Internet Telephony: The Status Quo Finds a Likely Champion

[Phaedrus]

by Jeff Taylor
Reason Online

Don't look now, but the Man in Plaid is back, finding compromise and defending a state's right to screw its residents without meddling from Washington. Sen. Lamar Alexander (R-TN) is not about to stand idly by while new technologies make state public utility commissions irrelevant, no sir. Ostensibly conservative but functionally a life-long politician, Alexander simply cannot let solutions erupt from the private sector without appropriate government oversight.

As a result Alexander finds himself standing opposite Federal Communications Commission chairman Michael Powell on the future of Net telephony. Powell has cautioned the states to leave regulation of voice over Internet protocol (VoIP) telephony to the feds. The states have resisted that advice, and Alexander's broadside against Powell and the FCC last week indicates the states intend to try and complete an end-run around the feds.

VoIP busts up the old assumption that this wire is "data" and that wire is "voice" by sending voice traffic around the globe as Internet data-packets. And since voice traffic is traditionally heavily regulated and taxed and data traffic is not, something has to give.

Alexander clearly wants the old rules for voice to apply to new VoIP services. Although he leavened his comments with some boilerplate about sharing Powell's vision of a minimally regulated VoIP world, Alexander trotted out the very burdens the old circuit-switched phone network labors under as a reason to maintain a large state regulatory role over VoIP.

When Alexander says that Congress wants to "make those telephone services available to low-income Americans as well as to those who live in remote areas, and are able to maintain effective 911 and other emergency services—especially during this time of emphasis on homeland security" he is endorsing nothing less that state control over VoIP.

But that isn't even the most immediate concern for Alexander, the states, and the defenders of the status quo. Taxes and fees on telephone service throw off some $20 billion a year to the states, mostly in obtuse ways that consumers never notice unless they read the fine print of their phone bills.

However, consumers are beginning to notice that if they use their broadband connection to run a VoIP application they suddenly lose a $30-40 monthly bill from the phone company. As that practice expands, and Alexander, the states, and the Bell companies know it will, the money stream to the old system will dry up.

In essence, Alexander is echoing Abraham Lincoln in the Lincoln-Douglas debates. Telephony cannot long exist both slave and free. This is why Alexander says we need "an appropriate decision about how to regulate and tax the migration of telecommunications services to the Internet."

Either telephony, Net and traditional, will operate as a heavily regulated state utility or voice traffic will just become something else your broadband pipe does for you when you are not downloading pr0n. And, as part of the bargain, government wiretaps could be a thing of the past, which accounts for Lamar's homeland security worries. Because it doesn't use a simple closed-circuit for transmission, VoIP needs to have government back-door built into it. Trouble is, there is already a move afoot to encrypt those pesky little packets, too.

Although it may be in the midst of a hype bubble, Skype is a VoIP offering that uses very powerful encryption—256 bit—to keep snoopers at bay, be they neighbors, FBI agents, or the National Security Agency. Breaking into such a call with mathematical brute force would take years. One reviewer notes just what this portends:

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>
A practically unbreakable encrypted phone call means that the NSA can be the man in the middle between you talking to your Mom, devote all their resources to cracking the conversation, and never prove in a court of law that you told her you liked the cardigan she knitted you... The encryption is arranged by both PCs taking part in the call, and the keys are unique for each call and thrown away after. An electronic wiretap would require corruption/cooperation of the actual PC making the call using Skype.
<HR></BLOCKQUOTE>

Plus Skype is peer-to-peer, meaning there is no there there when authorities go looking for someone to slap with a court order. In short, VoIP technologies like Skype take the century-long tight, symbiotic relationship between telephone service and government and break it into a million little gabbing nodes.

But still Alexander searches for some technocratic middle-road which can save all the old relationships. Guess he cannot change his stripes.

 

[Phaedrus]

Jeez, even when they're helping they hurt: Senator John Sununu has introduced legislation designed to keep VoIP from being interfered with by individual state governments (story here) ... but like all politics, nothing ever comes without a price, and in this case a particularly insulting one: under the new legislation, all American VoIP companies must contribute to the Universal Service Fund, a government-mandated welfare program that gives away telecom service to the poor and subsidises private companies that enter unprofitable markets.

How exactly this will be assesed for, example, companies in the Netherlands that do not provide US phone numbers, but which can be accessed by any American with a broadband connection, remains to be seen -- but since the answer is almost certainly "Um, well, um, see, we're thinking that most Americans will just use an American company, ok?" what a forced contribution to the USF means is that VoIP is about to get more expensive for anyone who wants to use it, so that dirt farmers in the ass end of nowhere can have e911 service for free.

Much more expensive? No, of course not. USF charges for phone service are negligible; VoIP will likely be even less. But it's the principle of the matter that should be considered.


Phaedrus

 

[Phaedrus]

Suprise, suprise ...

Feds: VoIP a potential haven for terrorists

The U.S. Department of Justice on Wednesday lashed out at Internet telephony, saying the fast-growing technology could foster "drug trafficking, organized crime and terrorism."

by Declan McCullagh
CNET News

Laura Parsky, a deputy assistant attorney general in the Justice Department, told a Senate panel that law enforcement bodies are deeply worried about their ability to wiretap conversations that use voice over Internet Protocol (VoIP) services.

"I am here to underscore how very important it is that this type of telephone service not become a haven for criminals, terrorists and spies," Parsky said. "Access to telephone service, regardless of how it is transmitted, is a highly valuable law enforcement tool."

Police been able to conduct Internet wiretaps for at least a decade, and the FBI's controversial Carnivore (also called DCS1000) system was designed to facilitate online surveillance. But Parsky said that discerning "what the specific (VoIP) protocols are and how law enforcement can extract just the specific information" are difficult problems that could be solved by Congress requiring all VoIP providers to build in backdoors for police surveillance.

The Bush administration's request was met with some skepticism from members of the Senate Commerce committee, who suggested that it was too soon to impose such weighty regulations on the fledgling VoIP industry. Such rules already apply to old-fashioned telephone networks, thanks to a 1994 law called the Communications Assistance for Law Enforcement Act (CALEA).

"What you need to do is convince us first on a bipartisan basis that there's a problem here," said Sen. Ron Wyden, D-Ore. "I would like to hear specific examples of what you can't do now and where the law falls short. You're looking now for a remedy for a problem that has not been documented."

Wednesday's hearing was the first to focus on a bill called the VoIP Regulatory Freedom Act, sponsored by Sen. John Sununu, R-N.H. It would ban state governments from regulating or taxing VoIP connections. It also says that VoIP companies that connect to the public telephone network may be required to follow CALEA rules, which would make it easier for agencies to wiretap such phone calls.

The Justice Department's objection to the bill is twofold: Its wording leaves too much discretion with the Federal Communications Commission, Parsky argued, and it does not impose wiretapping requirements on Internet-only VoIP networks that do not touch the existing phone network, such as Pulver.com's Free World Dialup.

"It is even more critical today than (when CALEA was enacted in 1994) that advances in communications technology not provide a haven for criminal activity and an undetectable means of death and destruction," Parsky said.

Sen. Frank Lautenberg, D-N.J., wondered if it was too early to order VoIP firms to be wiretap-friendly by extending CALEA's rules. "Are we premature in trying to tie all of this down?" he asked. "The technology shift is so rapid and so vast."

The Senate's action comes as the FCC considers a request submitted in March by the FBI. If the request is approved, all broadband Internet providers--including companies using cable and digital subscriber line technology--will be required to rewire their networks to support easy wiretapping by police.

Wednesday's hearing also touched on which regulations covering 911 and "universal service" should apply to VoIP providers. The Sununu bill would require the FCC to levy universal service fees on Internet phone calls, with the proceeds to be redirected to provide discounted analog phone service to low-income and rural American households.

One point of contention was whether states and counties could levy taxes on VoIP connections to support services such as 911 emergency calling. Because of that concern, "I would not support the bill as drafted and I hope we would not mark up legislation at this point," said Sen. Byron Dorgan, D-N.D.

Sen. Conrad Burns, R-Mont., added: "The marketplace does not always provide for critical services such as emergency response, particularly in rural America. We must give Americans the peace of mind they deserve."

Some VoIP companies, however, have announced plans to support 911 calling. In addition, Internet-based phone networks have the potential to offer far more useful information about people who make an emergency call than analog systems do.