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Regulating IP telephony in Canada will not be easy, report concludes

Internet Protocol telephony (IPT) poses a major challenge for traditional communications regulations, a new report...

August 22, 2003  

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Internet Protocol telephony (IPT) poses a major challenge for traditional communications regulations, a new report from the Yankee Group concludes.

According to author Mark Quigley, it also challenges newer policy principles of competitive and technological neutrality and regulatory forbearance in relation to new services.

"As IPT becomes widespread, the case for regulatory parity will increase to include the application of more onerous licensing and market-entry requirements, " said Quigley, an analyst who covers the Canadian telecommunications and Internet marketplace.

"Regulators must balance the obligations of IPT providers with rules that encourage this medium’s growth.

"Traditional service definitions and distinctions lose meaning as packetized voice and data services travel over the same medium and different types of traffic are virtually indistinguishable. Separate measurement and usage metering of voice and data services is nearly impossible. IPT services are challenging traditional subsidy mechanisms for domestic and international interconnection and universal service, as usage- and distance-based charging mechanisms lose applicability for packetized traffic."

The report states that there are also many technical and quality-of-service (QoS) standards issues to address, including interoperability between IP-based networks and PSTNs, and the development of numbering and naming protocols and processes.

While the inferior quality of IPT services compared with circuit-switched services has justified regulatory forbearance, some regulators are now considering the imposition of QoS standards on IPT providers, it said.

"The regulatory treatment of IPT, incorporating both Internet telephony and voice-over-Internet Protocol (VoIP), is ambiguous around the world," Quigley wrote. "In many jurisdictions, IPT is either unregulated or subject to limited registration requirements similar to Internet services. Some nations allow only licensed incumbents or long-distance operators to provide IP-based services, while others place restrictions on the types of IP-based services that can be provided.

"In some cases IPT is banned outrightusually for the protection of incumbentsespecially where incumbents (often state-owned operators) draw major revenue from international settlements and use this revenue to offset local call rates and fund universal service."

"There is no guarantee that the relatively hands-off global regulatory status quo will prevail. The classification and subsequent regulatory treatment of IP services are progressively emerging on regulator and judicial agendas.

"Short-term decisions to regulate IPT will have major implications for the development of this nascent market segment. These decisions will set dangerous precedents for future regulation of many different types of broadband and next-generation services and providers, the report concludes.

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