The new rules from the FCC were published last month and take effect Nov. 14 , though companies have 18 months to comply. The order expands a controversial 1994 law known as the Communications Assistance for Law Enforcement Act, or CALEA, which required phone companies to buy or retrofit switching equipment to meet stringent, government-approved wiretap standards that permit law enforcement to more easily wiretap digital phone calls, and to capture information such as voicemail PINs typed on a phone after a call is completed.

Under the new order, VOIP services that can both dial into, and be called from, the traditional phone network also have to comply with the costly requirements, pulling services like AT&T CallVantage and Vonage into the wiretap regime.

Critics say the rules make it harder for new U.S. internet telephony companies to get off the ground.

"What the FBI has asked for, and what the FCC has to date given them, would require any new developer of a voice-based technology to submit their application for the FBI's approval before even one single person on the internet can try it," said John Morris of the Center for Democracy and Technology. "If the FCC continues to give the FBI every power it asks for, we will see a tremendous diminution of innovation in the United States and innovation will move overseas to places that are more supportive of small innovators."

The ruling could be particularly troublesome for companies using a peer-to-peer architecture that doesn't route calls through a central server, and which may not technically be able to comply. The FCC order says that all calls on such a system -- not just the ones to and from the traditional network -- have to be wiretappable using CALEA standards.

The end result, according to Jeff Pulver, who co-founded Vonage and runs a free P2P internet telephony service called FWD, is that the rules "take away our freedom to innovate and take away inspiration for people to be entrepreneurial in this space."

"This comes at a time when it's most susceptible to being screwed up," Pulver said. "The technology is still in its adolescence. This is a transformational current -- we are talking about the communications and computing industry transforming into something that has never existed before. This is not your parents' telecom service."

The ruling appears to pull in the best-known P2P telephone service, Skype, which eBay recently purchased for $2.6 billion. Skype offers optional pay services called SkypeIn and SkypeOut that permit customers to receive calls from, and make calls to, the traditional phone system. That means it will have to re-engineer its system to make its customers wiretappable, even during free peer-to-peer calls between Skype users -- something that might not be possible. The company did not return a call seeking comment.

Lee Tien, an attorney for the Electronic Frontier Foundation, sees this as an example of how the FCC order could hinder innovation by providing companies with a financial incentive for restricting their offerings.

"This might be where CALEA distorts things," Tien said. "It might cause a company to ... say, 'We will just have one of these capabilities, not both,' and this will keep them out of CALEA, while still offering 75 percent of functionality that people want."

SIPphone, which appears to use peer-to-peer architecture and allows for calls into and out of the traditional network via a third-party contractor, would also likely be affected by the new rules, but Wired News was unable to reach company representatives by press time.

When the FCC announced in 2004 that it intended to extend CALEA to VOIP companies, it indicated that the rules would differentiate between managed and unmanaged services, leading many to believe that peer-to-peer companies would not be affected.

The final rules discarded that line, relying instead on a differentiation between voice applications that touched the public network and those that didn't. Applications such as multiplayer gaming chat and telephony through instant-messaging services such as AOL Instant Messenger and Google Talk are thus exempt.

FCC spokesman Mark Wigfield was unable to elaborate on the change, but pointed Wired News to portions of the final ruling that said the difference between a managed and unmanaged service was muddy and that the line between a connected and unconnected service was much clearer.

According to the ruling, telecommunications giants SBC Communications and Verizon Communications, which each offer a traditionally routed VOIP service, both argued for extending CALEA to all VOIP providers, including any using peer-to-peer architecture.

The FCC's order also forces all broadband internet service providers to comply with CALEA, and a recent FBI proposal would expand the wiretapping requirements to reach emerging in-flight broadband systems on commercial airliners. The Electronic Frontier Foundation and the Center for Democracy and Technology say they plan to file a lawsuit challenging the FCC's authority to extend CALEA to the internet.