Summary of the CALEA NPRM's Tentative Conclusion Regarding Certain VOIP Services

August 9, 2004. The Federal Communications Commission's (FCC) CALEA NPRM [100 pages in PDF], released on August 9, 2004, tentatively concludes that "``managed´´ Voice over Internet Protocol (``VoIP´´) services are subject to CALEA". (See, NPRM at Paragraph 1.)

The notice of proposed rulemaking (NPRM) elaborates that "We tentatively conclude that providers of managed VoIP services, which are offered to the general public as a means of communicating with any telephone subscriber, including parties reachable only through the PSTN, are subject to CALEA." It bases this conclusion upon the substantial replacement clause of the CALEA. (Footnotes omitted. See, NPRM at Paragraph 56.)

The NPRM also tentatively concludes that "providers of non-managed, or disintermediated, communications should not be subject to CALEA". It adds that these "Non-managed VoIP services" include "peer-to-peer communications and voice enabled Instant Messaging". (See, NPRM at Paragraph 58.)

The NPRM seeks comments on this approach.

There is much to be clarified in this rule making process. The NPRM does not define the term "managed VOIP services". Nor does it explain the dichotomy of managed and non-managed services. The NPRM, taken literally, applies the term "managed" to any service that enables users to reach any phone subscriber. For practical purposes, this would be the capacity to reach a wireline or cellular phone on the PSTN.

The Department of Justice (DOJ) petitioned the FCC with a vastly different concepts of "managed" and "mediator" in mind. The DOJ's petition for rulemaking [83 pages in PDF] references the terms "managed" VOIP services "mediator", in a lengthy footnote. (See, DOJ petition, footnote 39, at pages 16-17.)

The DOJ wrote that a mediated VOIP service is one that is provided by "an entity that both provides the broadband access service that enables the telecommunications ... and acts as a mediator that provides any connection management". This might include a VOIP service offered as part of a cable company's broadband internet access package.

The NPRM, in contrast, does not associate the words managed or mediated with the concept of providing the underlying broadband internet access service.

The DOJ also wrote that "A stand-alone broadband telephony service provider includes entities that do not offer broadband access but do provide fully- or partially-managed broadband telephony service. Stand-alone broadband telephony service providers own or lease transmission facilities in order to manage quality of service and are thereby responsible to the customer for the transport of packets." The DOJ argued that both of these types of services, as well as others, should be subjected to CALEA obligations.

The NPRM tentatively rejects the DOJ's proposed approach. It states that "We tentatively decline to adopt Law Enforcement’s recommendation of basing statutory classifications on proposed ``business models.´´ We have strong concerns that such a regulatory approach could be easily circumvented and could adversely affect innovation by giving VoIP service providers a regulatory incentive (rather than a business or technical incentive) to design their services to avoid falling within one of the covered business models. Nevertheless, we invite comment on the proposed models and on the business model approach generally." (Parentheses in original. See, NPRM at Paragraph 57.)

The NPRM is not clear on the regulatory treatment of a service or application provider who does not own broadband internet access facilities, but does enable subscribers or users to communicate with a device on the PSTN. Under a literal reading of Paragraph 56 of the NPRM, this provider would be subject to CALEA requirements. But, such a conclusion would arguably be inconsistent with Paragraph 51 of the NPRM, which states that the NPRM "does not propose attaching CALEA obligations to services or applications that ``ride over´´ the underlying broadband transmission".