Presented by H. Michael Warren, President fiducianet, inc.

1. VoIP Technology Perspectives Law Enforcement Concerns & CALEA Compliance Requirements Presented by H. Michael Warren, President fiducianet, inc.

2. DOJ/FBI/DEA Petition • Filed for expedited rule making on 3/10/04 • Comments due 4/12/04; replies by 4/27/04 • LEA asserts: • LEA ability to conduct ELSUR compromised • Action needed to clarify services & entities subject to CALEA • Asks FCC to reaffirm that CALEA applies to packet services, particularly broadband access and broadband telephony • Types of enforcement actions • Who is responsible for costs (CALEA vs Provisioning)

3. FCC CALEA NPRM • On August 9, 2004, the FCC released an NPRM addressing the issues presented in Law Enforcement’s Petition • The FCC also reached several tentative conclusions that may have a direct impact upon service providers • Public comments will be due 45 days after publication in Federal Register; reply comments due 30 days later

4. CALEA NPRM - Tentative Conclusions • Broadband access service providers are subject to CALEA • “Managed” VoIP providers are subject to CALEA but not peer to peer providers • Common carriers must be CALEA compliant regardless technology offered • Future services do not need to be CALEA compliant before being offered

5. CALEA NPRM:Proposals & Questions • What are advantages/disadvantages to having third parties handle electronic surveillance? • Is the standard setting process deficient? • Is there a need for compliance extensions? • Does the FCC have adequate enforcement authority to ensure packet mode compliance? • What are the costs of CALEA and how should they be recouped?

6. CALEA NPRM - Declaratory Ruling • “Push to Talk” services are subject to CALEA

7. “Telecommunications Carrier” • Definition of Telecommunications Carrier under CALEA • (FCC’s Second Report & Order 8/99) • Section 102 (8)(A)&(B) • Section 102 (8) (C) (ISP’s exempt) • Definition of Telecommunications Carrier under Communications Act • FCC - NPRM: • Supports LEA’s request for a broader definition of telecommunications carrier to cover packet technologies • Key question is whether FCC has developed record to support its determination if there is an appeal

8. ELSUR Obligations • Obligation to provide all information, facilities and technical assistance part of ELSUR laws since 1970 (“Technical Assistance”) • Apply available technology • Under some circumstances, allow use of LEA technology in network

9. Enforcement Actions • CALEA Section 108 clearly sets forth enforcement provisions • FCC regulations under CALEA Section 105 contain enforcement and penalty provisions for non-compliance • LEA Petition over-reaching by asking for E-911 enforcement provisions to apply to CALEA • ELSUR Law allows for penalties /show cause orders and obstruction of justice proceedings

10. Costs • FCC asked to confirm carriers bear sole financial burden for CALEA compliance (post 1995) • Section 107(b)(3) requires FCC to minimize cost to residential ratepayers • LEAs want carriers to impose an “end-user” surcharge on ratepayers • FCC in Order on Remand (2002) allowed recovery of capital costs for punch list compliance

11. Costs (cont.) • FCC: NPRM • FCC will refer to CALEA statute for pre/post carrier cost recovery • FCC will point to CALEA Cost Recovery Regs • FCC will clarify order on remand language to eliminate cost recovery for punch list • ELSUR Statutes allow for cost recovery therefore no need to address provisioning costs • CALEA currently allows carriers to petition PUCs to include CALEA related costs

12. Trusted 3rd Parties • Build internal infrastructure: • Legal Assistance to develop Policies / Procedures (Internal or External) • Hire & Train Personnel • Expertise in Legal Matters and ELSUR • Implement Compliance Program & Audit Procedures • Invest in Technology to Support Operations • Outsource • Outside law firm for Policy / Procedures / Review • Service Bureau (end-to-end solution)

13. Issues Facing VoIP Service Providers • Technology has made access to network elements and information more automated • LEAs are demanding access to these digital reservoirs of customer related information • Law Enforcement is demanding CALEA Compliance • Problem: • Many Service Providers do not have the personnel or the business systems in place to handle • Broad record production searches • Electronic Surveillance Demands

14. Impact on the VoIP Service Provider • An increasing personnel burden & high cost in support of LEAs demands for records and technical assistance • Growing workload increases potential for mistakes • As workload increase and backlogs grow, greater risk of • Show cause action from LEAs and fines • Increased legal risk resulting from errors • Greater risk to your public image • Business Challenge • More is being demanded of the VoIP Service Provider • Business realities • Function is non-core and non-revenue generating • Economic conditions require cost reductions

15. For more information contact… H. Michael Warren, President fiducianet, inc. 703 796-1100 ext. 22 (voice) 703 689-0566 (fax) 703 863-1979 (mobile) e-mail at mike.warren@fiducianet.biz