Home EMEAEMEA 2006 IP telephony, the telecom revolution, and regulatory challenge

IP telephony, the telecom revolution, and regulatory challenge

by david.nunes
Marc FurrerIssue:EMEA 2006
Article no.:1
Topic:IP telephony, the telecom revolution, and regulatory challenge
Author:Marc Furrer
Organisation:The Swiss Federal Communications Commission
PDF size:256KB

About author

Marc Furrer is the President of the Swiss Federal Communications Commission (ComCom), the regulatory authority for telecommunications in Switzerland. As Secretary of State, he was responsible for Switzerland’s preparations for the World Summit on the Information Society in Geneva (2003) and head of the Swiss delegation for the WSIS 2005 in Tunis. In 2003-2004, he presided over the European Conference of Postal and Tele-communications Administrations (CEPT) and in 1999 the Independent European Regulatory Group (IRG). He served previously as the Director General of the Swiss Federal Office of Communications (OFCOM) and as the personal political secretary to Minister Adolf Ogi, Head of the Federal Department of Transport, Communications and Energy. Marc Furrer earned a Master’s Degree in Law from the University of Berne and graduated as an attorney and notary.

Article abstract

Each type of Internet voice telephony presents a different regulatory situation. PC-to-PC Internet calls and Internet-based, corporate communications systems are not regulated. ‘Public’ VoIP is regulated because users can be reached from an ordinary telephone. Given the technical limitations, ‘public’ VoIP service providers are not required to provide carrier pre-selection, or the locations of emergency callers. On the other hand, users of ‘public’ VoIP receive telephone numbers that are portable and can be transferred throughout the public telephone system.

Full Article

Voice over Internet Protocol, VoIP, or IP telephony, will undoubtedly be part of our future. The general trend is clear – everything is becoming ‘IP’ – and this will profoundly change the telecommunications market worldwide. IP technology is the main pillar of voice and data network convergence. Versatile, digital, IP networks will replace conventional analogue telephone networks in the medium term. VoIP, an important example of the first wave of new IP-based services, brings users a variety of significant advantages. Consumers will benefit from falling telephony costs as VoIP leads to greater competitive pressure in the fixed network and, as soon as mobile VoIP becomes available, in mobile telephony as well. It also opens up completely new possibilities for the integration of different services. However, VoIP also gives rise to new regulatory challenges. As an example of pragmatic regulatory solutions, this article presents some decisions of the Swiss authorities in this context. Two different VoIP application concepts Voice over IP is not synonymous with ‘telephoning over the Internet’. Today, there are essentially two different VoIP application concepts. IP telephony within an operator’s private fixed network : Unlike the Internet, the operator has full control over the network traffic and can therefore guarantee the high grade of service quality necessary for voice transmission. In the next ten years, most of the incumbent’s conventional telephone networks, public switched telephone network, PSTN, will presumably become IP-based data networks – Next Generation Networks, NGN. In that case, all phone calls will be IP-based. It is still difficult, however, to estimate the time frame and extent of this migration. This change raises some important regulatory questions about new interconnection models and issues such as security, billing and quality of service. Economic necessity, as well as technological development, is pushing telephony in the direction of IP. A single platform that handles a number of diverse services leads to lower infrastructure costs and savings due to simpler network maintenance and implementation of services. On the other hand, today we are already seeing the use of IP-based telephony in the internal networks of large businesses (eg Novartis, Swatch, Nestlé), which are, of course, connected to the public telephone network. There is a considerable potential for savings in the business sector, in addition to the virtually no-cost internal calls. The convergence of information and communications technologies means only one infrastructure has to be maintained for a wide variety of services. This offers new opportunities in the development of applications (e.g. integration of telephony, mail, fax and images, video telephony, collaboration tools) and greater flexibility when changing business processes. In fact, ‘enterprise VoIP’ has a promising future and, since enterprise VoIP systems are not public, they are outside of our regulatory concerns. Telephony over the Internet : From a regulatory standpoint, different versions of Voice over Internet Protocol need to be distinguished. What they all have in common is that users must have broadband Internet access. Here are two typical examples: 4 Pure Internet telephony PC-to-PC (with or without connected VoIP phone) – In general, free software from the VoIP provider enables all users who are online with the same software to make free calls PC-to-PC (e.g. Skype, VoIPBuster, Google Talk). In the same way, video telephony between computers could also become successful (e.g. Sony IVE). In these cases, the VoIP operator merely manages the user’s electronic addresses and generally has no influence upon the transport of the voice data. The data packets are transported by an Internet service provider, ISP, and over the public Internet – the voice over Internet providers are taking advantage of the existing costly access infrastructure. The Swiss Law on Telecommunications does not consider this form of ‘Internet only’ VoIP application, for example, to be a public telephone service. 4VoIP telephony between a PC and an ordinary fixed network telephone – In order for a VoIP customer to be able to call all fixed and mobile network numbers, the VoIP operator establishes a connection via a gateway between the Internet and a traditional telephone network (PSTN). If the VoIP customer can also be reached via a ‘normal’ telephone number, then this constitutes a public telephone service as defined in Swiss telecom law. VoIP market potential criteria With the rapid spread of broadband connections – an important prerequisite for VoIP – high-quality, very-low-cost Internet telephony has become a reality. As with broadband penetration, which differs from country to country, the market potential of VoIP for business and residential customers also varies. In addition, other criteria for the potential of VoIP have to be factored in, including pricing level and competitiveness of the telephony market, market share of local loop unbundling, usage of fixed voice telephony, status of the CATV, cable TV, market, etc. In Switzerland, fixed-voice usage is still high and prices have not fallen as much as in other countries, so Switzerland is a strong candidate for a dynamic VoIP market. National regulatory authorities as ‘VoIP enablers’ The Federal Communications Commission (ComCom), as the Swiss regulatory authority for telecommunications, is committed to facilitating the deployment of VoIP. This is also consistent with the general intention of the European Regulatory Group, ERG. In 2005, the ERG published a ‘Common Statement for VoIP regulatory approaches’. Today, VoIP continues to be an important issue on the ERG/IRG work programme 2006. In the context of VoIP, the regulatory authorities must meet several new regulatory challenges, including, for instance, the requirement of open, non-discriminatory access to broadband Internet and issues related to security and competition, such as carrier selection, numbering, emergency calls and lawful interception. Whilst enabling innovative services, the regulatory authority must also find a way to guarantee a certain level of consumer protection. Pragmatic regulatory solutions for VoIP – the Swiss case In principle, VoIP providers have to comply with certain quality requirements if they want acknowledgement as public telephone services. In order to guarantee a specific level of service and sustainable competition in the interests of consumers, Swiss telecom law prescribes a whole range of conditions for public telephone services. The conditions include: providing the ability to route calls to all telephone numbers (interoperability); real-time voice transmission; identification of location for emergency calls; carrier selection; number portability; access to subscriber directories and enabling the interception of telecommunications traffic. The Swiss authorities are trying to find pragmatic solutions – although the focus must be on customer benefit. As far as most obligations of the public telephone service are concerned, there is no need to make any adjustments for VoIP. In the case of carrier pre-selection, numbering, number portability and access to emergency services, it has been possible to find the following pragmatic solutions: 4 No carrier pre-selection obligation for VoIP – The goal of free carrier selection on the fixed network is to break the close link between the telephone network and telephony services and thereby promote competition. With Internet telephony, the situation is completely different: customers are free to choose their Internet service provider, ISP. As long as there is an Internet connection, the user can select a variety of VoIP operators. Implementation of a technically complex pre-selection procedure would be likely to affect adversely competition, which is contrary to the goals of the Swiss telecom law. Therefore, ComCom has decided not to impose carrier pre-selection in the case of public telephone services provided via VoIP. However, this decision assumes that access to the Internet is open and possible without discrimination. Otherwise, ComCom might re-introduce the corresponding obligation. Carrier selection call-by-call, on the other hand, is being retained. 4 Telephone numbers – In Switzerland, customers of VoIP providers offering public telephone service, like fixed-network customers, receive a geographical telephone number from their provider. 4 Number portability possible – ComCom has also made some consumer-friendly changes to the regulations regarding number portability. Customers can take their fixed network number with them to a VoIP provider, and vice versa. Therefore, it becomes easier to change provider. 4 Difficult identification of location in the case of emergency calls – One advantage of VoIP is that telephone calls can be made worldwide from any broadband connection (nomadic use). In contrast with the fixed network, a VoIP telephone number is therefore not associated with a specific location. This can make it impossible to determine the location of a customer in the case of an emergency call. In this context, the Swiss Federal Government introduced the following temporary solution for VoIP operators on September 1, 2005 – until a technical solution is found, location identification must be guaranteed only for calls made from the principal location. The VoIP operator has to inform its customers explicitly about this problem. Nevertheless a solution remains to be found, for instance, in the case of the complex task of monitoring of calls via VoIP (lawful interception), given the rising volume of data. The regulatory authorities will have to monitor constantly further developments, not just in relation to VoIP but also with the impending new IP-based services in general, as the uncertain evolutionary path has only just begun. The main challenge for the regulators is to implement potential measures in sufficient time in order to strengthen competition and to maintain legal certainty.

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