VOIP Regulations

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Will States Or Feds Control VOIP Regulations?

July 23, 2004

By Caron Carlson

As voice over IP catches on, lawmakers struggle to define its place in telecom regulation, and a federal court rebuffs one state's effort to govern it.

Recent acceleration in the popularity of voice-over-IP services has lit a fire under lawmakers to define IP telephony's place within the larger scheme of telecommunications regulation. But there remains considerable disagreement in Congress over the roles federal and state regulators should play.

Demonstrating the issue's ongoing divisiveness, commerce committee senators last week approved the VOIP Regulatory Freedom Act after amending it to preserve some authority for states. But with the vote 13-9, the absence of a solid consensus makes it unclear whether the measure will be brought to a vote in the full Senate this year.

Nonetheless, the impetus to let VOIP thrive unfettered by regulations appears to be spreading. Several states, including Minnesota and New York, have shown they are reluctant to leave VOIP alone, but federal courts have rebuffed them. Last week, for example, a federal court in New York ruled that regulators in the state may not regulate or tax the broadband telephone company vonage-forum.com/vlink6.html">Vonage Holdings Corp., based in Edison, N.J.

Sen. John Sununu, R-N.H., who authored the bill, wants not only to prevent state regulators from meddling in the emerging technology but also to restrict the Federal Communications Commission's authority. Sununu and Sens. Maria Cantwell, D-Wash., and Ron Wyden, D-Ore., warned the FCC this month to resist pressure from the FBI and the Drug Enforcement Agency to impose wiretap requirements on the Internet application.

Cautioning that applying wiretap rules to VOIP would put law enforcement "in the role of mandating design features for Internet applications," the senators urged the FCC to reject law enforcement's request.

On the day the bill was approved in committee, Verizon Communications Inc. jumped on the VOIP bandwagon, launching a residential service available to DSL and cable-modem subscribers. VOIP is gaining a foothold among business users as well.

America-Mideast is deploying a VOIP system from Siemens AG, of Munich, Germany, this month. With its headquarters in Washington and 15 field offices in the Middle East and North Africa, the training center chose VOIP to reduce long-distance calling expenses and encourage more efficient internal communication, said IT Director Ugur Usumi in Washington.

"Because of the cost, people tend to not call [long-distance]," Usumi said. "Hopefully, this will provide quicker results for business decisions."