The Future Regulation of VoIP services

OFCOM has recently published a new statement and a further consultation paper regarding the regulation of VoIP services[1] (the 2006 Consultation) in which it has finally (some 18 months after first consulting on the issue) indicated how it intends to regulate these services in the future. Responses are due by 3 May. The net result is that VoIP operators who include emergency services access as part of their service offering will probably be subject to regulatory obligations in addition to those that apply at present but they will also take the benefit of number portability (discussed below).

 

This could have important implications both for providers and for users of such services.

 

What is VoIP?

 

VoIP is the delivery of voice information in digital form over the Internet rather than via the traditional public switched telephone network.  VoIP services will normally use a broadband connection to provide voice call services (either from a personal computer and dedicated headset or via a traditional telephone handset with an adapter).  However there is a growing trend to make VoIP calls over wireless networks (whether via the unlicensed wi-fi spectrum or via spectrum licensed, for example, to 3G operators like Three[2]).

 

There are several potentially exciting consequences of this technology.  In the first place, it allows users to circumvent traditional phone networks when making calls and so it lets them reduce call charges, especially for long-distance or international calls.  In addition, the nature of VoIP means that users can use entirely new services and features.  They can, for example, access their VoIP services and make and receive calls on the same phone number whether connected in their home, anywhere in the UK or even abroad.

 

Legislative framework for electronic communications providers

 

In the UK any provider of an electronic communications service or network must adhere to general conditions of entitlement (the General Terms) set by OFCOM.  Some of these General Terms apply only to providers of ‘public’ networks or services, and a smaller set apply only to entities providing ‘publicly available telephone services’ (PATS).  To qualify as a PATS provider, the service being provided must:

 

·         be available to the public

·         allow the originating and receiving of national and international calls

·         give access to emergency services

·         use telephone numbers in a national or international telephone numbering plan.

 

A PATS provider not only has certain additional regulatory obligations (such as the obligation to ensure the ‘proper and effective functioning of the network’) but is also entitled to certain benefits such as the portability of numbers (see below).

 

Regulation of VoIP

 

The General Terms were not originally drafted with VoIP services in mind. As far back as 2004 OFCOM noted the problem of there being a disincentive to provide emergency services.  This arises because, where a telecommunications provider provides access to emergency services (and meets the other conditions for PATS providers as set out above), it will be subject to the additional regulatory requirements of the General Terms applicable to PATS providers only.  Therefore by not offering emergency services access, the provider will not fall within the category of a PATS provider and thus will not be subject to these additional regulatory requirements.

 

Access to emergency services

 

In its 2004 Consultation, OFCOM introduced a policy which aimed to avoid this problem. It did this by saying that Service Providers could offer access to emergency services without being subject to the other obligations applicable to PATS providers.  This measure, though on its face contrary to European law, was intended to encourage VoIP providers to offer some form of emergency services access by reducing the regulatory burden which would otherwise be applicable to them as PATS providers. 

 

In its 2006 Consultation OFCOM has decided that this “interim forbearance” policy will no longer continue.  This means that where a VoIP provider meets the PATS criteria (as set out above), it will now be subject to all the obligations of PATS providers.  Where a VoIP provider does not meet all of the PATS criteria, it cannot be considered to be a PATS service and therefore cannot enjoy the benefits afforded to PATS providers, such as number portability (see below).

 

This change in policy will take effect as of the statement following the 2006 Consultation, which is expected in August 2006.

 

Number Portability

 

Closely linked to the issue of access to emergency services is number portability.  This is the ability for a user to change network operator whilst retaining the same number.  As explained above, only communication service providers qualifying as PATS (and therefore offering access to emergency services) benefit from number portability (though it is worth noting that all service providers, whether or not PATS, have an obligation to offer it when a customer ports their service to a PATS operator).  It is believed that number portability will be important to the expansion of VoIP so the incentive to qualify as a PATS provider is clear.

 

As part of the 2004 Consultation, OFCOM stated that it would not expect a communications provider to provide portability to a provider of PATS if that provider was not complying with its full PATS obligations as a result of OFCOM’s “interim forbearance” policy explained above.  In the 2006 Consultation, OFCOM has indicated that it will now require all communications providers to provide number portability as soon as is reasonably practical on reasonable terms for all services which fall within the meaning of a PATS.

 

Therefore where a VoIP provider does not fall within the definition of PATS (for example where it does not provide access to emergency services) it will not enjoy the benefits of number portability.  On the flip side, VoIP operators must offer number portability to their subscribers where they wish to move from an existing VoIP operator to a communication service provider falling within the definition of PATS (whether another VoIP or non-VoIP service).

 

Essential requirements guidelines

 

In 2002 Oftel published a set of guidelines known as the essential requirement guidelines[3] which set out the appropriate measures a PATS provider should have in place to protect network security and integrity.  However, VoIP services are normally offered by providers who do not control the underlying network so OFCOM has realised now that it is unreasonable to expect them to control the integrity and security of such a network.  OFCOM has therefore withdrawn the Essential Requirement Guidelines.[4]

 

Draft Guidance on application of PATS obligations to VoIP service providers

 

Since more VoIP providers will be subject to the PATS obligation after publication of the statement on the 2006 Consultation (due in August 2006), OFCOM has drafted a set of guidelines which will illustrate how OFCOM would investigate potential contraventions of its requirements or obligations to providers of new services such as VoIP providers.[5] 

 

They discuss the types of steps OFCOM considers that VoIP providers may be required to take to comply with their obligations under the General Conditions.  For example, they suggest that VoIP providers should implement measures to protect the elements of their network not under their control and should carry out a risk assessment over the network service being provided. They also suggest that VoIP operators should take steps to provide location data to the emergency operator services (for example by developing technology to identify location more precisely from an IP address).

 

Information requirement

 

Most respondents to the 2004 Consultation agreed with OFCOM’s view that consumers must be made aware of the differing levels of service and available features between traditional telephone services and VoIP services.  OFCOM has therefore proposed a code of conduct for all providers of publicly available communications services which sets out the type of information which should be made available to customers and the ways in which the information should be presented to them.  In this way, customers will be able to make an informed choice about whether to subscribe to, and use, VoIP service as opposed to traditional telephone services. 

 

The type of information that must, under the Code, be provided is as follows:

 

• service reliability – the provider must inform users of the circumstances in which the VoIP service may cease to function, such as where the broadband connection fails

 

• access to emergency calls – if a provider will not be offering access to emergency services it must inform the user at various stages and, even where emergency service access is provided, the provider will be expected to obtain location information from the user where possible and to explain how this may affect the use of emergency services

 

• ability to port numbers – the provider must inform the user of its rights to number portability and if the provider does not offer number portability as it is not a PATS provider, it must again make this clear to the user throughout the sales process

 

• other information for domestic and small business customers – the provider should explain how other services normally available via a traditional telephone line, such as directory enquiries and caller line ID, may not be provided over the VoIP service.

 

Under each of these headings, the Code sets out in more detail the type of information communications providers must supply to the customer and at what point in the sale process this information should be provided.  It is important to note that it is suggested with many of the information requirements that the information is given at various stages in the sales process (for example in marketing the product and at the point of signature).

 

Conclusion

 

Since OFCOM has now ended its “interim forbearance” policy on the access to emergency services, VoIP operators are clear that, unless they offer emergency service access, they will not benefit from number portability.  The offer of number portability is a considerable incentive for VoIP operators to work around the issues of routing and caller location information to provide a solution for emergency service access thus bringing their service into line with traditional telephone services.  It is, then, expected that most VoIP operators will look to offer emergency service access.

 

The discontinuance of the, arguably illegal, “interim forbearance” policy is also to be welcomed, since it left the industry in a very uncertain state in the long term.  It is hoped that now the industry has a clearer understanding of what is expected users will be more willing to try out these new VoIP services.  However, as with most new technologies, OFCOM has been left trailing in the wake of the VoIP providers and is only just now beginning to catch up and provide UK users with a consistent regulatory regime.

 

 

Mike Conradi (mike.conradi@shlegal.com) is the Head of Technology at, and Travers Symons (travers.symons@shlegal.com) is an assistant in, Stephenson Harwood’s Commercial, Outsourcing and Technology team.