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Regulation and Taxation of VoIP in the USA


VoIP (Voice over Internet Protocol) refers to the technology that enables the transmission of voices through data networks. As the name suggests, VoIP transmissions are carried out using IP (Internet Protocol). The increasing ubiquity of IP voice services in the United States has raised concerns due to unequal regulatory treatment between VoIP services and traditional telecoms providers. This is because these services have provided preferable substitutes for the services of traditional telecoms providers yet they are subject to unclear taxation and regulation rules. Notable among the affected services are the services of the long-distance call through which traditional telecoms providers have been generating a substantial percentage of their revenues. This has attracted the attention of regulators in limiting the negative effects of VoIP in the industry by imposing regulations and taxes (“Internet Law” 1).

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VoIP regulation

As discussed above, VoIP regulation has been largely motivated by the part-provision of VoIP services by standard telephone service providers and the unfairness created by the lack of regulation of VoIP services. Other reasons for VoIP regulation include the fact that VoIP regulatory payments are bound to enable VoIP to expand and the fact that non-regulation may fuel terrorism. Despite the stated need for VoIP regulation, the jurisdiction of the FCC (Federal Communications Commission) has, until recently, excluded the internet from its jurisdiction, and thus VoIP regulation has been beyond the jurisdiction of the FCC. This has necessitated the involvement of Congress in implementing VoIP regulation. VoIP taxation has also raised major concerns related to the imbalance between the business environment of VoIP and that of its competitors. To create a productive balance between the preservation of technology and regulation, Congress passed regulatory acts aimed at refraining states from imposing regulations on internet services. It also issued the FCC with VoIP jurisdiction. This led to the remarkable, issuance of E911 obligations to VoIP emergency service providers (“Internet Law” 1).

The Telecom Act and the VoIP Regulatory Freedom Act

The Telecom Act differentiates telecommunication services from information services in Title I and Title II respectively. The two, therefore, have different regulatory measures under the Telecom Act. VoIP is not clearly defined as either a telecommunications service or an information service. With the jurisdiction over VoIP granted by Congress, the FCC is authorized to impose VoIP regulations under Title I. The FCC has already done that but its regulation only covers a limited number of VoIP services. An example of the regulations it has already imposed is the stated imposition of the E911 (Enhanced 911) requirement for emergency services in 2005 after some people reported that they were unable to reach 911 using VoIP services. Consumers must, however, register and constantly update location information with their providers for the E911 services because VoIP is different from a landline. Congress also introduced the VRFA (VoIP Regulatory Freedom Act) which is aimed at preventing harmful obligations and discriminatory regulations from being imposed on VoIP providers and future similar protocols. This implies that the federal government holds VoIP regulatory power and thus the FCC is authorized to impose regulatory measures (“Internet Law” 1).


Although technology (internet) services are difficult to regulate, the U.S. has made every effort to ensure both the existence of sufficient regulation and motivation for technological advancement. VoIP has specifically proved to be a regulatory challenge but after intervention by Congress, substantial VoIP regulation and taxation rules now exist. This has been achieved by giving most of the VoIP regulatory tasks to the FCC.

Works Cited

International Business Law Services. “Internet Law- Regulation and Taxation of Voice over Internet Protocol (VoIP) in the United States.” 2008. Web.

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