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California’s ISP Deregulation Law Allows Recording VoIP Calls without Consent

The Electronic Frontier Foundation has been opposing A.B. 1366, legislation by Assemblymember Lorena Gonzalez, which would renew a law that effectively shields a huge part of the telecommunications industry from state and local regulation. Comcast and AT&T law backed this law, Public Utilities Code Sec. 710, in 2012—and are backing its renewal now. Renewing this law would reaffirm that state and local governments cannot regulate VoIP—a term used to refer to  any technology that allows you to use the Internet for voice communication or receive telephone calls over the Internet—for another decade.
We oppose A.B. 1366, largely because of the damage the existing law has done to the state and local government’s ability to promote competition and access for broadband access, but many other problems are present due to this law. Religious groups and human rights groups have also raised concerns with how deregulating VoIP will harm inmates in prison who need to stay in contact with their families. AT&T has asserted it is not subject to state oversight when building our Next Generation 911 emergency system, simply because it uses broadband. And it now appears that the law also makes it legal for Internet companies to record your calls without your permission, as long as they use VoIP. 
Take Action
Tell your lawmaker to oppose A.B. 1366
How Deregulating VoIP Carved Out a Loophole in California’s Invasion of Privacy Act 
California’s Invasion of Privacy Act (CIPA) in 1967 prohibited calls from being recorded without your consent. Specifically, Section 632.7 of the California Penal Code states that anyone who “intercepts or receives and intentionally records, or assists in the interception or reception and intentional recordation of, a communication” shall be fined or imprisoned. The law applies to communications that occur between any combination of two cellular telephones, cordless telephones, or landline telephones.
However, when the California legislature enacted P.U.C. § 710, it distinguished VoIP calls from other calls as a legal matter—despite serving the same function in the real world. In fact, because of the way telephone networks have evolved, the distinction between VoIP calls and traditional phone calls is essentially non-existent. Calls made on smartphones or landlines regularly travel through the traditional and Internet-connected call infrastructure. In some cases, it can be forwarded in multiple directions simultaneously—for example, a recipient with both a Mac and an iPhone will receive the call at both locations. This is possible because the phone and Internet services are interconnected at the network level.
We explained this to the FCC when it repealed net neutrality. The agency at that point claimed that mobile broadband did not have to be neutral by incorrectly concluding that the traditional phone system was a separate, isolated network. (The FCC had to make this argument because, legally, communications over the phone system have to be non-discriminatory.) Today, as anyone who uses a phone knows, this is a false distinction.
The problem is that, despite technical reality, the law the state passed for Comcast and AT&T is pretty explicit that VoIP must be treated differently. This distinction was recognized by a California Superior Court decision involving a class action lawsuit against Yelp for allegedly recording conversations without consent. The court found that California’s Invasion of Privacy Act simply does not apply if you use VoIP to make the phone call. 
As the court stated in its opinion, “the Court finds that Yelp has met its initial burden of showing section 632.7 does not apply to VoIP calls.” While Yelp won the initial round of its litigation on other grounds as well, the fundamental fact remains that a company can assert that just because it uses VoIP to call you—or anyone in California—it is not subject to a communication privacy law we’ve had in place for decades. That’s unacceptable. Our privacy rights should be enhanced and protected as our use of technology grows. 
Our privacy rights should be enhanced and protected as our use of technology grows. 
Californians Have Received No Benefit from the 2012 Comcast and AT&T Law  
The ISP industry claims that the law, which mirrors the Trump Administration’s Federal Communications Commission (FCC) efforts, promotes broadband deployment. But that has not happened. In the years that followed the passage of the original law, Google Fiber left the market, Verizon had already stopped building out its FiOS service, and AT&T announced in June that it will no longer aggressively deploy fiber to the home and is instead cutting jobs and investment. This leaves people with only their local governments and small ISPs as possible alternatives to their cable company in a vast majority of markets for high-speed access to the Internet.
In short, California residents have received absolutely no benefits from the existing law and what we’ve seen instead is monopolization of high-speed broadband access that has hurt rural and low-income people the most. We are also seeing the corrosive effects of this ISP-backed law spilling into arenas of public safety, privacy, and justice. It is time to end it.
A.B. 1366 is pending a critical vote in Sacramento before the Senate Utilities Committee on July 2nd. By voting it down and letting this law expire, state and local governments can proactively explore how to bring fiber connections to all Californians without fear of litigation that incumbent ISPs would bring under the status quo. It will also put an end to the collateral damage the law is causing to other very important issues.
If the largest ISPs refuse to deploy services that are ready for the 21st century, then it is the duty of local and state officials to ask how to change the status quo to ensure they can bring those services to their communities.