Speaking on the Legal Side of VoIP

Voice over Internet Protocol technology (VoIP) usage has soared in 2005, with rapid consumer adoption through purveyors like Vonage and growing business adoption as well...

By Mary E. Shacklett
Published: January, 2006

Voice over Internet Protocol technology (VoIP) usage has soared in 2005, with rapid consumer adoption through purveyors like Vonage and growing business adoption as well. The reasons are easy to understand:

• VoIP is cheaper than traditional phone service, especially when it comes to long distance;

• VoIP uses the same broadband

access that many households and businesses already have installed;

• VoIP data can be organized and

stored on a computer network;

• VoIP is a mobile and highly flexible mode of communication.

Consumers and businesses adopting VoIP understand that quality issues like jitter and dropped calls are still being resolved. These technical issues — and how to solve them — are fairly well known, and are being worked on by VoIP providers. Lesser known are the legal issues that potentially confront VoIP users.

What is VoIP? VoIP is analog audio, like voice over a land or cell phone, turned into digital data, which is transmitted over the Internet. This method enables a user to place calls to anywhere in the world, while bypassing phone company charges.

Civil Liability

Misunderstandings or miscommunications of sensitive or timely data (due to jitter or other interfering factors) may have troubling consequences, such as confusion, or different understandings of essential business terms. In the worst scenario, this could lead to civil liability. A second concern is disruption of power. If the power source becomes inoperable, the computer will fail, taking VoIP down with it. This, too, could lead to civil liability. Arrangements must be made to provide for alternative power sources to guard against this danger, especially if you are a business.

Like the Internet, VoIP is still considered a newer and experimental technology. Congress has seen fit to let the experiment continue, free from regulation, taxes and major regulatory requirements. At issue is VoIP’s low cost — and whether it will stay that way. Traditional telephone services are subject to extensive state regulation, including payment of access fees, while VoIP is classified as an information service, which is exempt from state regulation, including access fees. If access fee payments are mandated one day, VoIP could lose its cost advantages.

911 Emergency Services
The FCC Final Rule of June 29, 2005 gave VoIP providers until Nov. 29, 2005 to provide 911 coverage. Several VoIP providers filed for extensions because they could not meet the deadline, but most complied, including major carriers like Verizon, Qwest, and many of the Baby Bells. When choosing a VoIP service provider, confirm that the provider has full 911 emergency services before you subscribe.

Still among the significant issues to be decided with VoIP is the accessibility of communications to law enforcement. The FCC has tentatively ruled that all providers of broadband Internet access or managed VoIP services are telecommunications carriers subject to the Communications Assistance for Law Enforcement Act (CALEA). Under CALEA, telecommunications carriers must provide technical facilities to law enforcement to carry out wiretapping in pursuit of crime or terrorism.

In addition, there are legal requirements for VoIP under the USA PATRIOT Act and the Sarbanes-Oxley Act, both of which were installed after 9/11. The PATRIOT Act expands law enforcement’s access to business records when sought for intelligence or terrorism investigations. The Sarbanes-Oxley Act, which affects public companies or companies desiring to go public, creates crimes for altering or destroying documents to impede investigations. The bottom line: VoIP data like emails (if you are a business) should be retained.

VoIP is an exciting technology that will replace most traditional telephony over time. Telecommunications carriers and technologists are diligently working to resolve the quality of service issues that still exist with VoIP, and that can present legal exposure. Regardless of how the technology and its legal issues work out, VoIP is here to stay — and it is no different than any other technology in its legal evolution. VoIP’s regulatory environment will mature with the technology, as will best practices that carriers, businesses and consumers employ.