Regulatory Issues of Voip

Regulatory issues of VoIP

The Federal Communications Commission (FCC) has worked to create an environment promoting competition and innovation to benefit consumers. Historically, the FCC has not regulated the Internet or the services provided over it. On February 12, 2004, the FCC found that an entirely Internet-based VoIP service was an unregulated information service.

Currently, the FCC is not regulating VoIP, however there are still major concerns that need to be addressed. There are three main issues that are of the utmost importance to the telecommunications industry. The Tax Freedom act, E-911, and Calea are three most imperative issues concerning VoIP.

The Internet Tax Freedom Act was authored by Rep. Christopher Cox and Sen. Ron Wyden, and signed into law on October 21, 1998 by President Bill Clinton. This law bars state and local governments from taxing Internet access service. In 2003 the House of Representatives approved bill H.R. 49, the “Internet Tax Non-Discrimination Act of 2003.” This bill would expand and make permanent a federally imposed “moratorium” on state and local taxation of sales of “Internet access” services. States and local governments would be permanently prohibited from charging sales taxes on the monthly service charge that households and businesses pay to be able to access the World Wide Web.

VoIP rides a fine line between being a telephone service and an internet service. This is due to the fact that a call is initiated from a phone in an analog format, transmitted over the internet in a digital format and finally converted back to analog format typically across the same lines that traditional phones operate on. In addition many states rely on the taxes received from telephone service to run programs to low income areas. VoIP is seen as threat to these programs because taxes will not be imposed on this service due to current legislative language. Many opponents of the non-taxation of VoIP feel that exemption from taxation is not needed to spur investments in this type of telecommunication. They also feel it singles out one type of telecommunications service for favorable treatment, which will lead to other types of services asking for similar treatment at the expense of the state and local tax base.

E-911 short for Enhanced 911, is a location technology that will enable phones to process 911 emergency calls and enable emergency services to locate the geographic position of the caller. When a person makes a 911 call using a traditional phone with ground wires, the call is routed to the nearest public safety answering point (PSAP) that then distributes the emergency call to the proper services. The PSAP receives the caller's phone number and the exact location of the phone from which the call was made.

Because VoIP is an internet based phone system it is difficult to pinpoint where a VoIP caller is when they call 911, other than using their billing address. Many VoIP customers use a paperback book-sized box that allows them to take their phone anywhere they have internet access, often far from the billing address. Current VoIP technology does not provide for the transmission of the caller's physical location along with the voice call. If the caller dials