Regulating VoIP right call

The great voice over IP debate in Canada is finally over. At least for now. Last month the Canadian Radio-television and Telecommunications Commission decided to regulate voice over IP services like regular voice services. This means incumbent local carriers, like Bell Canada and Telus, won’t be allowed to charge less for VoIP services than a threshold set by the CRTC in areas where the incumbents are the dominant service provider.

There are arguments to make both for and against regulating VoIP. Ultimately though, regulating VoIP, in the short term, makes sense.

On the technology side, VoIP is different than traditional voice in that it’s a packet-based technology rather than a constant switched stream. Ultimately though, VoIP is still a voice service and logically should fall under the same rules as traditional voice.

On the economic side, VoIP users will pay more for their VoIP services in the short term in a regulated environment, because the incumbent providers won’t be able to sell the service as cheaply as they might like. On the positive side though, this ensures the incumbents won’t kill off competition from the cable companies and other telcos by charging rock-bottom prices for VoIP that make it impossible for anyone else to get into the market. Long-term competition in the voice market will ultimately mean better, more stable VoIP prices.

The one wild card in the VoIP market is the cable companies. Since they operate over their own networks, they’re not restricted by the VoIP decision. And they clearly have the financial resources to offer very cheap VoIP prices by using their cable TV and Internet revenues to subsidize their VoIP offerings.

This should make it easy for the cable companies to eat into the local market share of Bell and Telus, but at the same time it could be tough for anyone else to compete with the cable companies’ pricing.

What does the VoIP decision mean for Canadian enterprises? Probably not that much. VoIP at this point is still largely a consumer service. Most enterprises currently using VoIP are probably using it primarily within a campus environment. Some use it to connect geographically diverse locations, but as long as those enterprises are using their own PBXes, the VoIP decision won’t impact them.

The companies that will be affected by the VoIP decision are the ones who use IP PBX services provided by a telco and those firms who use VoIP services from a telco for branch offices or remote workers.

Hopefully a couple of years down the road there will be a large stable of financially healthy VoIP providers, including incumbent telcos, cable companies and independent teclos, and the CRTC can revisit its VoIP decision and do away with the regulations.

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Jim Love, Chief Content Officer, IT World Canada

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