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VoIP – legal issues for resellers

The legal consequences associated with rolling out any new technology, including the regulatory burden and cost of compliance with all relevant laws, codes, regulations and policies should always be evaluated prior to signing a contract with the wholesaler. This is especially relevant to VoIP. And although there may be a potential to make serious money from VoIP, resellers need to stop, think and ensure that the legal obligations involved in providing VoIP are understood and that the reseller has the resources to be legally compliant at all times.

The individual obligations and restrictions imposed on VoIP providers will vary according to the type of VoIP service being offered. Generally, unless the VoIP service provides interconnection with public telephone networks, the VoIP service will not be subject to the strict regimens imposed under Australia’s Telecommunications Act 1997 , comprising a whopping 609 pages. Unfortunately, this means that most Australian resellers of VoIP-over-broadband services and other popular implementations which provide connection to public telephone networks will generally attract the wide range of regulatory obligations traditionally reserved only for telecommunications carriers.

With VoIP inherently subject to the same security vulnerabilities as any internet-connected computer like denial-of-service attacks and viruses, one area of potential legal exposure for resellers is e-security. Telecommunications networks in Australia are required to exhibit a higher degree of e-security than other systems. As a result, a compromised network resulting from a failure to implement robust e-security measures could result in legal action being brought by numerous complainants and the imposition of hefty fines by the Telecommunications Industry Ombudsman.

VoIP has also exposed resellers to areas of significant jurisdictional uncertainty. This is due to the ability to resell VoIP on behalf of a wholesaler who is based overseas. There are important aspects of international law that come into play here, such as the issue of having to determine which legal system applies under the reseller contract – the reseller’s or the wholesaler’s? It may also be difficult to enforce Australian laws, such as privacy law, on wholesalers based in foreign jurisdictions. A tightly knit contract can help avoid some nasty problems that can arise in this area.

Another important consideration is the emergency service access requirement imposed on standard telephone service providers. VoIP providers may be required to provide free access to emergency service organisations. Similarly, VoIP providers will generally also need to comply with the laws on calling line identification and accessibility for disabled people.

Furthermore, depending on the circumstances, VoIP resellers may also need to assist in the provision of interception capabilities to law enforcement and other government agencies. This means that VoIP providers may, for example, need to provide records in relation to national security and other serious matters.

It is clear that Australian VoIP providers are subject to Australian telecommunications laws. This article has only touched on some of those laws. Providers must either catch up on the compliance issues or face the consequences.

Disclaimer: This column is for general informational purposes only. It is not legal advice nor is it a substitute for legal advice. Readers should seek legal advice on their own particular circumstances. Alan Arnott is a technology & telecommunications lawyer with qualifications in computer science and law with Arnotts Lawyers Jones Bay Wharf in Sydney. For more information, please visit