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November 29, 2005

US VoIP industry hangs up momentum as E911 deadline passes

A significant portion of the US VoIP industry is bracing for a slow-down now the US government's deadline, which required all VoIP users in the country to receive emergency 911 calling capabilities as a standard feature, has passed.

By CBR Staff Writer

So-called enhanced 911, or E911, ensures that VoIP users have the same emergency calling features as they would with traditional telephony. Several high-profile cases earlier this year, in which VoIP users called 911 but were mistakenly routed to an answering machine service, were the impetus for the new rules.

But more than 200 VoIP providers, including market leader Vonage Holdings Corp, have told the US Federal Communications Commission they were unable to meet its November 28, 2005 deadline to provide E911. According to the FCC’s mandate, those companies are now prohibited from marketing to or accepting new subscribers in regions where E911 is unavailable.

This is expected to slow down the initiatives of VoIP providers and their vendors, including the deployment of new technologies and service applications. It also may dampen the rapid pace of VoIP adoption in the country, which recently stood at 3.6 million users but increases each week.

Everything is going to be slowed down and have a domino effect, said Michael Khalilian, chairman of the nonprofit International Packet Communications Consortium.

The actual number of VoIP providers who are not in compliance with the FCC’s mandate is likely more in the range of 260 companies, Khalilian said. Many VoIP companies have not yet registered a compliance report with the FCC because they can’t provide E911 in the 120-day timeframe the FCC set, or their paperwork has yet to be processed, he said.

Roughly half of VoIP users in the US are thought to be serviced by cable TV and traditional phone companies that already provide E911.

But for pure-play VoIP providers, such as Vonage, meeting the FCC’s mandate has been a scramble. In its FCC report, Vonage said just 26% of its customers had full E911. The company has more than one million subscribers.

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Some VoIP providers such as 8×8 Inc of Santa Clara, California said they were able to meet the FCC’s requirement. A company spokesperson said the company had employed third-party E911 service providers to help it comply. To just about break even on the cost of using these E911 providers, 8×8 would charge its customers an additional $1.99 per month beginning next year, she said.

At the end of the September quarter, 8×8, which provides the Packet8-branded VoIP service, had 93,000 subscribers.

The additional cost of E911 would likely be passed onto consumers at other VoIP companies too, although the cost to users is not expected to be significant.

However, even E911 service providers, a new breed of companies that have emerged to capitalize on the VoIP industry’s 911 predicament, cannot always guarantee a successful E911 rollout.

A large part of the problem is the unwillingness of some US incumbent local exchange carriers, or ILECs, to open up access of select routers that VoIP companies and E911 service providers need to provide E911.

ILECS and RBOCs [regional bell operating companies] don’t have to give these VoIP companies access because the FCC is not demanding them to do so, IPCC’s Khalilian said.

ILECs are under no legal obligation to cooperate because the FCC categorizes VoIP companies as information service providers rather than telecom services providers. Vonage and several E911 providers have previously described various delay tactics used by ILECS.

Third-party E911 providers, in particular, have met with extreme resistance for cooperation by ILECs, Khalilian said. These E911 providers have asked the FCC to intervene to expedite access, but so far there has been no progress.

Vonage VP for government affairs Chris Murray recently told Computer Business Review that its E911 progress was specifically being held back by RBOC SBC Communications.

As a result, the company expects to have E911 in all its markets by the end of February, contingent of the cooperation of other ILECs that control key 911 technologies.

Until then, Vonage will not be able to market to or sign up new customers in SBC territories, which account for roughly one quarter of its customers.

The FCC, which is headed by chairman Kevin Martin, was urged by House and Senate lawmakers in recent weeks to give VoIP providers more tools to speed deployment, as well as an extension on the deadline. But the FCC didn’t budge.

But Khalilian is optimistic that the FCC’s attitude toward VoIP will experience a sea change at some future point. There is a limit as to how much they can resist VoIP, he said.

He said the government agency needs to implement a regional call center strategy to handle E911 calls, similar to that used in Canada and Japan. He calls for an increased number of public safety answering point call centers, whereby the physical location of 911 calls are received and routed to the proper emergency services.

This would not only help VoIP companies comply with the FCC’s requirements, but provide the infrastructure needed to deal with emerging IP communication applications, Khalilian said.

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