The Federal Communications Commission said its deadline applies to interconnected VoIP providers, meaning those that allow users to send and receive calls from the PSTN. Pure PC-to-PC voice providers are not affected.

E911 provides emergency services staff with a caller’s physical location and callback number, similar to the way landline and mobile calls are handled. Historically, this information for VoIP callers was not sent to 911 services and calls were not always routed to appropriate emergency personnel.

Unlike many large US VoIP sellers, market leader Vonage Holdings Corp does not already have E911. Vonage must now spend tens of millions of dollars to comply, said a company spokesperson, who declined to elaborate.

The amount will be sizable. It certainly is going to be expensive for Vonage in the short term, said IDC analyst Will Stofega. Still, Vonage has been hit with a few high-profile lawsuits in recent months about its non-enhanced 911 service, so, in the long run, the company likely will save on legal expenses as a result of the ruling.

However, it wasn’t immediately apparent just how Vonage will enable E911 in time to meet the deadline.

Vonage told ComputerWire recently that it would spend more than $10m to set up E911 in New York City alone, using the wireless and wireline E911 of Verizon Communications Inc. And it will pay at least $1m per month on an ongoing basis to maintain the service, said Brooke Schulz, Vonage senior VP of regulatory affairs, in a May 4 interview.

Since only one phone network in any given locale is designated for E911 services, it is cheaper for a VoIP retail seller to buy E911 access directly from that network provider, such as Verizon.

Perhaps coincidentally, Vonage announced yesterday it had similar struck deals SBC and BellSouth to purchase access to their wireless and wireline E911 networks.

The major holdout for an E911 deal with Vonage is Qwest Communications International Inc. Vonage is still in talks with Qwest, said Vonage spokesperson Carlos Arcila, who declined specifics. Schulz said a few weeks ago a Qwest deal was likely within the next several weeks.

Arcila said Vonage is considering using companies other than competitive local exchange carriers for E911 service.

Companies such as Level 3 Communications Inc and Global Crossing provide E911 capability as a hosted service. Using them for 911 would be most costly than directly buying E911 access from the phone network.

On the flipside, yesterday’s ruling likely will be a boon for these types of service providers. Level 3 VP Charles Meyers said the company likely would benefit as smaller VoIP sellers who currently don’t provide E911 may now become customers.

Most smaller or new VoIP sellers, and there are about 11,000 of them in the country, do not have E911, said analyst Stofega. For some, the cost of renting E911 from a provider, such as Level 3, will be too high and some will not survive, he said.

Of course, the FCC’s decision was no surprise, but it was not clear whether how long a grace period before compliance it would give. Previously, the industry buzz was between three to six months.

Many VoIP providers seemed more prepared than Vonage for the news. A few weeks ago, VoIP seller SunRocket stopped selling its service in areas it did not have E911.

Indeed, other cable companies with VoIP, including Cablevision, AT&T and TimeWarner already have E911, analyst Stofega said.

Broadband cable company and business VoIP seller Covad Communications Group Inc already enabled E911 to 95% of its VoIP customers. To convert the remainder will be a negligible expense, said Bill Weber, Covad’s VP of regulatory affairs and operations. The company has 690 enterprise customers.

Of course, in the big picture, the VoIP will become a little safer and, therefore, more profilific, said Lynda Starr, VoIP analyst with researcher Frost & Sullivan.