High Tech Policy Guide - VOIP

Voice Over IP Voice Over IP


The growth in the use of Voice over IP (VoIP) has presented regulators world wide with the question of whether or not VoIP should be regulated in the same manner as traditional telephone service.

In the United States, the issue is largely whether VoIP (or some types of VoIP) should be as highly regulated as telecommunication services or left largely unregulated as information services. If treated as a telecommunications service, VoIP services will be liable for regulatory charges such as access charges and universal service subsidies as well as compliance with regulations governing E911 emergency services, lawful intercept under the Communications Assistance for Law Enforcement Act (CALEA) and access for people with disabilities. The Federal Communications Commission (FCC) has opened an omnibus proceeding on not only the regulatory treatment of VoIP but also of all IP-based services.

VOIP Defined
VoIP, or Voice over Internet Protocol, holds the promise of transforming the world’s phone systems. This revolutionary technology converts analog audio signals into digital data that can be sent over the Internet. Generally, this means transmitting voice information in digital form in discrete packets rather than in the traditional circuit-committed protocols of the public switched telephone network (PSTN).

In the European Union (EU), there is a positive attitude towards "disruptive" technologies such as VoIP. Many of the recent policy papers, such as the report "Rethinking the European ICT Agenda," highlight that a "timely acceptance and uptake of disruptive technologies is of enormous importance" and plead for a minimization of the barriers to allow for the introduction of VoIP. Additionally, the regulatory choices are not as stark since the categorizations do not carry the same implications as in the U.S. The main categories are "electronic communications services" and "publicly available telephony services." The current debate is focused on social requirements and numbering.

Regulators are analyzing to what extent new VoIP-enabled services will need to comply with the same social requirements as "publicly available telephony services" (e.g. access to emergency services, network integrity, access to disabled users, lawful intercept etc.) and what types of numbering resources should be allocated to VoIP.

VoIP-enabled services will only face economic regulation when they are found to be a substitute for traditional voice service, the market is not competitive and the provider has market power. Essentially, only incumbent providers face the potential of significant regulation if they offer VoIP as a substitute to traditional services.

Business Impact

Significant regulatory questions do remain, however, including numbering arrangements for new VoIP services or legacy type regulatory requirements that could be imposed on the various types of VoIP enabled services.

The development of the VoIP market, particularly in the consumer sector, will be greatly impacted by the decisions of Regulators around the world. For example, if the U.S. FCC chooses a highly regulatory structure for VoIP, it could slow the deployment of VoIP to consumers via competitors and web-based services. Similarly, how the FCC develops limited regulations in the "social issues" of E911, CALEA and universal service would have great impact. If these regulations are merely imposed from the circuit switched world, they could make VoIP more difficult to deploy and create additional product development costs.

The sweeping nature of the current FCC proceeding that includes all IP based services presents risks beyond just VoIP: if all IP applications are treated as telecommunication services, then the entire Internet would essentially become regulated by the FCC and state Public Utility Commissions. Such regulation would dampen the innovation of Internet applications.

Likewise, in Europe, the development of VoIP market will be impacted if Regulators decide to impose unnecessary constraints or regulatory burdens on the rapid development of VoIP-enabled services in the EU.



The U.S. FCC proceeding on IP Enabled Services, including VoIP, continues. Cisco filed formal Reply Comments on July 14, 2004. The FCC will continue to examine issues related to VoIP but is not expected to issue any rulings in the proceeding until 2005. On a parallel track, the FCC has opened a proceeding on the application of CALEA to IP services. That proceeding is pursuant to a Petition filed by the FBI which seeks broad application of CALEA. On November 8th, 2004, the FCC issued an Order preempting state regulators from regulating certain implementations of VoIP pursuant to a petition filed by Vonage.

Three bills were introduced in the last Congress that would limit state and federal regulation of VoIP. Although Congress adjourned without final action on these bills, similar bills are expected in the 109th Congress.

Numerous proceedings on VoIP are springing up around the world. The majority of Regulators are currently reviewing their position on what are the regulatory requirements and numbering resources that should be allocated to VoIP services. The European Commission is moving to play a central role in order to harmonize the differing views. A European Commission Guideline on VoIP is expected to be published in early 2005.

Cisco filed comments in June 2004 before the German telecoms regulator, RegTP. Additional filings have been made in August/September 2004 with the European Commission, Ireland, France and Spain. Other proceedings are underway in Austria, Denmark, the UK, Norway, Netherlands, Colombia and Malta.

The UK Regulator, Ofcom, has recently published the response to its numbering consultation, and decided that geographic numbers should be available for VoIP enabled services as well as a new non-geographic number range, 056. However in regards to social requirements, Ofcom is initially proposing to take a "light touch" approach to promote growth of new VoIP services whilst ensuring proper consumer information.

In August 2004, Germany's Reg TP issued two decisions disallowing the use of geographic area numbers for 'nomadic' VoIP services. Instead, personal numbers with the service code 0700 should be used for such services. In Ireland, ComReg's issued a response in October 2004 to its numbering consultations and decided to open a new (non-geographic) number range (access code 076) for the purposes of facilitating the introduction of VoIP services, as well as to grant access to geographic numbers to VoIP operators with some restrictions.

Cisco Position

  • VoIP should be treated as a largely unregulated information service.
  • Recognizing VoIP as an Internet application and information service prevents the imposition of uneconomic regulatory charges, such as access charges, that would impede the deployment of VoIP.
  • Large scale deployment of VoIP would also drive increased broadband penetration, aiding many countries' goal of universal broadband access.
  • Cisco recognizes that there may be areas where some regulation might be appropriate for VoIP. With respect to emergency services, lawful intercept and access for the disabled, limited regulation could be considered so long as it recognizes the technological differences between VoIP and circuit switched services.
  • Likewise, VoIP services that interconnect with the Public Switched Telephone Network (PSTN) should contribute to the upkeep of the PSTN through an appropriately devised universal service charge. However, it is important to distinguish between these limited regulations and the onerous regulatory structure that exists for telecommunications services.
  • And most importantly, Cisco believes that these few regulations must be limited to voice services only and not be imposed on other IP based services, including e-mail, instant messaging and web applications.

Cisco supports the FCC's ruling granting a petition by Vonage Holdings Corp. asking that its voice over Internet protocol, or VoIP, service be treated as interstate, putting it under federal jurisdiction. This decision represents an important step in the process of enabling the growth of VoIP without unnecessary government regulation.


Key Messages

  • VoIP is an Internet application capable of delivering much more advanced services than plain telephony and is impossible to separate from other IP based services. Therefore, it should not be regulated like a telephone service.
  • Importing the onerous and subsidy-laden circuit switched regulatory system into VoIP will inhibit the adoption of this new technology and slow the growth of broadband.
  • Limited regulation may be considered for a few important social issues, such as emergency services/E911, lawful intercept/CALEA and access for the disabled, but such regulation must be specifically tailored to VoIP technology.
  • VoIP service providers should be entitled to the types of numbering resources of their choice, including geographic telephone numbers and to number portability.

The U.S. FCC


As of January 2005

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