 | Issue: | Latin America I 2001 |
| Article no.: | 8 | |
| Topic: | IP Telephony, the Internet, and Brazil | |
| Author: | H.E. Ambassador Oscar Lorenzo Fernandez | |
| Title: | Secretary for Industrial Technology | |
| Organisation: | Ministry of Development, Industry and Commerce, Brazil | |
| PDF size: | 20KB |
About author
Not available
Article abstract
IP Telephony raises a series of important regulatory, economic and practical questions of concern to all involved. The handling of these questions will have enormous consequences for IP telephony and traditional telephone network operators. Competition from IP telephony threatens existing telephone companies. They feel that, despite their heavy infrastructure investments, they will be reduced to mere renters of capacity for IP telephony unless allowed to provide value added services.
Full Article
Telephone network operators, ISPs, and regulatory agencies are still discussing the issues related to Internet telephony billing, and the issues continue to be quite polemic. Telephone networks are tightly regulated, this is partly a heritage from the times when they were deemed to be ‘natural mono-polies’ and partly due to more recent tariffs and billing policies designed to foster competition. The Internet, an anarchic network of more than 130 thousand nets, on the contrary, has grown in an ad hoc and largely unregulated fashion. Now, technology is pushing the telephone and Internet networks toward convergence. This raises, in addition to a series of yet to be resolved technical questions, many econo-mic, political and regulatory questions. The way in which these questions are equated will have enormous consequences for the future of both IP telephony and traditional telephone network operators. Obviously, the convergence of the public switched telephone network (PSTN) and Internet protocol (IP) data networks promises exciting opportunities for local and long-distance wireline and wireless carriers, Internet service providers (ISPs), equipment manufacturers, and value-added resellers (VARs). Technology, the extension of intelligent network (IN) capabilities to and from IP networks, for instance, is advancing at an accelerating clip. It is interesting to remember, in the context of these advances, the concept of creative destruction, put forward by Joseph Schumpeter, an economist whose innovative thinking on the role of technology in economic development is now widely heeded. Horse carriages were superseded by electric trolleys and then by gas and diesel engine vehicles. The electric telegraph no longer competes with the telephone, the net, the satellites, and so on. Radio dominated the 30s, but has lost market share to television. The television sector itself, now, is in technological and economic turmoil, with competition form digital TV, DVD, streaming and the like looming ahead and adding to the confusion. There are a number of issues, now, we cannot escape having to think about. A simplistic position would be: the economy is a Darwinian arena, so let the ablest win, and the devil take the hindmost. This might have a somewhat right-radical chic sound, but life is never so simple. Theoretically, if we take competition to its ultimate limits, marginal returns will be zero for every competing economic actor. The result would be a loss of capacity to invest, to pay for research, to innovate and, ultimately, poor service to the public. How then do the so-called developing countries see this whole story? They, pretty much like everybody else, have two views of it. On the one hand, they are obviously very interested in cheap, universal access to multiple means of communication and data transmission. They are interested in the growing varieties of services promised by the rapid development and deployment of IP telephony technologies; consequently, they have a stake in it. On the other hand, the swift pace of privatisation since the 80s caused many companies in developing countries to invest heavily in traditional PSTN circuit-switched technology. They laid millions of miles of cable, mostly optical fibre, and spent large sums for satellites, for microwave systems and so forth. The need for competition dictates that these incumbent telephone operating companies should not become to any very large extent providers of value added services competing with ISPs, and so on. Unlimited competition from IP telephony is seen by many existing telephone companies as a menace. They feel that unless they are allowed to provide value added services, they will tend to be reduced to mere carriers, to ‘backbone motels’, and that all their heavy investments will fit them to be no more than renters of capacity and time to their upstart IP telephony nemesis. In Brazil, there are specific services, defined by law and regulations, that are appropriate for voice transmission. Licensed providers can, then, use IP for the delivery of their services. These services are known by their Portuguese abbreviations: STFC – fixed switched telephone service; SRTT – Network Transport Service; SLE – limited specialized network and circuit service; and SCM – Multimedia Mass Communication Service. STFC is equivalent to the PSTN. It is open to the public; everyone has an equal right to communicate using the PSTN without discrimination. Access to telephone service in Brazil has exploded since the privatisation policies of the mid-90s. It has grown from 13.3 million fixed and 80 thousand mobile telephone lines in 1994 to the current 41.65 million PSTN (fixed) and 29.2 million mobile telephone lines in 2001. System growth is expected to top 58 million PSTN and 58 million mobile telephone lines by 2005. The number of households with Cable TV increased from 0.4 million in 1994, to 5.6 million currently. Households with Cable TV should number at least 16.5 million by 2005. Population access density still is relatively modest – 23.9percent for PSTN, 17.2percent for mobile telephone lines, and 12.3percent for cable TV – but it is expected to reach about 33percent in each of these three sectors by 2005, after which a certain deceleration of growth might occur. Internet penetration has been growing even faster than telephone service. The number of users grew from 160,000 in 1995, when commercial Internet first became available, to 14 million now, and should exceed 29 million by 2005. A recent estimate (July 2000) indicates the existence in Brazil of 662,810 hosts. This is 8.6 times the number of hosts in January 1997. There are now are 333,448 registered domain names here, and the number should top 400,000 by the end of 2001. The Brazilian market now has four PSTN incumbent companies, each serving a defined geographical region. Each of these regions also is served by one of four “Mirror” PSTN companies created by law to compete with the incumbents. In addition, 22 “little mirror” companies were created to enhance competition in less sought after markets. These service providers already have signalised their intention to use IP protocols in their networks. Both incumbent and “mirror” PSTN companies offer SRTT (Transport Network Service), and already use IP Protocols in the majority of their networks. Limited Specialized Service (SLE – network and circuit) is geared to user groups who dedicate themselves to specific activities. At this moment, 195 companies are authorised to perform these services. The market is principally concentrated in the Southeastern Region, which is the most industrialised and has the highest per capita income in the country. This service may interconnect with PSTN, but its use is not allowed in the case when the traffic both originates and ends in PSTN. Several Service Providers already use IP in the operation of their support networks for the SLE services. Multimedia Mass Communication Service (SCM) is a fixed data, voice and image service available to any type of user. The Brazilian Government has already consulted the public regarding proposed new regulations for this service; the regulations should be issued no later than the first semester of this year. No restrictions whatsoever are established regarding the technologies used or the means employed to perform this service. SCM providers are free to offer IP telephony based voice services, but are bound to obey the restrictions imposed on these telecommunications services within the region in which they are authorized to operate. In Brazil, a connection to the Internet is not considered a telecommunications service; it is considered a value added service. The Internet Service Providers are considered to be just users of the telecommunications services which provide access to the network. Therefore, when the Internet is used to provide IP Telephony, without interconnecting with other services – that is using an Internet-to-Internet connection, it is not subject to regulation by ANATEL, the National Telecommunications Agency. There are now some 500 Internet access providers in 300 of Brazil’s five thousand plus existing municipalities; they are not subject to any governmental controls. The universalisation of access to the Internet is closely linked to the utilisation of the PSTN. The ample capillarity of the PSTN network, and the extremely wide availability of its services, now cover almost all of Brazil’s territory making it the most effective of the existing delivery vehicles for the Internet. New rules for the use of the PSTN by the Internet, providing special numbers and lower tariffs, are now under consideration. The networks utilised by the PSTN offer a good opportunity for establishing high speed “Wide Band” access to the Internet, employing DSL (digital subscriber line) technologies. This service already is being offered by some SRTT (Transport Network Services) in cooperation with Internet Access Providers. Another alternative for expanding access to the Internet is the Mobile Cellular Telephony Service. Mobile telephony is now provided by 40 companies in Brazil which together serve 23.2 million users. Some of these companies are investing in the WAP technologies that provide limited Internet access to mobile phone users. Conclusion Not much seems to have changed as a result the IP Telephony Workshop (Geneva, June 14-16, 2000) held at the invitation of the ITU Secretary-General. The workshop considered the economic and regulatory implications of IP Telephony and its likely impact on ITU Member States and Sector Members. The divergent views of the participants regarding the definition of IP Telephony, whether as a technology or as a service concept, and over the priorities in dealing with the issues raised by IP Telephony have yet to be reconciled to the general happiness of all. Regulatory matters, particularly with respect to pricing and prohibition of services, probably can not be dealt with coherently until the progress of technological convergence permits a clearer evaluation of costs and benefits, or better said, of who gets what and how. Developing and middle level economies (Brazil is the 8th largest economy in the World, but its US$4,570 per capita GNP, in 1998, ranks it a middling 72nd among 208 countries) may gain by being prudent. The enormous investments in fixed telephony cannot be written off in too short a period. Divergent interests are easier to smooth over time. IP Telephony, certainly, is a window wide open to the future.
