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Federal Appeals Court Sides With VoIP Providers

Posted by timothy on Wed Dec 29, 2004 05:20 PM
from the semantics-sometimes-important dept.
Communications The Internet Government The Courts United States News
gollum123 writes "AP reports that the Eighth U.S. Circuit Court of Appeals has upheld a ruling by a lower court that A Minnesota agency may not regulate calls through VoIP as it does calls through traditional phone lines. 'The Minnesota Public Utilities Commission had argued that VoIP companies were providing phone-like service and therefore should be regulated as phone companies are. But those businesses said they provide an information service rather than a telecommunications service. This follows the FCC saying that VOIP cannot be regulated using the same rules as traditional phone.'"
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  • load of bull? (Score:5, Insightful)

    by t_allardyce (48447) on Wednesday December 29 2004, @05:23PM (#11213644) Journal
    This is really just bullshit isnt it? VoIP _is_ like a phone, the only reason that it shouldnt be classed as a phone system is to get around stupid ancient phone laws that should be updated instead of worked around, its like saying that by-passing CD 'copy protection' isnt a violation of the DMCA because its for back-up purposes, - it quite clearly is a violation, the real point is that the DMCA is crap.

    • Re:load of bull? (Score:5, Insightful)

      by eln (21727) on Wednesday December 29 2004, @05:25PM (#11213666) Homepage
      That's not a politically viable viewpoint, no matter how correct it is. There is no political pressure to reform the outdated phone system regulations, and classifying VoIP as "phone service" could open the door to classifying IP traffic in general as "phone service," thus opening up the political dynamite that is regulating the Internet.

      Clearly, the safest political move is to simply classify VoIP as not phone-related, thereby sidestepping the dicey issues that are really at play here.
    • I agree...There are way too many laws that are so outdated and are still legitimate it's kinda scary. Most law makers don't know anything about technology so it takes time. I mean VOIP is phone service using new technology that does the same thing as traditional 100+ yearold technology but in a completly difrent way. This should be toghroly reviewed by law makers and updated as necesary.

    • Re:load of bull? (Score:5, Insightful)

      by QuantumRiff (120817) on Wednesday December 29 2004, @05:38PM (#11213777)
      Um, maybe they should not be classified as a phone system is because they are not a phone system. If I live in LA, but get a NY area code from Vonage, which states regulations apply, (or do both). What happens when I take my little vonage box to New Mexico to visit the family for a week, or on a long business trip? What if they use Vonage over a Dialup connection, do they get to pay double fees? The main reason for the laws that are there is becuase they telecoms agreed to them in order to get a government "licensed" monopoly. The goverment taxes the phone lines, (ie, the wires) not the calls. If they want, they should tax the internet connections, the cable modems, DSL lines, wireless hotsposts, whatever, but not the data.
    • In a way, it is kind of a tax dodge. I think it is funny, especially when a lot of people buy DSL service (over a phone line), get phone service (VoIP) and basically get the same service with a phone number, 911, voice mail, caller ID, but is not taxable or regulated as a phone service.
      • it's not the same service, it looks like the same service just like watching downloaded TV shows off a cable modem looks similar to just watching TV over the cable. The telephone line is still being paid for and taxed wherever it exit's the vonage system and becomes a phone number, the only difference is Vonage is able to get bulk rates rather than residential rates, basically vonage acts as a for-profit collective bargaining agent, the telco's don't like that because they want to be able to squeeze money f
    • By claiming Ebay isn't an auctionsite, but an online marketplace, they circumvent the thousands of laws across the world regarding how auctions take place.

      Same goes for paypal, they get to dodge all the laws that regulate banks because they don't claim to be a bank, but an online transaction site or something.

      I'm just thankful the government hasn't been able to tax the internet yet.

  • Doesn't stop them... (Score:5, Insightful)

    by NoMoreNicksLeft (516230) <john DOT oyler AT comcast DOT net> on Wednesday December 29 2004, @05:25PM (#11213667) Journal
    From selling it as a telephone substitute. I'd be more than happy to let them out of this, if they were willing to point it out to each customer prioring to signing them up, that courts have ruled that it's not phone service, and that they have no recourse through the utility commission should it have problems.

    • Re:Doesn't stop them... (Score:5, Interesting)

      by ReTay (164994) on Wednesday December 29 2004, @05:35PM (#11213747)
      "and that they have no recourse through the utility commission should it have problems."

      But that would be wrong.

      I work for a large cable company and we are adding VOIP to our line up as fast as we can provide the guaranteed up times mandated by the government. Like 99.99 uptime and independent power supply and such. And yes if your ticked at the cable company you can call the P.U.C

      The funny thing is that so many people hate the phone companies so bad they will snap up the service as fast as it is available. The growth has to be slow to keep the network growing in front of the wave of people who hate phone companies bad enough to do nearly anything to get away from them.
      They did it to themselves. Bad customer service is legendary with phone companies.
      • You're correct about the telcos, but don't become complacent yourselves. Like having your DNS servers on the same subnet.
      • I work for a large cable company and we are adding VOIP to our line up as fast as we can provide the guaranteed up times mandated by the government. Like 99.99 uptime and independent power supply and such. And yes if your ticked at the cable company you can call the P.U.C

        Which is fine. But suppose I only get connectivity from your cable company, and get VoIP from, say, Vonage. (Just an example, I'm not saying anything's wrong with them) And then suppose they charge me for some service I never signed up

        • Or simply disappear off the face of the earth. I have no recourse at all.

          yes you do... ever heard of a "chargeback" ? Every single one of these voip companies has you pay via credit card.
        • "Which is fine. But suppose I only get connectivity from your cable company, and get VoIP from, say, Vonage. (Just an example, I'm not saying anything's wrong with them) And then suppose they charge me for some service I never signed up for."

          You pays your money you takes your chances.
          Don't use a fly-by-night company and your set.

          "And certainly the cable company would be no more liable than if I bought some other online service (like, say, video conferencing) and it went down."

          Incorrect on two counts.
          Cabl
      • You make it sound like SBC, Verizon, etc., are all washed up. It's just a matter of time before voice service is strictly VOIP, with the usual suspects who can afford it pricing those who can't outta the market, then we're still stuck w/ their crap customer service. And if their price fixing doesn't work, they'll just buy any competition up. Nothing changes.
        • "hmmmm... and here I was thinking it was BAD CABLE SERVICE that was legendary."

          Ha even the worst cable company out there would have to work night and day for decades to get close to phone companies.
            • "first, I'd like to mention that I am in no way a proponent of phone companies or work for one."

              Fine granted, I do work for a cable company for the moment. However I can put my finger in the wind and see the direction it is blowing. And the first company that gets fiber to the door will win. End of story.

              "now, you said bad service is 'legendary'. I can't seem to remember any commonplace stereotypes about phone companies"

              Well I only know the rules that go in the company I work for. Two hour appointmen

    • Re:Doesn't stop them... (Score:4, Informative)

      by jdreed1024 (443938) on Wednesday December 29 2004, @06:21PM (#11214107)
      if they were willing to point it out to each customer prioring to signing them up, that courts have ruled that it's not phone service, and that they have no recourse through the utility commission should it have

      Exactly. This is not entirely good. It's good in that it gives the VoIP providers a bit more flexibility in what they can do, and where they can offer service, and what service they can offer. By the same token, there's nothing to stop a fly-by-nite VoIP provider from scewing everyone over.

      Some states have regulations that currently prevent phone companies from turning service off completely in the case of non-payment (ie: you can still call 911). And they allow you to dispute a portion of the bill and pay the undisputed portion and still have no service cutoff until the dispute is resolved. Those regulations are among those that states would not be allowed to enforce under this ruling.

      However, all the courts said is that you don't get to regulate VoIP in the same method as phone service. There's nothing to stop the states from setting up new regulations for "information providers", etc.

    • The customer has even better recourse: switch VOIP providers. It's a lot easier than switching traditional phone or cable providers. Bad VOIP companies will lose customers overnight, since it will be trivially easy to find another one. This should be all the regulation VOIP providers need, apart from the usual consumer fraud laws which already apply.

  • Wiretap (Score:5, Interesting)

    by darth_MALL (657218) on Wednesday December 29 2004, @05:27PM (#11213676)
    (disclaimer: this is not my area of expertise)
    How does this desicion affect the rights of law enforcement to 'tap' VOIP communications? Has it now placed them outside the scope of a traditional wiretap? Does a traditional wiretap now encompass data? If not, Having the FCC and two courts backing this would make it pretty difficult for the feds to work around I think.

    • Re:Wiretap (Score:3, Interesting)

      by Kjella (173770)
      They can always certainly do a wiretap and tap the line the VoIP travels over. They can do that with any form of internet connection, and it can encompass data as well. The question is if they can demand changes to the software to make it meaningful (i.e. be able to decrypt the line).

      My indication so far is that this hasn't been required. However, the way to twist their arm has normally been to demand that they follow phone rules in order to bridge VoIP to phone. Basicly, that they would have to provide th
  • When I call my family using VoIP, they can't tell the difference.Who would have thought making calls across the atlantic would be much cheaper than calling someone across town on a payphone?

    I don't care what they decide to call it. I'm just glad it's dirt cheap.

  • Good news... (Score:5, Insightful)

    by drinkypoo (153816) <martin.espinoza@gmail.com> on Wednesday December 29 2004, @05:28PM (#11213690) Homepage Journal
    It's always nice to see law follow reality. The problem with regulating VoIP is the question of where you stop. It's only a short conceptual jump from regulating VoIP telephony to regulating Roger Wilco. Imagine if you had to allow a tap on any voice communications. The only way to do that is either mandate a standard back door, or to outlaw all encryption. The future of telephony is internet-connected phones and dialing by DDNS with very, very short leases. Cellphone providers will become internet and DDNS providers and all communications will be only as sniffable as the communication between the two phones allows.

    Regulating VoIP can only make criminals out of those who desire privacy.

  • This could be a bad thing. (Score:5, Interesting)

    by jacobcaz (91509) on Wednesday December 29 2004, @05:29PM (#11213695) Homepage
    I've run several ISPs over the years and one thing that always was the ISP owners "big stick" over the telcos (both ILEC and CLEC) was the PUC (public utilities council), usually coupled with a local utilities council or other regulatory group (like the IURC in Indiana).

    Every time we were jerked around by our ILEC or CLEC providers, we could give the PUC and IURC a call and the problems would usually be solved post haste. A call to our account rep suggesting we would report an incindnet to the PUC would bring swift service indeed.

    See, we alone couldn't do anything to SBC/Ameritech or Time Warner Telecommunications (or our other CLECs), but the PUC and IURC could "get their regulatin' on" and slap them around with big fines for not providing the promised service, breaking rate tarriffs, etc.

    Sure, you can much more easily choose a different VoIP provider than you can a POTS provider, but how long before market consolidation leaves only one or two real VoIP choices? What happens when they start to pull similar BS that the ILECs and CLECs do but aren't regulated by the FCC?

    I'm not generally in favor of governmental regulation, but sometimes a little oversight isn't a bad thing. If they want to act like utilities, let them be treated like utilities since we know the markets will converge and consolidate anyway towards only 1 or 2 big national players.

    • Re:This could be a bad thing. (Score:5, Interesting)

      by Mattintosh (758112) on Wednesday December 29 2004, @05:39PM (#11213787)
      The thing is, they're not utilities. They're providers. Utilities maintain wires. The big guys have been protecting their status as both utility and provider for a long time, but VoIP will end that once and for all. SBC will become a line utility, and the ISP will become a VoIP provider. Whether SBC will sell the general public a VoIP service is irrelevant. Someone will, and there will be competition.
    • [...] ISP [...] ILEC and CLEC [...] PUC [...] IURC [...] POTS [...] VOiP [...] FCC [...]
      Would you mind following up your post with a glossary? ;-)
    • Sure, you can much more easily choose a different VoIP provider than you can a POTS provider, but how long before market consolidation leaves only one or two real VoIP choices?

      My guess is never. The VoIP market doesn't show any sign of being a natural monopoly the way the telephone market is. Economies of scale won't win you very much past a certain point, so there's no reason it would ever get to the point you describe.
    • Welcome to the club.. We've had to take the ClueBat to our ILEC and CLEC's more than a few times over the time in which we had leased our HiCap analogs and PRI circuits from Verizoned and SBClueless. Each time a circuit would go down, we'd call them, and either they would say it would take 2-3 days, or if it were on a weekend as when it break often, SBChumps woulden't even answer the phone!

      The only T1 provider in which we came to love those last couple of years was Sprintlink. They were helpful, nicer'n an
        • I am 99.999999% certain that when Minnesota sued for the right to "regulate" VoIP, they actually meant tax not "make sure VoIP providers played nice". They might tell people they want to do the latter, but if they had won, you'd be certain that your VoIP bills would have "mandatory regulatory fees" tacked on post haste.

        Here's the thing, the taxes are all mostly bull shit anyway. The USF fee (Universal Service Fee) which has been collected on all data and voice lines since the telecom deregulation in

        • The phone company is mandated to pay the USF.

          The FCC does not require companies to recover their contributions directly from their customers. Each company makes a business decision about whether and how to assess customers to recover Universal Service costs.

          The company is mandated to pay the USF. What you quoted says they don't have to list it as a line item on your bill, essentially, not that they aren't required to pay the USF. So they have an option between giving you a lower bill, and putting a

  • Does anyone know what sort of regulations were in question?

    Right now, it seems that only the FCC has the authority to regulate. I just hope that when there is an emergency I will be able to get connected to a dispacher quickly.

  • the 911 issue (Score:3, Interesting)

    by zoloto (586738) on Wednesday December 29 2004, @05:58PM (#11213921)
    I've heard many people for an against VoIP regulation, most people make valid points with it. My personal opinion is leave it unregulated and unencumbered by law.

    My only issue is that of 911 calls. Like one poster mentioned about location (sorry, Quantumriff [slashdot.org] but it's a good one) , if I lived in LA but had a New York area code then visited relatives in New Mexico, how would the 911 issue be fixed?

    They don't have to provide this service at all (to the best of my knowledge) but if they had to/or are willing here's what I suggest.

    Make it based on IP/range etc. When you plug in and log-on, have a dialog setup for voluntary or manditory address insertion before you can use the phone. Shouldn't take too long right? That way your info can be transmitted via the VoIP service to the 911 center and have the correct information.

    Once you plugged in again to the system, you can opt to have that information perminantly deleted or kept in your account for future if it's a frequented place of yours.

    Does that sound viable? Opinions please!

    -zoloto
    • and by manditory, I mean if the system can detect if you are definitely out of state or really out of your area. Maybe even have the information not be manditory (since hotels and relatives/friends have phones you can use).

      Just to clarify.
    • So I'm in LA and I have an internet connection with a tunnel to an ISP in Nebraska. As far as my IP address, I'm in Nebraska. How are you going to verify that?

      Maditory address insertion is absurd at best. Some insane scheme of madatory GPS would be more realistic but probably just as easy to spoof/bypass.

      How do cell phones do 911? I guess they can at least tell what tower the device is connected with.
      • I have no idea how cellphones do 911 but since as you say they can see the tower that's probably pretty much how it's done. You could accomplish the same thing with VoIP phones just by doing a traceroute...
      • Hey, thanks for that link. I missed it (sometimes I miss a barn in front of me) for some reason. The E911 service makes sense for another responder to my question.

        Thought manditory/almost manditory information insertion isn't absurd, just annoyance at best if you have no other way to dial 911.

  • Regulating/taxing VoIP is a bad bad thing (Score:4, Insightful)

    by ValuJet (587148) on Wednesday December 29 2004, @06:09PM (#11213999)
    VoIP is just data packets being sent back and forth on the internet. There is no real difference between a VoIP packet and one of your favorite website. Allowing the government to apply regulations to a specific kind of traffic is the start of a VERY VERY nasty slope. The government should not be able to apply taxes to VoIP because it is just data being sent over the internet.

  • Time to change (Score:4, Insightful)

    by pnewhook (788591) on Wednesday December 29 2004, @06:19PM (#11214086)

    It's time we change the way we think about these utilities and start removing some of these outdated regulations.

    Currently (here in Canada at least) I can get telephone, cellphone and high speed internet from my cable television supplier, or I can get cellphone, television and high speed internet from my telephone company, or I can even get most of the above through a number of independent smaller companies, usually through a wireless antenna or satellite dish.

    With all of these options on equivalent services, these regulations and their outdated definitions no longer make sense.

  • Whichout regulation, what kind of defense does The Quality Paperback Club in Mechanicsburg, PA have when enough people report them for harrasement?

    They seem to be calling my house 3-4 times a day every single day, sometimes leaving a messege, other times not. They start their prerecorded messege before my machine is even done with it's announcement. It's a machine calling, and leaving a messege.

    You may be asking why a paperback book club would be making automated calls to me, well, they're not! It's a
  • Keeping the regulation of VOIP seperate from traditional phone services is just going to open the door to regulate it differently.. More severely. Things that have not been tolerated on phones thus far will probably be thrusted on VOIP due to the fact that it is still hardly widely used.

  • VoIP not really a phone - more reasons (Score:3, Informative)

    by Frank T. Lofaro Jr. (142215) on Wednesday December 29 2004, @07:40PM (#11214636) Homepage
    1. Phones can work without power, as long as the switch is alive.
    2. A normal phone can be a simple piece of electronics not subject to computer failure modes.
    3. Phone service is circuit switched and reliable. VoIP is packet switched, and thus has much less reliability.
    4. 911 doesn't work well over VoIP.
    5. Even if it did, problems 1-3 would make it something you can't rely on.
    6. People should always have a land line for emergencies. If an emergency occurs and they onle have a VoIP and/or cell and they might suffer tragedy.

    Loss of phone service is expected to endanger life in many cases. It needs to be regulated.

    Loss of VoIP should not be expected to do so, except if people choose to rely on it and not have a landline.

    • Re:Laws? (Score:4, Informative)

      by techno-vampire (666512) on Wednesday December 29 2004, @05:38PM (#11213778) Homepage
      Why does every government agency seek to enlarge it's power by regulating new things?

      It's simple. The more things they regulate, the more power they have, the more people they need and the bigger their budgets get.

        • A good answer, in general, but it misses my point. I was trying to explain why every agency tries to expand its own mandate. Sometimes it does make sense to add something to an existing agency, sometimes to create a new one. But no matter what, each agency will try to expand no matter how much better things would be seperating the responsibilities into two or more different sets of people.

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