Up in arms over Net telephony rules?

The fine line between the need to ensure market competition and protect incumbent interest is still hazy, say participants at a telecoms conference.

SINGAPORE--Telecommunications players at the VoIP World Asia conference here this week were divided over where the boundaries of Net telephony regulation should lie.

Jonathan Draluck, vice president of business affairs and general counsel at iBasis, said regulations were initially created to ensure dominant telcos do not charge monopoly rates for telecoms services. Promoting free market competition, he said, can achieve the same effect. iBasis is a wholesale provider of international IP telephony services.

Regulation can help keep out any competition in a country that has yet to liberalize its market, he said. At the same time, regulations should also ensure new technologies such as VoIP (voice over Internet Protocol) are introduced into the marketplace, he added.

Draluck said he has no misgivings about regulation if it allows operators with the best service in the market to shine the brightest. "I want to know that if I can offer technology at the lowest price, I'll be welcomed unconditionally," he said during a panel discussion at the conference.

According to Draluck, regulators need to answer several questions: Are officials comfortable that a more open market may not be kind to all participants including monopoly flag carriers? Can users access emergency services from wherever they are? How will governments intercept messages for law enforcement purposes, and will regulation affect service quality?

Some countries in the region, such as Singapore and the Philippines, have taken a light approach to VoIP regulation.

The Philippines' National Telecommunications Committee (NTC) for example, deregulated VoIP services, defining it as a "value-added service" instead. Value-added services providers such as Internet service providers, operating in the country can offer VoIP services without the need for further registration. Before the change, VoIP was considered a voice service which only telecommunications operators with a congressional franchise, could provide.

In China however, PC-to-telephone calls are reportedly blocked by local authorities, though PC-to-PC calls are allowed in the country.

Bernard Hill, head of competition affairs from Hong Kong's Office of the Telecommunications Authority, said the territory's regulatory framework is modeled after the United Kingdom, where there is an active bias against regulation. "The presumption is that the market will resolve the issues, not the regulator."

John Bradfield, general manager for competition and compliance at Hong Kong's incumbent telco, PCCW, said one issue faced by his company is the inconsistency in regulation. He noted that traditional phone lines in Hong Kong are regulated to ensure quality and security, but VoIP is not subjected to the same rules.

"It's fine if a good regulator is also a lazy regulator, as long as that regulator is consistent," Bradfield said.

Meanwhile, as regulators around the world ponder over which aspects of VoIP services should be regulated, Draluck noted that the uncertainty over VoIP regulations in the United States and Europe has bolstered the growth of the technology in the two regions.

He said: "Restriction is not the word that we want to hear when we talk about VoIP. If there were restrictions, we wouldn't have flourishing competition in the VoIP space."

Draluck pointed out that the telcos which want to be treated equally are typically those who "hold the keys to the kingdom" with their history and legacy infrastructures. They want to make sure everyone in the market is licensed in the same way, before they further their investments, he added. "[But] that's not the way innovation works."

The uncertainty over VoIP regulations has not prevented iBasis from spending "hundreds of millions of dollars" on new technology, he said. "We remain uncertain, and that's ok, because that's the nature of a dynamic market," Draluck said.

PCCW's Bradfield, however, said that being an incumbent does not mean the company is not innovating because it still needs to create revenues.

"We just want some form of consistency, not restrictions, so we know which playing field we're on," he said.