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Tuesday, March 22, 2005

Nanny State in Texas--Hard Cases and Bad Law
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The Texas Attorney General has sued Vonage under the state deceptive trade practice act for failure to disclose limited E-911 functionality. The AG's case follows on the heels of a tragic situation in Houston where a Vonage customer attempted to contacted E-911 during a home invasion, but apparently had not activated the 911 features on the account.

To begin with, I am missing the "fraud" Vonage has perpetrated. As a Vonage customer -- having received all of their sign-up information and used my account interface through the web -- it was perfectly clear to me of the service's limited 911 functionality. Indeed, in my experience, Vonage actively notifies its customers of the need to affirmatively opt-in to E-911. Because Vonage is not location-specific, its customers needs to activate E-911 by giving Vonage their location information. Given the political sensitivity of E-911, I cannot imagine Vonage was less forthcoming to its Texas customers about the service's E-911 limitations.

The situation also points up the difficulty of consumers adapting to a competitive phone world. With competitive markets, we do place a certain onus on consumers to make price/quality decisions. Before, regulators made these decisions, with mandates that were often over- and under-inclusive. Now, with VoIP and new communications technologies, consumers get both the benefit and burden of making decisions for themselves.

An implicit end of the Texas suit would be a generalized, de facto, E-911 functionality mandate on communications services. This would be a return to an over-inclusive regulatory mandate, and unfortunate in many respects. On the margin, it would erect an entry barrier for PSTN-compatible VoIP services. It would also eliminate part of VoIP's cost advantage, thus perversely encouraging migration to wholly non- E-911 compliant platforms like Skype or other SIP platforms.

[Ironically, part of the engineering difficulty of making VoIP E-911 compliant is the regulation-prescribed architecture of the nation's E-911 system, which is archaically based on 1960's network design and more vulnerable than it should be.]

The Texas E-911 situation is surely tragic. But it does not appear to be fraud in any meaningful sense. There is a robust literature on the use of regulation to erect entry barriers to new technologies. It would be unfortunate if supposed "consumer protection" litigation could be used to the same effect. VoIP providers clearly understand the imperative to offer E-911 functionality with their products. Better a phased-in mandate that looks to the technological feasibility and costs, like was done with wireless, than an indirect mandate through litigation.

posted by Ray Gifford @ 1:04 PM | VoIP

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