The Federal Communications Commission says certain IP-based services are not subject to state regulation.
Posted Nov 17, 2004
The buzz surrounding Voice over IP (VoIP) has reached federal regulators' ears.
The Federal Communications Commission recently ruled that DigitalVoice, an Internet telephone service provided by Vonage, is not required to comply with traditional state public utility legislation. Other forms of IP-enabled services similar to DigitalVoice, including those provided by cable companies, are also exempt from such regulation. The decision stems from a petition filed by Vonage requesting federal preemption of an order by the Minnesota Public Utilities Commission, which concluded that Vonage's DigitalVoice was a telephone service that required Vonage to acquire a certificate of authority and meet additional regulations governing telephone companies in the state.
John Flanagan, managing director for CRM consultancy BearingPoint's cable practice, says, "The FCC has basically stepped in and overruled the Minnesota courts by stating that a VoIP-based service in nature is interstate, and therefore preempting the state's jurisdiction to regulate these services." However, Flanagan says, the FCC was careful to "tell the states that they still maintain their position in dealing with things like fraud and public safety."
So how will the deregulation impact the VoIP vendors in the contact center space? According to Daniel Hong, CRM analyst at Datamonitor, the decision fairs well for VoIP companies and the industry in general, because it allows one governing agency to enforce regulations and fair business practices in the IP-based communications frontier. Although Hong expects to see more legislation in 2005, he adds that VoIP is a "disruptive technology," and needs room to grow without different restrictions placed by different state agencies. "If states are able to regulate VoIP as I believe Minnesota wanted to, the maturation and progression of the technology and the industry will likely be hindered."
Flanagan contends that although VoIP providers may decide to handle certain initiatives differently, the FCC's decision will have practically no influence on contact center operations. "They may choose to stop supporting certain regulatory initiatives like Universal Service Fund or e911 Fund, although this particular ruling has made it very clear that those issues are not resolved, and they encourage these providers to continue to work to resolve them and continue to work to support them. Immediately, I see no-to-very-limited impact to a call center operation."
However, in the VoIP world, where companies have multiple nodes within their networks that have to be managed, caring for the customer will significantly increase in complexity, according Jerry Keane, managing director responsible for BearingPoint's North American cable practice. "Once regulators make their decisions around taxes and access charges," Keene says, "that's going to drive significant change into the billing application, which is going to significantly increase the call volume into the [service provider's] call center."
The advantage that the deregulation provides to IP vendors is clear, but just how it will affect callers isn't. "For the perspective of people calling into call centers, I don't think there is much of an impact," says Sheila McGee-Smith, president and principal analyst at McGee-Smith Analytics. "What the FCC is really saying--and what the government has been saying--with IP is, we want to encourage the movement of technology. We want technology to be able to find its home and expand [undeterred] by taxes...but it really doesn't impact people calling in."
Hong says that it may be premature to declare that regulations will impact contact centers, but as VoIP grows and the FCC starts regulating to ensure that competition is encouraged, then it could start affecting the enterprise. "[When] VoIP penetrates among the consumer base...then it will affect the contact center, but it seems that right now regulations of any kind will not have any significant impact on contact centers, because they are mostly business focused at this time."
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