their customers as well as banning providers that do not offer such services from advertising. Part of this ruling also requires VoIP providers to give emergency operators a callback number and the physical location of any 911 caller. However, many companies are not offering these services or are operating with the future intention of complying with the FCC's ruling. Additionally, some companies are simply giving their customers the option and are therefore not fully complying with the FCC's ruling. For example, MyPhoneCompany gives its customers the option for 911 services, as can be seen in the image below. If they decline it, they avoid a one-time E911 activation fee of $15 and a monthly E911 charge of $1.50. Jim Kohlenberger, executive director of the Voice on the Net Coalition, a group that represents the VoIP industry belives that as long as VoIP providers show a good faith effort in complying with the FCC's ruling, the FCC will remain lax. Afterall, it has taken wireless providers years to provide 911 services and still, only half of the U.S. is covered. However, the liabiltity taken on by companies who use VoIP services still remains an important issue to consider when looking at VoIP. (6)

International Concerns

IP networks are not defined in geographical terms which causes problems on various levels. One problem that arises is the ability to change physical address without changing the number. For example, a customer from the U.S. may sign up with a U.K. number, thereby making local calls whenever calling to the U.K. This type of behavior has a negative effect on taxes and revenues for states and countries. Additionally, customers may be able to obtain services from providers not in their country and therefore, not subject to their country's regulations regarding VoIP. Lack of international standards heightens issues such as privacy where information may end up in jurisdictions with the lowest standards for regulations regarding privacy. In addition, violations of one country's codes may not apply to certain service providers because they do not originate in that country, thus diluting any sort of effective reguation with VoIP. (7)

Plans to Implement VoIP?

As a company or organization thinking about implementing VoIP, it is important to consider the legal as well as technological aspects of the process. There are several acts to keep in mind when implementing VoIP including the Sarbanes-Oxley Act, the Gramm-Leach-Bliley Act and the Health Insurance Portability and Accoutability Act due to their affect on IT departments. In summation, these acts are important to keep in mind because they pertain to the protection and security of information. VoIP involves the transmission of data and its control and security is important according to these acts. It is also important to remember that a VoIP network is an IP network and is subject to the same security threats as all IP networks. In addition, it is important to consider the consider the issue of emergency call services with VoIP. Since VoIP numbers are portable, it is important to keep VoIP providers up-to-date with any change in address. Ultimately, it is the company's liability if E911 services aren't implemented and/or are not accurate. (8) To learn more about business implications, please click here.







(1) Todd, John. “VoIP Regulation in America: A View from the Trenches.” 21 November 2003. O'Reilly Network.
Available at http://www.oreillynet.com/pub/a/policy/2003/11/21/VoIP.html

(2) Jackson, Donny. “Panel: States Main Threat to VoIP Investment.” 31 May 2004. Telephony Online.
Available at http://telephonyonline.com/mag/telecom_panel_states_main/

(3) Lawson, Stephen. “Voice Over IP has FCC Alley.” IDG News Service.
Available at http://pcworld.about.com/news/Jul142004id116905.htm

(4) O’Reilly, Dennis. “Could your VoIP Phone be Tapped?” PC World.
Available at http://pcworld.about.com/news/Jan272006id124533.htm

(5) “VoIP – Privacy Issues.”
Available at http://wiki.media-culture.org/au/index.php/VoIP_-_Privacy_Issueshttp://wiki.media-culture.org.au/index.php?title=VoIP_-_Privacy_Issues&printable=yes.html

(6) Spring, Tom. “VoIP Firms Don’t Answer FCC’s 911 Call.” PC World.
Available at http://pcworld.about.com/news/Jun222006id126135.htm

(7) Malcom, Jeremy. “Privacy Issues with VoIP Telephony.”
Available at http://www.ilaw.com.au/public/voiparticle.html

(8) Shinder, Deb. “Consider these legal issues when planning a VoIP implementation.” 10 November 2006. TechRepublic.
Available at http://articles.techrepublic.com.com/5102-1035-6134488.html

(9) Image availabe at http://pcworld.about.com/news/Jun222006id126135.htm