June 16, 2004
Members will hear testimony on the merits of S. 2281. Senator McCain will preside. Witnesses will be announced at a later time.
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Mr. James X. Dempsey
Mr. Chairman, Senator Hollings, Members of the Committee, thank you for the opportunity to testify today on the question of what should be the regulatory framework for voice communication services that use the technologies and infrastructure of the Internet. We commend Senator Sununu for introducing S. 2281, and we commend you, Mr. Chairman, for calling this hearing and for opening this crucial debate. As S. 2281 correctly posits, the Internet and applications like Voice over Internet Protocol (VOIP) services are different from traditional telecommunications services, so significantly different that they have not been and should not be regulated under the traditional regulatory framework for telecommunications. For reasons that are still valid today, the Internet and Internet applications were not included in the regulatory mandates of the Communications Assistance for Law Enforcement Act of 1994 (CALEA). After an in-depth factual inquiry in the early 1990s, Congress focused on specific problems law enforcement agencies were encountering in carrying out surveillance in the public switched telephone network (PSTN). With CALEA, Congress imposed design obligations on already heavily regulated telecommunications common carriers. Congress expressly excluded the Internet from those design mandates, because it was committed to the non-regulatory approach, because it found no problems on the Internet, and because it was uncertain of how surveillance mandates would translate to the Internet. Consequently, the Federal Communications Commission has no authority to extend CALEA to the broadband Internet. Only Congress has that authority, and if Congress looks at the issues, conducting the same type of inquiry that it conducted a decade ago, we believe it will find that CALEA should not be extended to the Internet. As a threshold matter, there is no evidence that CALEA-type mandates are needed for the Internet. Service providers are already committed to cooperating. Moreover, the approach taken by the FCC in applying CALEA to the centralized PSTN – adopting detailed “punchlists” of surveillance features to be applied uniformly and ubiquitously -- is ill-suited to the decentralized architecture of the Internet and the innovative and diverse applications offered over it. There is much of merit in S. 2281, and CDT supports its overall philosophy of treating the Internet differently for regulatory purposes, but we focus in our testimony here on the law enforcement issues. Clearly, the law enforcement and national security interests in being able to carry out electronic surveillance on all forms of communications are very important. However, the Internet today is not a haven for terrorists and drug dealers, and there is nothing in the Sununu bill that would make it so in the future. Tapping the Internet will be different than tapping the telephone system, but on balance it will be no harder, once law enforcement gets up to speed on the technology. If Congress takes account of not only the law enforcement interests but also the other national interests in promoting innovation, maintaining American leadership of Internet technology development, expanding access, keeping costs down, enforcing competition, protecting privacy, and enhancing network security, it will conclude, as the Sununu bill does, that the regulatory framework of CALEA -- designed for the telephone network -- is ill-suited to the Internet and Internet applications. I. CALEA Was Adopted for the PSTN In the early 1990s, during the first Bush Administration and then in the Clinton Administration, the FBI began complaining that technological changes in the PSTN were interfering with law enforcement’s ability to carry out wiretaps. The Justice Department initially asked Congress to enact legislation giving the Attorney General the power to set standards for all providers of electronic communications services. Congress balked at such a sweeping mandate. Instead, Congress insisted first and foremost on a factual inquiry into what exactly were the problems being encountered by law enforcement. Hearings were held. The General Accounting Office conducted two studies. The FBI surveyed its field offices twice. Industry and law enforcement convened action teams to study the concerns of law enforcement and possible solutions. At the end of the process, industry representatives agreed that new technologies were defeating law enforcement surveillance. Some of the problems had to do with features such as call forwarding and speed dialing. Others had to do with the transition to multiplexed lines and fiber optic cables. Yet others had to do with the lack of sufficient capacity on switches to simultaneously accommodate a large number of intercepts. Based on this factual showing, and after further consultation and negotiation, Congress came forth with a bill that was fundamentally different from the one initially sought by the Justice Department. As adopted, CALEA did not give the Attorney General the power to issue standards for telecommunications networks. Instead, CALEA set forth four broad functional requirements, 47 USC §1002(a), and it gave industry the authority to adopt it own standards on how to achieve them, 47 USC §1006(a). If law enforcement was dissatisfied, it had to petition the FCC, 47 USC §1006(b), whose decisions were in turn subject to judicial review. Carriers were required to provide access to information only if it was “reasonably available” to them. 47 USC §1002(a)(2). Private networks were exempted, as were interconnection services. 47 USC §1002(b)(2). The legislation expressly said there was no obligation on service providers to decrypt communications scrambled by end users. 47 USC §1002(b)(3). Enforcement was placed in the courts, and Congress made it clear that no carrier would be found liable if compliance was not reasonable, nor would a carrier be liable if the information was available somewhere else in the network. 47 USC §1007. A separate rulemaking was authorized to establish capacity requirements. 47 USC §1003. Most importantly, Congress chose to extend the design mandate only to those entities providing telecommunications services as common carriers. 47 USC §§1001(8); 1002(a). That is where the documented problems were. That is where there were clear solutions. Congress recognized that the PSTN was a relatively centralized, relatively monopolized industry. The switches for the PSTN were made by a handful of switch manufacturers, who agreed that they had not built in easy intercept access points. The Congress focused its regulatory action on these telecommunications common carriers – entities already subject to a range of regulatory burdens. On the other hand, Congress found that the Internet was not posing a problem. Moreover, Congress was reluctant to impose design mandates on such a diverse and rapidly changing medium. At the time, the regulatory world was divided into two categories: telecommunications services carried over the public switched telephone network, and “information services,” which Congress and the Federal Communications Commission used as shorthand for the Internet and the applications running over it (among other services). Accordingly, Congress limited CALEA to telecommunications common carriers and expressly excluded “information services” such as the Internet from CALEA obligations. The term “information services” was broadly defined to cover current and future advanced software and software-based electronic messaging services, including email, text, voice and video services. Narrowband Internet access and Internet applications like email fit squarely within the definition. As the broadband Internet has evolved, it continues to be outside the scope of telecommunications common carriage, and Internet-based telephony services, like all other Internet applications, fit squarely within the definition of information services. The legislative history could not be clearer: The Committee Report states that CALEA obligations “do not apply to information services, such as electronic mail services, or on-line services, such as Compuserve, Prodigy, America On-line or Mead Data, or Internet service providers.” Telecommunications Carrier Assistance to the Government, H.R. Rep. 103-827(I), at 23 (Oct. 4, 1994) (“House Report”). As the FBI Director testified, CALEA was “narrowly focused on where the vast majority of our problems exist -- the networks of common carriers, a segment of the industry which historically has been subject to regulation.” When the Court of Appeals reviewed the FCC’s CALEA implementation order, the Court noted, “CALEA does not cover ‘information services’ such as email and internet access.” United States Telecom Ass’n v. FCC, 227 F.3d 450, 455 (D.C. Cir. 2000). And the FCC found that information services “such as electronic mail providers and on-line service providers” are exempt from CALEA. In the Matter of Communications Assistance for Law Enforcement Act, Second Report and Order, 15 FCC Rcd 7105, at 26 (1999). II. The Internet is Already Tappable As a legal matter, there is no impediment to tapping voice or data communications over the Internet. The Internet is already subject to the wiretap laws, which authorize courts to issue surveillance orders for all types of electronic communications. Furthermore, all providers of VOIP services are already under a legal obligation to cooperate with all court orders for interception. Under 18 USC § 2518(4), any service provider can be required under a wiretap order to provide “forthwith all information, facilities, and technical assistance necessary to accomplish the interception.” (Similar authority compels the assistance of service providers in carrying out interceptions of signaling information under the pen register and trap and trace statute, 18 USC § 3124(a).) Moreover, as a practical matter, the broadband technologies used for VOIP are already tappable at one or more points in the networks. Service providers are quite willing to work with law enforcement to satisfy interception orders quickly and fully when they receive them. The cable industry has already developed a standard for interception of voice communications offered by cable companies. Cisco, a major maker of Internet routing equipment, already offers an interception capability in its equipment. Companies like VeriSign are offering packet interception services. Last year, only 12 of the 1,442 state and federal wiretap orders were issued for computer communications, and the FBI has not argued that it had difficulty implementing any of those 12 wiretaps. Indeed, out of all 1,442 authorized wiretaps, the “most active” was the interception of a DSL line in Minnesota, suggesting that law enforcement agencies can readily intercept broadband communications. III. CALEA Implementation in the PSTN Has Been Plagued by Problems Even as applied to the relatively centralized PSTN, CALEA has not worked well. The FBI and DOJ admit as much in their petition to the FCC. Indeed, their petition is almost schizophrenic: the first half argues that the Internet should be brought within the regulatory scheme of CALEA while the second half lays out a litany of delays, confusion and controversy under CALEA as applied to the PSTN. The FBI states that the CALEA implementation process “is not working.” Petition, at 38. It cites “problems and delays,” id. at 53; a “seemingly endless cycle of extensions that have consistently plagued the CALEA compliance process,” id. at 55; and more “problems and delays,” id. It states that “carriers continue to express uncertainty,” id. at 64, and that “a growing number of law enforcement agencies have increasingly expressed concern,” id. at 68. This record of disfunctionality is confirmed by a report by the Office of the Inspector General (OIG) of the U.S. Department of Justice, issued on April 7, 2004. The OIG's biannual audit, mandated by CALEA, evaluates the progress of CALEA compliance, and finds broad problems. The report, for example, notes that costs of CALEA for the PSTN have been much higher than Congress anticipated. The report also shows that the FBI's insistence on it “punchlist” has caused enormous problems within the CALEA standards setting efforts of industry. Simply put, CALEA has proven to be a flawed statute. As to why, there is probably enough blame to go around. One key factor is that, contrary to Congress’ intent, the FBI exercised de facto power to impose specific design mandates on the PSTN. This came about as a result of the interplay between the law’s safe harbor provision and the process for FCC review of standards. As industry tried to develop a standard to implement CALEA, the FBI issued detailed “requirements” documents defining very precise features it wanted built into communications equipment and architectures. The FBI told carriers that it would challenge as deficient any standard that did not include all its stated “requirements.” Carriers and their equipment manufacturers were eager to take advantage of CALEA’s safe harbor provision, and incorporated many of the FBI’s design features, even if they did not seem to be required by CALEA. Nevertheless, at the end of the day, the FBI challenged the industry standard as deficient before the FCC because it did not include each and every item. The FCC thereupon ordered the industry standard rewritten to conform to the FBI’s “punchlist.” In this process, the FBI succeeded in imposing on industry surveillance features that went beyond even the capabilities of the traditional telephone system. For example, the FCC imposed at least $120 million in costs on industry to obtain one feature known as “dialed digit extraction,” which requires local exchange carriers, after call set-up, to reach into the content of the communications and extract additional dialed numbers, such as the numbers called on a long distance calling card. The FBI could have obtained the information it wanted by going to the providers of long distance services, but it wanted to obtain the information more conveniently through the local phone system. But this solution was very expensive solution for carriers. Indeed, the FBI could have purchased the extraction devices itself and attached them as necessary, a solution that the FBI itself estimated would cost no more than $20 million a year, but instead the FBI insisted that all carriers install them on all switches. The FBI also successfully convinced the FCC to impose on industry millions in dollars of costs in order to provide separate identifying notices every time a party on a conference call joined, dropped off, or put the call on hold. In these and other ways, the FBI used CALEA to expand, rather than merely preserve, its intercept capabilities as technology changed. IV. Meeting Law Enforcement Needs in a Sensible Way Clearly, a different approach is needed for the Internet. Government agencies should not expect that surveillance will be carried out on the Internet the same way it is carried out in the circuit-switched telephone network. The digital revolution has produced many means of communication and it is not reasonable to require that all of them identify calls and route traffic the same way that the telephone network does. Internet interception may be less convenient for law enforcement than PSTN interception; given the diversity of services, the information will come in different formats and law enforcement will have to work harder to determine what it is intercepting. In many cases, law enforcement agencies will have to decode call-identifying information themselves. In some situations, law enforcement will have to obtain call-identifying information from an entity other than the one from which it obtains content. In other ways, however, Internet surveillance will be easier, in that the digital nature of communications makes them easier to analyze, store, manipulate and transfer. And Internet surveillance will certainly be more fruitful, with no need for design mandates, as more and more information moves online. Yet the Justice Department and the FBI are trying to force the diversity of services available over the Internet into a single format resembling the telephone network. To do so would irreparably harm the Internet. It would drive up costs for consumers, impair and delay innovation, threaten privacy, and force development of the latest Internet innovations offshore. It is directly contrary to the approach to the Internet that Congress has wisely pursued for the past decade -- that it remain a relatively unregulated area where new technologies can thrive. Instead of forcing industry to redesign its products and services to meet government specifications, law enforcement should itself develop the capabilities that it wants to impose on industry. In other words, law enforcement should develop the capability to extract call-identifying information from packet streams. The government will have to develop this capability in-house anyhow, because it will have to be able to deal with sophisticated criminals who can entirely avoid third party service providers and communicate directly and with custom-built protocols. Far and away the most effective approach to Internet interception is for law enforcement to develop the ability to understand Internet communications. Perhaps Congress should appropriate additional funds to the FBI to keep pace with technology and to support state and local law enforcement efforts. Perhaps ways need to be found to draw upon expertise from the private sector. We note that “service bureaus” have come into the market, offering to take on the task of processing digital intercepts. Rather than demanding that Internet communications be translated into circuit-switched terms, a solution suited to the Internet would probably best be built on the “layered” nature of its architecture. The focus of interception should be at the transport layer, not at the application layer, and the provider of transport services should be obligated only to isolate and deliver to law enforcement the data stream associated with a particular subscriber. Conclusion Congress has taken a relatively non-regulatory approach to the Internet and has refrained from applying to the Internet common carriage status and other regulatory burdens applied to telephone companies. CDT has consistently supported this approach. The Internet’s rapid growth and innovation attest to the wisdom of this policy. We are now in a time of transition from the narrowband, dial-up Internet of the past to the broadband Internet. The high speed Internet access available via cable modem and digital subscriber lines (DSL) is capable of carrying voice communications of high quality, as well as numerous other applications. This is precisely the wrong time to shoe-horn the Internet into the telecommunications regulatory structure. CALEA was adopted in 1994 in response to law enforcement concerns that wiretaps would be more difficult in advanced telephone networks. CALEA required telecommunications common carriers to design basic wiretap capabilities into their telephone networks. However, Congress decided in 1994 that CALEA should not apply to the Internet and “information services” carried over it, and rejected FBI proposals that would have gone that far. VoIP, email, Instant Messaging and other forms of Internet communications are information services and thus are not covered by CALEA. The regulatory framework of CALEA is not suitable for the Internet and Internet applications. The FBI and the Justice Department are absolutely correct when they say that the world of communications has changed dramatically since CALEA was enacted. That is exactly why applying a 10 year old law to this rapidly evolving technology would be a mistake. In sum, expanding CALEA to information services and the Internet would be inappropriate for three reasons: · It would be unlawful for the FCC to do so – the text of the CALEA excludes broadband Internet access and broadband applications. · It would be unwise for Congress to do so – CALEA-type mandates would drive up costs, impair and delay innovation, threaten privacy and force development of the latest Internet innovations offshore. · It would be unnecessary in any event – law enforcement already has Internet surveillance abilities through other statutes and through the cooperation of service providers.
Ms. Laura ParskyDeputy Assistant Attorney GeneralU.S. Department of Justice
I. Introduction Good morning Chairman McCain, Ranking Member Hollings, and Members of the Committee. I appreciate the opportunity to testify this morning about telephone service that uses the Internet Protocol (“VoIP”). How you treat this service will profoundly impact the Department of Justice’s ability to protect communities across the nation from the harms inflicted by drug trafficking, organized crime, and terrorism and fundamentally to protect the national security of the United States. It is imperative that public safety and national security concerns be carefully considered when evaluating advances in communications technology. II. VoIP Presents Both Opportunities and Challenges. First, I want the Committee to know that the Department of Justice is keenly aware that telephone service that uses the Internet Protocol has the potential to provide tremendous benefits to the American consumer. We are hopeful that this form of telephone service will cost less, provide better service, and include exciting new features. The Administration has spoken in favor of VoIP in the past, and the Administration continues to support the rollout of new technologies, such as VoIP. As with all new technologies, the Department of Justice celebrates the benefits it promises, while at the same time working vigorously to protect our country and citizens against its misuse. III. Electronic Surveillance is a Critical Law Enforcement Tool. As part of that work, I am here to underscore how very important it is that this type of telephone service not become a haven for criminals, terrorists, and spies. Access to telephone service, regardless of how it is transmitted, is a highly valuable law enforcement tool. Not only is electronic surveillance one of the most effective tools government has to combat crimes such as terrorism, espionage, and organized crime, but it is often the only effective tool. Any criminal conspiracy requires communication in order to operate. Today, these communications often do not occur in person, where law enforcement could observe a meeting taking place -- could see people physically coming and going. Instead, criminals do what many of us do, they use the telephone. Telephones allow criminals to coordinate their activities and allow organizers and kingpins to keep their hands clean of the most sordid criminal conduct. Federal and state prosecutors often note the importance of evidence gathered through electronic surveillance in obtaining arrests and convictions. Last year alone, 3,674 people had been arrested based on evidence obtained through wiretaps. Over the past ten years, over 54,000 people have been arrested based on wiretap evidence. That is up to 54,000 criminals that might have escaped justice had court-ordered electronic surveillance not been available. Electronic surveillance not only provides otherwise unobtainable evidence of criminal activity, but it also helps the authorities prevent crimes and save lives. For instance, in his 1994 testimony, former Director of the Federal Bureau of Investigation (“FBI”), Louis Freeh, described how electronic surveillance led to prevention of terrorist attacks such as the planned rocket attack against an FBI field office and an attack on a nuclear power facility. Electronic surveillance is also a critical law enforcement tool to identify and dismantle organized criminal organizations, including major national and international drug cartels. Last year, a wiretap in California led to seizures of literally thousands of tons of illegal drugs and millions of dollars. Another wiretap investigation led to over one hundred arrests, as law enforcement dismantled an international drug distribution ring that was responsible for vast quantities of heroin and cocaine coming into the United States from Columbia through Aruba. Electronic surveillance has allowed us to take cocaine, heroin, methamphetamine, and many other dangerous drugs off our streets and away from our children. Because electronic surveillance is such an effective law enforcement tool, criminals go to great lengths to shield their telephone communications. One tactic they employ is to use a wide array of communication devices, trying to isolate the damage done if a particular means of communicating is compromised. For instance, a recent Drug Enforcement Administration investigation revealed a Miami drug trafficker who is known to have used 20 different cellular phones in a three-month period. What is more, we know that when it becomes known that law enforcement has difficulty detecting communications over a particular technology, criminals quickly migrate to that technology. While I obviously cannot go into detail on this point, suffice it to say that criminals do not want to be caught, and they are quick to take advantage of any gap in our ability to detect and disrupt their criminal activities. If criminals could use new technologies to avoid law enforcement detection, they could use these technologies to coordinate terrorist attacks, to distribute drugs throughout the United States, and to pass along national security secrets to our enemies. If the criminals were successful, we would learn about these plots only after terrible damage had been done, or in some cases not at all. Put simply, law enforcement cannot effectively protect the public and enforce the laws in today’s world without electronic surveillance. IV. Because Electronic Surveillance Is Such A Powerful Tool, It Is Rightfully Subject To Equally Powerful Limits On Its Use. While electronic surveillance is a necessary tool, we are mindful that it is also a very powerful tool, which has serious implications for the privacy of citizens. As such, we only use electronic surveillance as a tool of last resort, and even then we adhere to strict limitations on its use. First, the U.S. Constitution places important parameters on our use of electronic surveillance. Under the Fourth Amendment, the government must demonstrate probable cause to a neutral magistrate before obtaining a warrant for a search, arrest, or other significant intrusion on privacy. Congress and the courts have also provided statutory limits beyond those required by the Constitution. For instance, law enforcement must obtain a “trap and trace” or “pen register” court order in order to obtain information identifying who is sending or receiving communications to or from a particular suspect, even though not required under the Constitution. See 18 U.S.C. 3121 et. seq. The Wiretap Act, 18 U.S.C. §§ 2510-22 (“Title III”), places an even higher burden on the real-time interception of the content of wire communications. The Senate Report on Title III stated explicitly that the legislation "has as its dual purpose (1) protecting the privacy of wire and oral communications and (2) delineating on a uniform basis the circumstances and conditions under which the interception of wire and oral communications may be authorized." Senate Committee on the Judiciary, Omnibus Crime Control and Safe Streets Act of 1967, S. Rep. No. 1097, 90th Cong., 2d Sess. (1968) at 66. Accordingly, under Title III, in order to obtain a court order to capture communications as they occur, the government must show that normal investigative techniques for obtaining information about a serious felony offense have been or are likely to be inadequate or are too dangerous, and that any interception will be conducted so as to ensure that the intrusion is minimized. Even beyond the limits placed by the Constitution and the Congress, the Department of Justice has its own internal procedures to provide still more safeguards. For example, the Office of Enforcement Operations (“OEO”) in the Criminal Division of the Department reviews each proposed Title III application to ensure that the request for interception satisfies the protections of the Fourth Amendment and complies with applicable statutes and regulations. Even if OEO recommends authorizing a request, the application cannot go to a court without approval by a Deputy Assistant Attorney General or higher-level official in the Department. The fact that not a single application for electronic surveillance under Title III was rejected by a federal court in all of 2003 is a testament to the vigilance and care the Department takes when asking for this authority. If the Department of Justice approves a federal Title III request, it still must, of course, be submitted to and approved by a court of proper jurisdiction. The court will evaluate the application under the Fourth Amendment and using the familiar standards of Title III. By statute, for example, the application to the court must show, through sworn affidavit, why the intercept is necessary as opposed to other less-intrusive investigative techniques. The application must also provide additional detail, including whether there have been previous interceptions of communications of the target, the identity of the target (if known), the nature and location of the communications facilities, and a description of the type of communications sought and the offenses to which the communications relate. By statute and internal Department regulation, the interception may last no longer than 30 days without an extension by the court. All intercepted communications are sealed by the court, further protecting privacy. Often courts also impose their own safeguards. For example, many federal courts require that the investigators provide periodic reports to the court setting forth information such as the number of communications intercepted, the steps taken to minimize irrelevant traffic, and whether the interceptions have provided information relevant to the criminal investigation. The court may, of course, terminate the interception at any time. The remedies for improperly intercepting communications in violation of Title III or the Electronic Communications Privacy Act (“ECPA”) can include criminal sanctions, civil liability, and, for law enforcement agents, adverse employment action. For violations of the Fourth Amendment, of course, the remedy of suppression is also available. All of these requirements and procedures ensure that electronic surveillance is only used when absolutely necessary to detect and prosecute serious criminal violations. It is a tool of last resort reserved for only the worst offenses against our civil society. It is done with the approval and oversight of the courts, and done in ways as narrowly tailored as possible to the investigation of specific individuals for specific criminal conduct. Further, if it is misused, there are serious consequences. V. CALEA is Critical to Implementing Court Orders Authorizing Electronic Surveillance. While electronic surveillance is a critical tool for law enforcement, it is not always easy to implement, and it is becoming even more difficult. In the past, when law enforcement agencies conducted court-authorized electronic surveillance, they were able to go to one provider and access a “local loop” that allowed a single location for the collection of content and related dialing information for all communications with the subject’s telephone number. However, it has been a long time since all that was required to implement a court order for electronic surveillance was a call to Ma Bell and a set of alligator clips. Today, communications are transmitted over many different wires and cables and over a myriad of frequencies through the air. These communications are provided by many different companies who use many different protocols. Making matters even more difficult, the parties that provide the transmission and switching of these communications may have no relationship with the providers who perform call set-up and addressing functions. It is because of both the breadth of services and the technical complexity of features associated with each one that law enforcement relies on the designers to assist in providing interception capability for the select cases where a court has ordered such interception. The Congress has already recognized this problem and taken decisive action to prevent public safety and national security from being imperiled as a result of the digital communications revolution. In 1994, Congress “concluded that there is sufficient evidence justifying legislative action that new and emerging telecommunications technologies pose problems for law enforcement.” In response, you prudently passed the Communications Assistance for Law Enforcement Act (“CALEA”). In enacting CALEA, you made clear that the purpose of the statute “is to preserve the government’s ability, pursuant to court order or other lawful authorization, to intercept communications involving advanced technologies such as digital or wireless transmission modes, or features and services such as call forwarding, speed dialing and conference calling, while protecting the privacy of communications and without impeding the introduction of new technologies, features and services.” Thus, CALEA struck a balance among sometimes competing goals. As the legislative history makes clear, “the bill seeks to balance three key policies: (1) to preserve a narrowly focused capability for law enforcement agencies to carry out properly authorized intercepts; (2) to protect privacy in the face of increasingly powerful and personally revealing technologies; and (3) to avoid impeding the development of new communications services and technologies.” In crafting this solution, you wisely did not limit CALEA’s scope to just one particular technology, service, or suite of features, but rather set in place a structure that anticipated and provided for a vast array of technological advances. As the then Director of the FBI testified in support of the legislation, it was intended to stand the test of time and overcome the shortcomings of the 1970 amendment. It is specifically designed to deal intelligently and comprehensively with current and emerging telecommunications technologies and to preclude the need for much more restrictive and more costly legislation in five or ten years when court-authorized interceptions would no longer be possible due to further technology advances. Any legislation that would limit its application to technological impediments on a piecemeal basis would be disastrous. Piecemeal legislation which deals only with current problems or some of the problems would result in common carriers fully deploying new technologies which would impede electronic surveillance and which would cause the government to return to Congress repeatedly. Hearing on Police Access to Advanced Communications Systems Before the Senate Subcommittee on Technology and the Law of the Committee on the Judiciary and the House Subcommittee on Civil and Constitutional Rights of the Committee on the Judiciary (statement of Louis J. Freeh, Director of the Federal Bureau of Investigation) (“Freeh CALEA Testimony”). Thus, Congress has already recognized the importance of ensuring that, as advanced telephone service technologies develop, they must have the technical ability to implement court orders for surveillance. Now, ten years later, we must not back away from the important principles behind CALEA. If anything, it is even more critical today than in 1994 (when CALEA was enacted) that advances in communications technology not provide a haven for criminal activity and an undetectable means of death and destruction. It is important to be very clear here - we ask today only that you not undermine current capabilities to implement court orders and conduct critical law enforcement activities. CALEA is about the practical necessity of implementing existing lawful authority, not expanding it. Congress said so itself, noting in the legislative history to CALEA that “[s]ince 1968, the law of this nation has authorized law enforcement agencies to conduct wiretaps pursuant to court order. That authority extends to voice, data, fax, E-mail and any other form of electronic communication. The bill will not expand that authority.” Nothing in CALEA gives law enforcement the authority to conduct any surveillance. It is only after all of the comprehensive regulatory, statutory, and Constitutional protections described above have been complied with that CALEA comes into play and ensures that the order of the court can be carried out. In fact, CALEA explicitly and intentionally protects privacy in very important ways. As the House of Representatives explained in its report on CALEA, “the bill further protects privacy by requiring the systems of telecommunications carriers to protect communications not authorized to be intercepted.” It does this in two ways. First, CALEA requires that providers be able to separate out the communications of just the subscriber for whom law enforcement has an order to intercept communications. This provision benefits both efficiency and privacy. Second, CALEA requires that a service provider be able to separate out call-identifying information from the content of communications. This protects the call content from law enforcement access where law enforcement only has legal grounds to obtain the call-identifying information. VI. The Application of CALEA to Advanced Telecommunications Technologies Is at Issue in Proceedings Before the Federal Communications Commission. This hearing comes in the midst of a vibrant debate on similar issues at the Federal Communications Commission (“FCC”). The FCC recently issued its Notice of Proposed Rulemaking concerning the appropriate treatment of IP-enabled services, including telephone service that uses the Internet Protocol. Hundreds of parties have submitted their thoughtful consideration of the issue, including the Department of Justice. With regard to CALEA in particular, the Department of Justice has petitioned the Commission for an expedited rulemaking to clarify which services and entities are subject to CALEA. We expressed our view that broadband access and broadband telephony service providers are “telecommunications carriers” under CALEA, and, therefore, they must be capable of implementing court orders for surveillance. In both the IP-enabled services and CALEA proceedings at the FCC, the Department of Justice has made the same points that I want to emphasize here this morning: (1) that public safety and national security will be compromised unless court orders for electronic surveillance can be implemented by providers; (2) that assistance requirements should apply to every service provider that provides switching or transmission, regardless of the technologies they employ; and (3) that if any particular technology is singled out for a special exemption from these requirements, that technology will quickly attract criminals and create a hole in law enforcement’s ability to protect the public and the national security. The CALEA proceedings in particular are creating a compelling record regarding the drastic consequences if we were to fail to provide law enforcement the tools it needs to protect public safety. Thus far, dozens of state and local law enforcement entities - from New York to Los Angeles and dozens of places in between - have filed comments at the FCC emphasizing the critical need for these tools and the dire consequences of failure. It is not surprising that so many police chiefs and district attorneys came out in strong support of the Department in this matter, because state and local governments account for almost three-fifths of all wiretap applications. As the National Association of District Attorneys expressed so well in their comments to the FCC in the CALEA Rulemaking proceeding: For over a decade we have been pleading for the tools and the laws we need to protect the people in our communities. We will never know whether we could have prevented the tragic consequences of September 11th had we had the investigative tools we have been asking for since 1992. We only know that we will need every advantage to prevent such a tragedy from ever occurring again. Comments of the National Association of District Attorneys, In the Matter of Joint Petition for Rulemaking to Resolve Various Outstanding Issues Concerning the Implementation of the Communications Assistance for Law Enforcement Act, RM-10865, at 2. We are also pleased that a number of the Commissioners have already publicly acknowledged the need to preserve law enforcement access to telephone service that uses the Internet Protocol. Chairman Powell was unequivocal in his statement accompanying the recent IP-Enabled Services Notice of Proposed Rulemaking. He stated: CALEA requirements can and should apply to VoIP and other IP-enabled service providers, even if these services are “information services” for purposes of the Communications Act. Nothing in today’s proceeding should be read to suggest that law enforcement agencies should not have the access to communications infrastructure that they need to protect our nation. On the contrary, all IP-enabled services should consider the needs of law enforcement as they continue to develop innovative technologies. Statement of Chairman Michael K. Powell, In the Matter of IP-Enabled Services: Notice of Proposed Rulemaking, FCC 04-28. Further, many responsible members of the communications industry have agreed with the Department that their assistance is critical to public safety and national security. One member of the industry put it simply: "American citizens should be assured that communications companies are providing appropriate help to law enforcement." Comments of the United States Telecommunications Association, In the Matter of IP-Enabled Services: Notice of Proposed Rulemaking, FCC 04-28, at 36-37. There is one aspect of the Department’s position in the CALEA proceedings before the FCC that is important to clarify to avoid misunderstanding. Law enforcement does not seek the power to dictate how the Internet should be engineered or the power to veto the deployment of new telecommunications services. CALEA specifically states that it “does not authorize any law enforcement agency or officer to require any specific design . . . .” 47 U.S.C. 1001(b)(1)(A). Nor does CALEA authorize law enforcement “to prohibit the adoption of any equipment, facility, service, or feature . . . .” 47 U.S.C. 1002(b)(1)(B). As law enforcement requested, Congress made the providers’ obligations under CALEA generic by design. The then Director of the FBI could not have been more clear on this point, when he testified in support of the CALEA legislation in 1994: The Government purposely eschewed setting any technical standards because it does not desire to ‘dictate’ particular technological solutions. It is the Government’s position that each common carrier is best positioned and qualified to determine how it will meet the requirements in the most cost-effective way. Freeh CALEA Testimony. Law enforcement cannot - nor do we seek to – dictate to any carrier how best to design their service or what services they can or cannot offer. We only ask that any service comply with the law in order not to imperil public safety and national security. VII. S. 2281 Could Significantly Diminish the Department of Justice’s Ability to Investigate Serious Crimes and Protect the Safety of the American People. With regard to the bill that is the subject of this hearing, S. 2281, the Department of Justice has a number of comments, all of which we hope to provide formally in writing in the near future. Given the focus of this hearing, however, I will limit my remarks to how the bill could impact CALEA and law enforcement’s ability to implement court-ordered electronic surveillance. In this regard, the Department of Justice is concerned that S. 2281 could be read to significantly diminish the Department’s ability to investigate serious crimes and protect the safety of the American people. S. 2281 seeks to exempt providers of telephone service that uses the Internet Protocol from many obligations to which other telephone companies are subject. The Department of Justice recognizes that this Committee rightfully must consider whether this type of telephone service may require different regulatory treatment for many purposes, including economic. When considering such regulatory treatment, it is very important to keep in mind how it will impact our CALEA authority and the implications for public safety. Recognizing the importance of law enforcement access to this type of telephone service, the bill would require the Commission to “require a provider of a connected VOIP application to provide access to necessary information to law enforcement agencies[;]” however, the bill restricts the obligation to “not less than that required of information service providers.” Two aspects of this provision could result in a diminished or inadequate ability for law enforcement to fulfill court orders for electronic surveillance. A. S. 2281 Only Identifies Assistance Requirements for Providers Who Interconnect with the Publicly Switched Telephone Network. First, S. 2281 only requires law enforcement’s access to “connected VoIP application[s].” The bill defines a “connected VoIP application” as “a VoIP application that is capable of receiving voice communications from or sending voice communications to the public switched telephone network, or both.” In other words, the bill protects law enforcement access to those technologies that continue to rely on one particular set of wires, the publicly switched telephone network. As the Congress already recognized when it passed CALEA, limiting law enforcement’s ability to obtain assistance from a provider to only a particular type of wires, nevermind one that is quickly being overtaken by new innovations, can significantly diminish law enforcement’s ability to protect public safety and national security. B. S. 2281 Could Be Read to Limit the Obligation To Provide Government Access To “Not Less Than That Required of Information Service Providers.” Second, and more importantly, the bill would require law enforcement access to necessary information be “not less than that required of information service providers.” Although it is unclear what this provision is intended to mean, it runs the risk that it could be interpreted as a ceiling rather than a floor. Currently, CALEA exempts “information services” from its assistance capability requirements. If telephone service providers were to have only the obligations of those entities that are information service providers under CALEA, then they would be exempt from CALEA and the Department of Justice’s ability to investigate serious crimes and protect national security would be undermined. VIII. Conclusion Mr. Chairman, the Department of Justice appreciates your support as we continue with the difficult work of protecting our nation and enforcing our laws during times of rapid technological change. We are concerned that S. 2281 could create a safe haven for criminal activity by not preserving the application of CALEA to new technologies. It is very important that, in taking action regarding telephone service that uses the Internet Protocol, Congress carefully consider implications to public safety and national security. Thank you for the opportunity to testify before you today, and I am happy to answer any questions the Committee may have.
Witness Panel 2
Mr. Tom RutledgeChief Executive OfficerCablevision Systems Corporation
Click here for a PDF version of Mr. Rutledges's remarks.
Mr. Jeff Pulver
Mr. Chairman and Members of the Committee, thank you for inviting me to testify today on Senate Bill S. 2281, “The VoIP Regulatory Freedom Act of 2004.” I should mention at the outset that I have no formal telecommunications training. I have formed my opinions of communications from my almost 30 years as an Amateur Radio operator, my decade on the Internet, and my life experiences interacting with computers. I grew up in a family that supported the merits of Ham Radio. I learned Community at an early age, participated in Field Day -- our annual test to demonstrate preparedness for emergency communications -- and helped pass emergency communications traffic whenever asked. Thanks to my life experiences, I would like to think that my thought process is not constrained by anything other than my imagination. I became a full-time VoIP hobbyist in 1995, combining my passion for community and technology and connecting my Ham Radio to the Internet to communicate with people around the world. This overall perspective drives my passion for Free World Dialup, which over the years has evolved into a peer-to-peer IP communications application. Free World Dialup was, in fact, the subject of the Federal Communications Commission’s (FCC) first order, and perhaps the world’s first positive regulatory statement, on IP communications. In the pulver Order, the FCC recognized Free World Dialup as an “information service” and exempted it from telecommunications regulation and state jurisdiction. When I look to the future, end-to-end IP networks have the power to disrupt traditional telecommunications and to empower consumers and enterprise users of future communications services. Over the next 7 to 10 years, as traffic moves from legacy networks to wireless and broadband, what will be needed is just fair and unfettered access to the Internet and maybe not much more. The advent of Open Source communications is helping to level the playing field and to put high quality communication software into the hands of hobbyists and communication enthusiasts for free. As much as there are email and web servers on the Net today, look for communications servers to become part of the Internet experience. The deployment of such servers will start to empower a new generation of communicators -– people who can “talk” on the Internet without any formal billing relationship or need for a voice service provider. The future is bright, but we need to make sure that the burden of regulation does not get in its way. The Internet is a user’s network, not a service provider’s network. It has a rich history as a result of the universities, enterprises and entrepreneurs that represent the end points that utilize the technology and not because of the service providers that transport the bitstreams. Indeed, the Internet was invented to circumvent any one network provider’s potential failure. Because of the Internet’s empowering use of technology, we have a unique opportunity to radically transform the way we communicate. IP communications is “disruptive” communications in the most positive sense and, if allowed to evolve, will dramatically enhance the ways in which we communicate. Applications and services, be they video, data, or even voice, are now clearly severable from the telecommunications transport on which they ride. Services and applications can be deployed from anywhere to anywhere. Like email, “voice” will be enabled from a variety of everyday consumer devices, managed in a variety of architectures. Anyone can deploy new applications and services and no one is beholden to the “one-size-fits all” service provider model of the legacy telecommunications network. In sum, IP-based communications are capable of empowering users to control their own communications experience. The Communications Industry has the unique opportunity to deliver innovative new services and not be constrained by the legacy vision of the past. There is no reason to replicate what used to be done when we have a platform where we can innovate upon the future. My hope is that a regulatory free environment is created to attract the entrepreneurs needed to help effectuate this kind of change. And if there must be regulation, there should be forbearance. Government must not be tempted to treated IP-based communications like traditional telecommunications and must not attempt to squeeze IP-based communications into legacy telecommunications regulations, even if the services of today are not yet evolved into the platforms of the future. We, the IP-based communications pioneers, need room to innovate and experiment in a regulation free zone for the Internet. If there is regulation, it should be smart, targeted, and narrowly tailored to achieve a very precise goal that is not amenable to market solutions and does not otherwise constrain the evolving industry. Congress and regulators should fix the broken problems rather than apply old regulatory policy to new innovations. It is for these reasons that I agree with what I believe is the intent and spirit behind introduction of S. 2281. The Bill is, no doubt, an effort to ensure that IP-based communications can grow and evolve in a relatively unregulated environment, except where regulation is absolutely necessary because a particular social good or policy goal might not be readily achieved through competitive market forces. I applaud the legislation for recognizing that there should be a broad hands-off approach to IP-based communications, particularly peer-to-peer IP-based communications that do not connect to the Public Switched Telephone Network. To the extent that S. 2281 rests authority over IP-based communications with the Federal government, and exempts IP-based communications from the jurisdiction of 50 state, and countless local, jurisdictions, the legislation lends essential certainty to the market and should foster the growth of IP-based communications. Companies like mine want to bring the promise of IP-based communications to all Americans and to all the world, not just pockets of citizens, fortunate enough to reside in localities where public officials have recognized the value of embracing IP-based communications. To this end, companies like mine cannot be subjected to a multitude of disparate, irreconcilable, cumbersome, and economically debilitating local rules. It is evident that IP-based communications obliterate traditional geographic distinctions and jurisdictional categories. In fact, IP-based communications transcends national borders. An IP-based communications service provider could deliver services to residents in Arizona, from a computer based in South Carolina, or even from a computer in Australia. To the extent we have clear Federal guidelines, without subjugation to a multitude of disparate state and local rules, IP-based communications providers can bring new technologies and services to all Americans. And, to the extent that the United States embraces IP-based communications, it is far more likely that the serving computer is based in South Carolina, rather than Australia. FCC Chairman, Michael Powell, has spoken on several occasions of empowering consumers of IP-based communications. Chairman Powell challenged us to adopt four simple Internet Freedoms for consumers: · Freedom to Access Content; · Freedom to Use Applications; · Freedom to Attach Personal Devices; and · Freedom to Obtain Service Plan Information. According to Chairman Powell, these freedoms will preserve consumer choice, foster competition, and promote investment in infrastructure and Internet applications. As I read S. 2281, I believe its intention is also to empower consumers and ensure that they can realize the full potential of IP-based communications by accessing the applications of their choice without fear that the application will be subjected to legacy regulation. pulver.com and many other members of the domestic and international IP-based communications community are equally committed to empowering consumers to control their communications experience through IP technology. To this end, pulver.com supports development of voluntary industry solutions, rather than government-compelled solutions, to the social issues confronting IP-based communications. I believe that industry is capable of such self-governance. Frankly, under most circumstances, the competitive market will compel providers of IP-based communications to develop solutions that will satisfy the broad spectrum of consumers. Government should recognize that a “cookie-cutter” approach to the ways in which applications are delivered to consumers would preclude consumers from controlling their own communications experience. I believe S. 2281 recognizes the need for such flexibility. pulver.com and many other members of the IP-based communications community are committed to promoting the social good by establishing industry-based solutions to the host of social issues confronting IP-based communications. To this end, pulver.com has established the Global IP Alliance (“IP Alliance”), www.ipall.org, an international consortium of IP-based communications providers committed to realizing the promise of interconnecting IP-based communications. The IP Alliance will adopt and implement common principles designed to promote the net freedoms enunciated by Chairman Powell and to promote the social good. I recognize that one goal of the legislation is to ensure that the archaic, kluged intercarrier compensation and universal service regimes that currently plague traditional telecommunications carriers do not extend to, and stifle the growth of, IP-based communications. Regulators, both Federal and state, have spent the better part of the past decade, trying to reconcile, to little avail, the patchwork of disparate and illogical support mechanisms and rules governing intercarrier relations. The disruptive emergence of IP-based communications essentially compels traditional telecom carriers and regulators to revamp the vestigial regulatory structure, so that traditional telecommunications providers can join the IP-based communications community and deploy new advanced technologies and services. To the extent S. 2281 ensures that legacy regulatory structures do not apply to IP-based communications, this legislation will add the clarity needed to give would-be communications innovators, as well as traditional telecommunications providers, the proper incentives and signals to deploy networks, technologies and services that will allow America to lead the way in dramatically improving the quality and nature of communications. Universal service is an issue that might require explicit Congressional action, primarily because of the FCC’s possible lack of plenary jurisdiction. I would support a connections or numbers-based approach to universal service contributions. More importantly, however, I think Congress would do America a great service if it initiated a “Universal Broadband” policy that would devote significant resources to ensuring that Americans have access to the most robust communications network possible. I do have some concerns about the varying degrees of specificity and vagueness engendered in S. 2281. I know it is a difficult balancing act for Congress to pass legislation that provides, simultaneously, enough certainty and enough flexibility so that rules are adopted that achieve the goal of advancing IP-based communications. In particular, I have some concerns that the intercarrier compensation and universal service provisions of S. 2281 are still a little too vague to give would-be innovators the certainty we need to deploy IP-based technologies and services with the assurance that we will not be pulled into the telecommunications quagmire and somehow subjected to supporting the legacy telecommunications network. I would suggest that the legislation more explicitly exempt IP-based communications, at least pure peer-to-peer IP-based applications, from regulation. Section 8 of S. 2281 seems to acknowledge that there is still potential for an entity to wield monopoly control over the transmission facilities needed to obtain the applications or content of the consumers’ choosing. In order to ensure the four Internet Freedoms heralded by Chairman Powell, Congress must ensure that no entity can use its market power, facility control or other dominance to choke a consumer’s access to the applications of the consumer’s choice. Legislation and any regulations arising from such legislation must ensure that consumers have the right and ability to attach the personal devices of their choosing and can reach the IP-based application service providers of their choosing. Under some circumstance, this logically might compel some minimal antitrust or regulatory oversight over bottleneck transmission facilities. Regardless of how many potential applications exist on the Internet, there will be only a limited supply of transmission facilities available to the consumer. A controller of such a bottleneck, be it a wireline local exchange carrier, a cable company or a wireless carrier, must not be allowed to parlay its dominance over a bottleneck facility to choke a consumer’s access to the Internet or the application of her choice. Such application access need not be accomplished through full-blown network unbundling, but, in order to ensure the net freedoms, an access obligation must exist to ensure that consumers may access the application and content of their choice. I applaud the Senate Bill for recognizing that, even in the sensitive area of lawful intercept, Congress should not adopt a “one-size-fits-all” approach. There are qualitative technological distinctions between communications delivered via a traditional circuit switched network and communications delivered via IP technology. While the IP-based communications community is committed to meeting the needs of law enforcement, traditional information collections practices that have applied to the circuit-switched world do not lend themselves to ready application in an IP environment. I would suggest, however, that government need not micromanage a solution for lawful intercept. Rather, the best role for government would be simply to push industry to develop solutions that work best for particular technologies and network configurations while achieving the desired law enforcement goals. While I can acknowledge some role for government to ensure lawful intercept where market forces might otherwise not compel industry to develop its own market-based solutions, many of the other social goods suggested in the Bill are more readily achieved through the pure play of the competitive market. For instance, I do not believe that the Bill need address IP-based communications quality of service. When IP-based services are to be used by a customer as a replacement for its existing phone service, the provider will not remain in business if it cannot guarantee quality emergency response. More generally, consumers will demand, and providers are going to want to offer, varying levels of service quality. As long as consumers are properly informed of the capabilities of the service, the market should be able to establish appropriate levels of service quality. The role of government would essentially be to ensure that consumers are not misinformed. The legislation properly carves out a role for the Federal Trade Commission to prevent unfair or deceptive acts or practices. The college student who wants a cheap service and does not care about quality should be able to purchase one level of quality, while the business user that wants its packets prioritized should be able to purchase a higher quality offering. The X-boxer looking for an interactive game with an incidental voice application need not have the same access to emergency response service as the grandfather who has fallen and can’t get up. Frankly, the solutions that IP-based technology allow, and that a competitive market will compel, for emergency response will dwarf the quality of emergency response to which we have grown accustomed in traditional telephony. Imagine a world in which a person using an IP-enabled communications device simply presses a button and coordinated emergency response teams obtain immediate access to the person’s location, medical history and other relevant data that might require particularized treatment. Combined with an IP-based video application, this is a revolutionary emergency response capability. Telemedicine is happening because of the Internet and IP communications. One day, I hope we are able to provide E911 services in high rises that provide location based services and embed the floor someone is on –- in memory of my fallen friends at Cantor Fitzgerald in the World Trade Center where I used to work. It is inevitable that left to their own devices, enterprising IP-based communications providers will develop such innovative solutions. I would suggest that S. 2281 avoid singling out voice, as, somehow, qualitatively different than other IP-based applications. Voice, in an IP-based world, is really no different than other applications such as data, video, email, instant messaging, and presence applications. Legislation should logically exclude all IP-based applications, not just voice, from unnecessary government interference. Frankly, I would go one step further than this legislation and state explicitly that all IP-based applications are neither telecommunications nor even information services, but are simply computer applications, no more subject to regulation than a Web page or spreadsheet. Today feels much like the telecommunications industry must have felt in the late 19th Century, when a multitude of carriers with distinct networks and technologies were working out the interoperability and interconnection arrangements necessary to create a ubiquitous telecommunications network of networks. We have the opportunity to learn from those early experiences and speed the day in which we have ubiquitous IP-based communications, in all its flavors, be it Internet-only peer-to-peer applications, or a bona fide replacement for the Public Switched Telephone Network, or all the variants of IP-based communications in the middle. pulver.com is currently working out its interconnection arrangements and interoperability guidelines with other IP-based communications islands and other IP-based entities. From this perspective, pulver.com requests that government, first, does no harm, and, second, lends additional clarity to the regulatory landscape, so that pulver.com and other IP-based communications companies may proceed and make business decisions with certainty. In the future, we envision a balance of people looking to manage their own access and people looking for services from third parties. The Internet will be the model of future communication and we should embrace the Internet as a “regulation-free” zone. We can empower consumers to control their own communications, as long as the end user has a broadband pipe and the ability to reach applications and attach approved equipment of her choice. Today, we can only glimpse a hint of the IP-based communications future. Personal and enterprise instant messaging and “presence” continue to grow and empower users. Social networking is helping to supplement business and social mixers. Open source communications is disrupting the vendor marketplace. With push-to-talk, we are rediscovering the walkie-talkie of our youth. Wi-Fi VoIP is disrupting mobile communications. We do not yet know the full potential and promise of IP-based communications. Our children will be dreaming that up if we give them the tools and latitude to innovate and evolve the ways we communicate. What we do know at this point is that VoIP has emerged as the “killer app” and, arguably, the first great driver of broadband. It’s important to note that VoIP is still in its nascency. Only a couple hundred thousand POTS lines have been lost to VoIP, whereas tens of millions of lines have been lost to wireless alternatives. For this reason, it is frankly absurd to impose regulations on an industry that has barely made a dent in legacy telecom revenue streams, and will, in fact, drive new broadband revenue to builders of telecommunications networks and infrastructure. With VoIP, the old interconnection rules need not apply. Open IP-based communications have already enabled early adopters, carriers and enterprises to interconnect directly as peers. End users have access to numerous alternative solutions. Customers can utilize multiple providers as well as enterprise or end user systems. End users can attach a variety of hardware and software including their own “switching” from varying locations -- blurring demarcation points. This scenario exists because, to date, IP-based communications pioneers have had the courage to test the waters, to experiment with Internet and other IP-based communications under the belief that voice is simply an application and will not be pulled into the morass of telecom regulation. Confirmation of this belief, through such legislation as S. 2281, will go a long way in giving the innovators in IP-based communications the needed comfort to continue to evolve the technologies and services enabled by IP technology. Congress has the opportunity to get a regulatory structure in place that will shape the future of communications, allow new technologies and services to evolve, enable both traditional telecommunications and emerging communications entities to cooperate and compete, establish the right incentives to ensure investment in and deployment of networks, infrastructure and equipment, and empower consumers to control their own communications experience. Congress has the ability to ensure that innovation in IP-based communications flourishes, so that rapid deployment, adoption, interoperability and ubiquity of IP-based communications emerges, and so that the United States may lead the way in realizing the full promise of IP-based communications. In doing so, the Congress should adhere to two core principles: (1) do not impose regulation unless absolutely necessary; and (2) ensure that no entity can leverage its market power to stifle choice and innovation. With these principles in mind, there is no need to impose legacy regulatory structures on the new and emerging IP-based applications and services, but there is a need to ensure that no entity can wield monopoly control over a facility, a market, or a customer to thwart innovation and consumer choice. We do not know the future’s requirements. IP-based communications can change the way we work and live. It has the potential to redefine communications as we know it today. In order to realize this potential, it is essential for Congress to set the tone, to lead the way and ensure that it and other governmental bodies around the world do no harm and ensure the growth and viability of IP-based communications. S. 2281, if implemented consistent with the spirit in which it was introduce, will help further this worthy objective. I would like to conclude my testimony with a word of caution to the Committee. While I acknowledge the worthy goals of S. 2281, I ask that the Committee ensure that the needs of would-be innovators and consumers of IP-based communications are fairly represented as the legislation works its way through Congress. For these reason, I am grateful to the Committee for allowing me to speak today. Thank you.
The Honorable Stan Wise
Mr. Chairman, Ranking Member Hollings and members of the Committee, I am Stan Wise, Commissioner with the Georgia Public Service Commission and President of the National Association of Regulatory Utility Commissioners (NARUC). Founded in 1889, NARUC represents the interests and consensus policy positions of State public utility commissions in each of your states. We are pleased to offer our testimony today on Senator Sununu’s “VOIP Regulatory Freedom Act” and the broader changing landscape of telecom business, technology and law. Now is an exciting time for the telecom industry because so many innovative new technologies are entering the market to enrich the lives of consumers and the productivity of businesses. Our challenge as state and federal policymakers is to allow this vibrant industry to take its course with as much flexibility as possible while still preserving the consumer protections, ubiquity and reliability that the public values and expects in its telecom system. Rural America and VOIP reform as telecom reform: One need only open a newspaper these days to see that VOIP is the domain, not just of ambitious start-ups like Vonage and Pulver, but of all the leviathans of the communications industry, including the Bell companies, the long-distance carriers, the major cable operators and even the promising wi-fi and broadband over power lines companies. As we keep our eyes on the future, we must contend with urgent challenges to the sustainability of reliable, affordable phone service in the rural and high cost markets around the country. Creeping regulatory arbitrage is eating away at the foundations of Universal Service and the intercarrier compensation system. Without these, consumers in rural and high cost areas would have to choose between exorbitant rates for basic service or simply being cut off from the outside world. Today, the VOIP services that are attracting most attention are actually hybrid services that bundle packet-switched calls with the services of traditional competitive and long-distance phone companies, terminating well over 90 percent of their calls to the Public-Switched Telephone Network (PSTN). These services could never get off the ground without the ubiquitous PSTN that ratepayers have paid to build out to every corner of America over the decades. Explicitly exempting all VOIP, including those forms of VOIP that use the PSTN, from regulation under this system could prove to be a naïve step in the direction of never reforming it. Thus when we consider a new federal statute to address VOIP technology, we are talking about the heart of a potential new Telecommunications Act. The decisions we make about its participation in the telecom system and the public interest obligations it must live up to are really decisions about what we as a society will expect from the telephone system of the future. The NARUC approach: functional nature of the service. In assessing the impact and import of new communications technologies, a consensus of NARUC commissioners have come to the conclusion that writing broad new policies around specific technologies will always leave us one step behind and may even hurt the development of technology by sending distorted signals to the marketplace. Instead, NARUC’s resolutions on VOIP emphasize that regulatory treatment should follow from the functional nature of a service, not the way it works under the hood. Rather than looking to the technology itself, policymakers should look at the salient features of a service. In most cases, the starting point in our analysis should be what it is to the consumer. The “functional nature” approach does not mean regulating new VOIP services just as if they were traditional circuit-switched service from Ma Bell. Rather it means a rigorous, intellectually honest dialogue about which public interest obligations are attached to which features of a particular service. If the physical structure of a particular service makes its carrier unable to exert market power, for example, that may impact whether the full panoply of economic regulations should apply. The New York Public Service Commission took that approach to heart in its recent decision regarding Vonage Holdings Corp. It examined a specific service offered to New York consumers and found it to be a telecom service. Based on the salient traits of that service, the NY PSC found traditional economic regulations inapplicable, but it did rule that consumers should receive reliable 911 emergency dialing services. The service was marketed as a replacement for traditional phone service but the lengthy standard contract that consumers had to sign contained some alarming provisions. Specifically, the company’s Terms of Service agreement, on page 7 of a 15 page single-spaced document said: “You acknowledge and understand that 911 dialing from your Vonage equipment will be routed to the general telephone number for the local emergency service provider (which may not be answered outside business hours)**, and will not be routed to the 911 dispatcher(s) who are specifically designated to receive incoming 911 calls at such local provider's facilities when such calls are routed using traditional 911 dialing.” **(emphasis added) Imagine if a consumer in upstate New York who replaced his traditional phone line with this service had the rotten luck of experiencing a heart attack or stroke after “normal business hours.” He dials 911 and, because it only goes to the business line, no one picks up. Brutal as it sounds, he is simply out of luck!! The New York PSC’s order suggested this was unacceptable but actually invited the company to work with them on an acceptable framework for achieving these important goals and to apply for waivers where traditional phone regulations did not apply. Consumer protection and VOIP: Even in a fully “packet switched” world, consumers will have a range of legitimate expectations about their service. The telecom business continues to be one where an ongoing consumer relationship is formed through an extensive small-print form contract that goes largely unread until there is a problem with the service. Often the contract locks the consumer in to a year or more of service with stiff financial penalties for breaking the contract. State Commissions handle tens of thousands of individual consumer complaints every year, covering such issues as · Slamming and cramming; · Clarity and honesty in billing; · Intrusive or deceptive marketing, · Quick response to service outages, · Privacy of customer billing and calling records; and · Making sure the emergency dialing service lives up to the trust that consumers put in it. These obligations generally apply to whichever company maintains the direct consumer relationship. Most complaints are resolved through Commission mediation or just explanation, although some merit intervention and enforcement. State commissions are particularly well-suited to this watch dog and referee role because they are in the local communities, staffed to be responsive and have unique expertise in the telecom business. Depriving State commissions of this role would fragment the response effort and confuse consumers as they were shuffled from one agency to another based on the technology they were using. Distant federal agencies would be hard-pressed to handle the load. Interconnection and competition: Cable industry representatives recently commented that State commissions will likely have a critical role to play in arbitration of interconnection agreements as the facilities-based VOIP carriers seek to knit themselves into the larger phone network. NARUC members have fulfilled this role for years already and are prepared to safeguard the same rules of nondiscrimination and fair dealing for the VOIP industry as they have for CLECs and others. Senator Sununu’s bill raises a related issue – also highlighted recently by FCC Chairman Michael Powell – of whether the “independent” VOIP carriers with no local facilities of their own will be able to survive if the facilities owners choose to favor their own VOIP products in the long run with preferential treatment. Vonage CEO Jeffrey Citron recently commented to the Washington Post that this might be an area that merits government intervention. Also, following “salient features” test, it is important to clarify that simple use of packet switching should not absolve a company of all its competitive obligations. While a company like Pulver, Packet8 or Vonage may not be positioned to exert market power when it acts independently, it is entirely foreseeable that a traditional incumbent could migrate customers to VOIP service en masse and still position itself to exert market power, especially in regions where it was the exclusive facilities-based broadband provider. S. 2281 would allow this exertion of market power to occur unabated. Senator Sununu’s bill: With regard to S. 2281, the question of the hour is whether Congress can or should break off a piece of the larger Telecom Act debate and pass it as a separate item in the remaining months of the 108th Congress, and if so, whether this is the right approach. Unfortunately, while NARUC appreciates and respects the dialogue that this legislation has spurred, we believe the answer to that question is a resounding “no.” S. 2281 does insufficient justice to the related issues of inter-carrier compensation and universal service, both of which are inextricably linked to VOIP. By seeking only to extricate a new specific technology from all forms of regulation under the systems that support the universal availability of the telecom network, this bill has the feel seeking to abandon a sinking ship – even though most VOIP services depend on a healthy PSTN. Also, by dismissing a state role out of hand on such core issues as consumer protection, interconnection, emergency dialing, market power and state universal service programs it would deal consumers and competitors a poor hand at the outset of a new era in telecommunications. Ultimately, S. 2281 suffers from a technology-specific approach that is driven, in large part, by the haste with which the issue has been pursued thus far. With more time, state and federal policymakers could cooperate in parsing out functionalities and features that deserve more precise regulatory treatment and, in some cases, strategic forbearance. At the same time we could shore up the foundations of universal service and rational inter-carrier compensation to make sure our rush toward the future doesn’t leave some communities stuck in the distant past. NARUC looks forward to that dialogue and we plan to engage constructively in it, but we cannot support the specific approach embodied in S. 2281.
Mr. Arturo ”Archie” Macias
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Mr. David JonesPresidentNENA
Mr. Chairman and Members of the Committee, thank you very much for providing me the opportunity to appear before you today. My name is David Jones and I’m a nationally certified Emergency Number Professional (ENP), serving Spartanburg County, South Carolina as the Director of Emergency Services. I’m also the First Vice President of the National Emergency Number Association (NENA), an organization consisting of public officials, fire, EMS, law enforcement, equipment and service providing vendors of the 9-1-1 community. I’ve been recently appointed to the Federal Communications Commission’s (FCC) Intergovernmental Advisory Committee (IAC), representing the interests of local government and public safety. Additionally, I’m a longtime member of the Association for Public Safety Communications Officials (APCO) International. Today I am appearing before the Committee on behalf of NENA, but also standing on the shoulders of others. Admirable colleagues, like those on my team in Spartanburg, who continue to find ways to get the job done regardless of the technical obstacles or challenges of modern communications in our Public Safety Answering Point (PSAP). National leadership, like that of Senators Burns and Clinton, as well as Representatives Shimkus and Eshoo who are leading the Congressional E9-1-1 Caucus and E9-1-1 legislation in the 108th Congress. And of course the South Carolina representation of Senator Hollings, who has taken an active interest in the deployment of wireless E9-1-1 as well as improved emergency communications in our state. I thank all of you for tireless work to make our 9-1-1 system work like it should. Opening Comments Mr. Chairman, I applaud your leadership, as well as that of your colleagues and staff in bringing the 9-1-1 community to the table for these vital discussions about the future of our nation’s communications capabilities, services, and systems. Truly the future is happening now. Voice over Internet Protocol (VoIP) is reaching millions of Americans with exciting communications possibilities. VoIP is dynamic, competitive, innovative and most of all, an opportunity to improve all of our communications systems. Better, faster, cheaper technology and communications service is vital to American consumers and business, but it may prove even more vital for our public safety and security. With our excitement for VoIP comes equal concern. If the past is any indication, public safety services and access will be woefully neglected unless we pursue early technical review and service planning within free-market development. Today we are on that path. NENA has adopted a “Future Path Plan” by which new services, technologies and devices capable of dialing or signaling 9-1-1 can and should be able to provide their users with access to emergency assistance. This path forward generates common objectives for E9-1-1 design and development. More than an evolutionary vision, it’s an economical plan for long-term investment in 9-1-1. The Future Path is a process, to ensure the effectiveness and integrity of the E9-1-1 system, both now and well into the future. It’s an opportunity to do it right, to plan for the next emerging technology, today, not tomorrow. In my statement today, I will refer to our vision, our needs and respectfully make recommendations to improve the legislation before the Committee, emphasizing fundamental points for NENA, 9-1-1 and Voice over IP. The Problems of E9-1-1 and VoIP VoIP brings a unique set of challenges to the delivery of location service for 9-1-1. To be effective and meaningful, E9-1-1 must work with a wide range of VoIP and IP-enabled products and services. This includes both voice and data, whether serving a fixed location, or nomadic locations that may change from day to day, or operating wirelessly in a much greater area (including roaming from area to area), during a single call. Long-term solutions are needed to accommodate all the variances. To do that, it is essential that government and industry support goal-oriented work, with appropriate technical experts and 9-1-1 operational professionals in an open standard and architecture environment. This is a tremendous undertaking which can not be marginalized by larger policy discussions or debates. Federal Jurisdiction for VoIP Regarding E9-1-1 Services and Systems The technical development of 9-1-1 must be convergent with its policy direction. Today’s regulations for 9-1-1 are fragmented, consisting of a jurisdictional patchwork of rules for various types of communications, providers and stakeholders Wireline issues are regulated by States. Wireless issues are regulated by the FCC. 9-1-1 Public Safety Answering Points are often local. Consumer expectations are national. VoIP can be international. 9-1-1 needs to be treated as an integrated public safety service, part of a larger whole for our safety and national security. This concept has been recently tested with the deployment of wireless Enhanced 9-1-1 (E9-1-1). Through this process, we’ve learned some important lessons in implementing new technologies with E9-1-1 systems: (1) E9-1-1 must be treated as an inter-dependent overall system; (2) coordination is very important; (3) federal leadership is necessary for national implementation and resolution of issues. In the late 1990’s, Senator Conrad Burns lead an effort to recognize ‘9-1-1’ as the universal number for emergency calling, and ensure the deployment of E9-1-1 for wireless capabilities and emergency integration. Enacted by Congress, “The Wireless Public Safety Act of 1999” is our foundation for greater 9-1-1 policy goals, including the ability to locate an emergency caller from any device, at anytime, everywhere. The tragic events of September 11, 2001, opened our nation’s eyes to the greater tasks at hand. Our nation’s 9-1-1 system is a homeland security asset. Everyday 9-1-1 callers are the eyes and ears of our defense. Modern communication capabilities are partners in delivering timely information. The 9-1-1 community must embrace and react to change quickly, to better serve the American public, industry, and the mobile consumer in all emergencies. This past year, Co-chairs of the Congressional E9-1-1 Caucus, Senators Burns and Clinton, and Representatives Shimkus and Eshoo drafted legislation (S. 1250 and HR.2898) to recognize further the national interests of 9-1-1 as well as address the needs of the deployment of new technologies. We thank them for their leadership. But more importantly we thank them for a vision for the future, by creating a national E9-1-1 Coordinating Office. A national E9-1-1 Coordinating Office is a needed and necessary step for improving our nation’s emergency response capabilities. The recent history of wireless E9-1-1 has demonstrated all too often how our 9-1-1 system can become easily strained by new technology. A national ‘Office’ could provide us immediate perspective, informed resources and a better dialogue for technical assistance, and consistent leadership for deploying technology advancements. We cannot support the further fragmentation of 9-1-1. We recognize that consumer expectations for 9-1-1 are national and therefore require jurisdictional leadership and resources from the Federal Government. We need a national coordinating office to make this happen. We agree and support the assertion of federal jurisdiction for VoIP services related to E9-1-1. The Federal Communications Commission, VoIP and E9-1-1 As part of the federal jurisdiction discussion, we support the need for targeted federal regulation for E9-1-1 and VoIP, believing further that this is most appropriately handled by the FCC. On May 28th of this year, we responded to the FCC’s Notice of Proposed Rulemaking in WC Docket No. 04-36. In our comments, we requested the FCC to exercise E9-1-1 leadership in “promoting the safety of life and property,” 47 U.S.C. §151. We stated: Given the obvious importance of emergency calling, how can we encourage (or require, if need be) 9-1-1 access as an essential ingredient of early planning for ‘technical and market development’ of new communications or information services and products? We support the FCC’s authority in creating a regulatory safety net if required, through our present collaborative and voluntary approach. With our support, we look to the Commission to maintain a directive influence in the needed processes for industry and public safety collaboration. In that we seek a ‘light touch’ regulatory approach for E9-1-1. A light touch approach can provide a consensus targeted regulatory definition that enables full 9-1-1 capabilities for the consumer while minimally affecting, and actually improving the advancement of overall consumer services. The changing dynamics of technology should be encouraged as a means toward improvement of consumer services and information availability. In our experience, voluntary consensus development, within reasonable timeframes, of requirements and rules for technology and service integration provides better, more accurate results. Improved E9-1-1 project management is better than legal debate. Real E9-1-1 solutions are better than arbitrary requirements. Flexible policies are needed to react to changes without having to adopt legislation every time there is a new technology or service advancement. We envision the FCC acting directly within forward-looking limits set by Congress. This can be achieved through the timely definition of needed results to Congress, and then through the direct enactment of appropriate requirements for 9-1-1 with the involved industry parties. Law Enforcement Subscriber information is a vital aspect of E9-1-1 service. If a subscriber is disconnected or hangs up on a call, we need reliable information to contact the caller. We recognize a reasonable 9-1-1 obligation for VoIP providers, consistent with expectations of other service providers, and we understand the expectations of law enforcement for far greater capabilities to obtain subscriber information in the fight against terrorism or criminal investigations. Consensus Since its inception, the 9-1-1 system has been THE first responder in times of individual and mass emergencies. Every day, Americans call 9-1-1 at the time of their greatest need. Today we are averaging over 200 million 9-1-1 calls per year. Ninety-six percent of the nation’s geography is covered by at least some basic 9-1-1; ninety-nine percent of the American public has access to 9-1-1. For the caller and the public, the successful completion of a 9-1-1 call can mean the difference between danger and security, injury and recovery, or life and death. The ability to call for help in times of an emergency is not ‘voluntary’ – it’s mandatory. We must set our standards high for achieving access to emergency assistance for all users. We must retain and improve 9-1-1 features and functions established and in use for the safety of the public. Connected VoIP applications, as defined in the legislation (S.2281) are only a portion of the E9-1-1 and IP landscape. There will likely be VoIP applications that need to support 9-1-1 calls terminating at the 9-1-1 PSAP without ever touching the Public Switched Telephone Network. Legislative definitions must allow for treatment of the full extent of options for IP and E9-1-1 as the future unfolds. The development of consensus guidelines, protocols, and performance requirements pertaining to VoIP applications for 9-1-1 services has begun. Aggressive NENA development efforts started in 2003, and the FCC’s NRIC VII focus on E9-1-1 and IP started in 2004. The potential is there. Indeed, the 2003 NENA – VON Coalition agreement was an important first step toward consensus development to both guide the initial efforts of Voice over Internet providers in handling 9-1-1 calls, and to gain agreement to that industry’s active role in the development of migratory and longer term IP and VoIP solutions for E9-1-1. NENA’s schedule is for completion of various technical and operational requirements before the end of First Quarter 2005. Customer disclaimers do little to support the public’s safety. Such actions should be viewed as only temporary, and with the clear expectation that the service provider is pursuing best effort toward the earliest possible application of industry recommended or otherwise required 9-1-1 solutions. Transmission Facilities and E9-1-1 Cooperation While ultimately VoIP application providers are expected to meet E9-1-1 obligations, the role of the transmission facility may be less clear. The proposed legislation states in Section 8 that regulations may not extend to the transmission facility. Without arguing the merits of Section 8, we recognize an E9-1-1 relationship between the transmission facility and the VoIP provider. This is especially true in determining the location of the caller. In the event of an emergency, the VoIP application provider may need to gain information on a caller’s location from the transmission facility provider, since that provider would have some knowledge of the terminating address/location or IP characteristics of the user. This is most likely for mobile and nomadic users, as a VoIP application provider may not be able to query the user for location. However, the transmission facility provider would have some basic knowledge, given the fixed connection to its terminus, as well as the relationship to the subscriber. In that scenario, there is an E9-1-1 relationship for the transmission facility and a need to support the VoIP provider with available known location information in the event of an emergency. Therefore, we ask for an emphasis on E9-1-1 availability, and less on classifications of services and facilities. Funding E9-1-1 in a VoIP Environment IP-enabled E9-1-1 services will not come free. The public safety community is extremely concerned by the immediate and growing impact of Voice over IP on loss of conventional service fees and surcharge revenue, and the uncertainty of any requirement to replace that critical operational funding stream in the VoIP environment. Until a clear solution is identified for this immediate public safety funding problem, attention to the need for technological change and evolution of the E9-1-1 system itself is difficult to achieve. Yet both must be solved, at the national, state, and local level, in order to realize the ability to bring new technologies into E9-1-1 service easily and quickly upon their appearance on the consumer front, and with less overall cost. We support the need for national direction from the FCC, just as we support, in pending legislation, cabinet-level attention to 9-1-1 issues. State and local government may still require the authority to consider, and should not be preempted from considering, equitable distribution of financial obligations among communications and information service providers offering 9-1-1 capability. Conclusion This past March, NENA issued an open letter to concerned leaders and citizens asking for a commitment to make significant progress in realizing the full potential for 9-1-1 and emergency services in the digital migration of our nation’s communications systems. In that letter we offered six IP services and applications principles for 9-1-1. These principles are NENA’s guidelines for establishing a public policy, technical and operational blueprint for the advancement of Internet-based service offerings for 9-1-1. These are emphasized in our testimony as follows: First, we need a national E9-1-1 VoIP policy. We have examined some of these issues in our testimony, but we recognize that more needs to be done to build a cogent policy for our nation’s 9-1-1 system. Second, we must encourage vendor and technology neutral solutions and innovation. Attempting to fit specific regulations to today’s circumstances has the potential to limit our options in design and future capabilities for our nation’s 9-1-1 system. This is not a free pass, but rather the recognition of a needed commitment. Third, we must retain consumer service quality expectations. 9-1-1 is national, consumers are increasingly global. As the consumer changes communications capabilities, the 9-1-1 system should be dynamic in design and operation to adjust to and match new technologies and old expectations. Fourth, we must support dynamic, flexible, open architecture system design process for 9-1-1. In an October 2002 report conducted by telecommunications consultant Dale Hatfield, ‘Report on Technical and Operational Issues Impacting the Provision of Wireless Enhanced 911 Services’ he stated that 9-1-1, and especially wireless E9-1-1 was a ‘kluge’ of various planning efforts and patchwork efforts to address new technology. If we are to avoid the kluge, we must support an open environment. Five, we must develop policies for 9-1-1 compatible with the commercial environment for IP communications. We seek to improve design and enhance the capabilities offered to consumers. However, we recognize that this must be managed in a reasonable timeframe to match service options available to consumers, private industry and others in calling 9-1-1. Six, we must promote a fully funded 9-1-1 system. Our nation’s 9-1-1 system needs reliable and dependable funding. In the VoIP environment, funding could prove evermore complicated, given the traditional policy framework reliance on state and local funding for 9-1-1 services and upgrades. S. 2281 is a step toward discussing the policy principles we see necessary for 9-1-1 and VoIP. A needed step, the proof will truly be in the approaches and leadership taken outside the Halls of Congress. 9-1-1 service should not be an ‘afterthought’ for communications providers, but rather an active part of service design and development. With some modifications, the legislation could make great contributions toward public safety and security. On behalf of thousands of NENA members, the 9-1-1 professionals and all involved in supporting their work, I thank you for your support and the opportunity to be here today.