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VoIP Unlikely to Offer Escape From State Law

Voice over Internet Protocol offers promising benefits to the call center industry, but exemption from state regulation may not be one of them, analysts and industry members said.

The technology uses broadband Internet connections rather than traditional telephone lines to send voice communications. New providers such as Vonage and VoicePulse offer VoIP service to businesses and consumers. Established telecoms including AT&T and Verizon have VoIP offerings as well.

VoIP offers consumers cheaper rates on phone time, especially for international calls. Call centers, which buy phone time in bulk, already get cheap rates on calls, but VoIP offers back-end advantages that may prove attractive to the teleservices industry.

State utility regulations long have governed telephone companies. But the Federal Communications Commission this month staked a claim over VoIP, ruling that it would be considered an interstate medium subject to federal telecommunications regulation only.

However, in the ruling, the FCC stated that it did “not express an opinion” about whether state laws affecting other aspects of telephone communication — such as taxation, fraud, marketing and advertising — will apply to VoIP calls. States will continue to play a vital role in protecting consumers, the FCC said.

If the FCC completely removed the states from regulating VoIP calls, that would simplify the jobs of teleservices compliance officers, who currently deal with 50 state laws as well as federal law. However, experts told DM News that the relief the industry may seek from VoIP likely will not be forthcoming.

The perception of VoIP as an unregulated void results from bad reporting, said network technology consultant Thomas Nolle, CEO of CIMI Corp., Voorhees, NJ. The FCC ruling was very limited in scope, stating only that state utility regulations don't apply to VoIP.

“Frankly, that was never in dispute,” he said. “It's not anything anyone was surprised about.”

Other regulations, including consumer rules such as no-call lists, won't be affected, Nolle said. VoIP still offers few advantages to outbound call centers, even when it comes to cost savings.

When a call goes out from a VoIP call center, it must be converted to a traditional phone call unless it reaches a consumer who has VoIP phone service, he said. That boosts costs, and the odds of reaching a consumer with VoIP phone service right now are very low.

For VoIP to work in outbound calling, there needs to be tens of millions of VoIP-using consumers, Nolle said. For 2005, call centers can look to regional Bell companies to offer cost savings on toll-free inbound numbers over VoIP, he said.

Cost savings from VoIP for call centers are not that compelling at the moment, said Chris Selland, vice president of sell-side research with Aberdeen Group, Boston. But the technology offers unprecedented back-end flexibility for call centers.

“In the past, with traditional telephony, making changes was painful,” he said. “You had to move phone switches and so on and so forth.”

VoIP networks make internal network changes easier for call centers, Selland said. The technology also should make it easier to go offshore or to have call center agents work from remote locations, such as their homes, rather than gathering at a call center.

One inbound teleservices provider, Alpine Access, Golden, CO, has all 3,000 of its telephone agents working from remote locations. However, the agents hook up to Alpine Access' network over traditional phone lines, not VoIP.

Voice calls are extremely sensitive to sufficient bandwidth, and if they don't have enough, the call can be garbled or “echo-ey,” said Jim Ball, co-founder and chief architect of Alpine Access. To ensure call quality, the connection between Alpine Access' network and its agents must, for now, be a traditional phone network.

But for nearly everything else, Alpine Access relies on a VoIP network, Ball said. For example, Alpine Access has multiple co-location facilities with multiple telephone switches, and it uses a VoIP network to move calls between them.

“It's moving to the point that the only thing we're not using VoIP for is the last mile to the [agent's] phone,” he said. “It's much more efficient.”

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