August 19
, 2004  (STAR) By Mary Ann Ll. Reyes - Can Internet service providers (ISPs) offer Voice over Internet Protocol (VoIP) as a separate service or do they need to tie up with telecommunications companies (telcos) in order to do it?

This is the question bugging the National Telecommunications Commission (NTC), thus preventing the agency from issuing the much-delayed rules governing the offering of VoIP in the country.

VoIP refers to all types of voice communications using IP technology, instead of traditional circuit switched technology used by the telcos.

The technology enables users to make long-distance calls without having to pass through the telcos’ facilities, thus avoiding payment of long-distance charges.

Internet telephony or making calls through the Internet can occur between computers, between a computer and a phone, and between phones.

Making calls through IP is still inconvenient and the quality is not as good as those made through the traditional circuit switches. However, the NTC said the technology is steadily improving and the quality gap between IP and circuit switched voice communications has narrowed down to a point where any difference in quality may no longer be obvious to the ordinary listener.

According to an NTC paper, since IP systems offer a more economical means of communicating, voice long-distance providers are naturally concerned if anyone with a personal computer and modem will be allowed to bypass their networks.

The NTC said one of the questions crucial in resolving this issue is whether VoIP is a telecommunication service or a value-added service (VAS).

If VoIP is classified as VAS or enhanced service, then there would be no legal restrictions for ISPs and potential providers other than telcos to offer VoIP as a separate and distinct service.

On the other hand, if VoIP is deemed to be a telecommunication service, ISPs and potential providers other than duly enfranchised and authorized public telecommunications entities can be allowed to offer VoIP for compensation, but only if the ISPs enter into separate agreements with these PTEs, the biggest of which is the Philippine Long Distance Telephone Co. (PLDT).

PTEs are those allowed by law to provide basic telecommunication services after securing a legislative franchise and a certificate of public convenience and necessity (CPCN) from the NTC to engage in a particular telecommunication service.

VAS Providers

Under the present legal regime, ISPs are not considered as PTEs. They are categorized as VAS providers, defined under Republic Act 7925 as entities which, relying on the transmission, switching and local distribution facilities of local exchange and inter-exchange operators as well as overseas carriers, offer enhanced services beyond those ordinarily provided by these carriers.

According to the NTC, the legal classification of VoIP is a regulatory puzzle that is not unique to the Philippines. In the United States, some states require VoIP service providers to seek authority to provide telecommunication services, while others have passed legislation exempting VoIP services from regulation.

Canada makes a distinction between Internet data applications, which are free from regulation, and Internet applications that provide an alternative to public switched voice services, which are regulated. In India, VoIP is allowed, but only for computer-to-computer communications.

In Thailand, the Communication Authority of Thailand (CAT) Corp., which is both an operator and a regulator, has the monopoly of giving concessions to ISP providers. CAT has the sole authority to use VoIP and now uses it for its international long-distance calls.

Vietnam, meanwhile, allows outbound Internet-based calls from computer to computer and from computer to telephone, but prohibits inbound Internet phone calls.

According to a paper disseminated by the NTC for comment, some sectors say the absence of formal rules to govern VoIP in the Philippines creates an environment of regulatory uncertainty that may impede the development and use of VoIP as a viable and affordable alternative to traditional telecommunication services.

Beyond PTEs, for example, potential providers of VoIP will not be able to make rational business decisions on investment and further expansion without clear rules.

If VoIP is classified as a telecommunication service, the NTC said another issue that needs to be resolved is whether access charges for it should be different from those paid by non-IP-enabled telecommunication service providers and if so, how differently should these charges be computed and assessed.

One strong argument favoring telcos, however, is RA 7925 which requires them to provide local exchange or fixed line services to unserved and underserved areas in urban and rural areas, an obligation that ISPs and other potential VoIP providers are not subjected to. Thus, allowing the latter to provide VoIP will subject PTEs to unfair competition, the NTC said.

Reported by: Sol Jose Vanzi

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