ITU GRAPPLES WITH HOW TO BOOST IP TELEPHONY, UNIVERSAL ACCESS

Ness was questioned several times from audience on how U.S. had lessened regulatory restraints on incumbent operators instead of putting more constraints on service providers seeking to provide IP telephony. “I did not want to leave anyone with the impression that we are removing all regulation from our incumbent providers,” she said. “It has to come as competition takes hold.”

ITU forums don’t generate regulatory outcomes but put in place opinions for member countries to consider. Companies that are part of U.S. delegation attending this week include AT&T, Genuity, Global Crossing, Hewlett-Packard, IBM, Level 3, Lucent, Motorola, Net2Phone, Nortel, Verizon, VeriSign, WorldCom. Satellite companies that sent representatives to 3-day forum include Astrolink, Eutelsat, Inmarsat, Intelsat, New Skies Satellites, Teledesic, WorldSpace.

First draft “opinion” under consideration focuses on implications of IP telephony for ITU members, including policy goals such as universal access, competitive markets, technology innovation. Report produced by ITU Secy.-Gen. Yoshio Utsumi is only working document on agenda of meeting. “Although IP telephony could have a negative impact on voice revenues generated by a number of telecommunication operators, particularly in some developing countries, there could also be a revenue gain for other telecommunication operators and service providers, and a general gain in welfare in the economy as a whole,” draft opinion said. Draft stresses IP telephony applications are supplied best in markets where consumers can choose among several providers. It said “regulation may be appropriate where there is market failure or when public interests cannot be adequately met by industry [e.g., universal access and service].”

Final draft of ITU report on IP telephony estimated it could make up 25-40% of international voice traffic in 5 years. Second draft opinion in report addresses how to assist ITU members and telecom companies in adapting to changes stemming from growth in IP telephony, including “possible cooperative actions.” Third set of policy points covers how to meet “human resource development challenges” posed by new telecom technologies such as IP telephony, including skill shortages and technology transfers. Argentina’s Communications Secy. Henoch Aguiar said information session set stage for this week’s ITU meeting. “In the same way you don’t put new wine in an old wineskin, it’s not good to regulate IP telephony” using same policy framework that has been created for legacy, circuit-switched networks, he said at start of information session that ITU streamed over Internet.

Growth in IP telephony raises questions about how universal service obligations will be handled, said Nicholas Argyris, European Commission dir-communications services, policy and regulation, in panel discussion. “We believe that the competitive market can deliver a lot in terms of universal service,” he said. He said European Parliament was considering framework proposal that would refine telecom deregulation efforts that began in the European Union in 1998 (CD Feb 28 p4). “Where it is determined that a universal service obligation imposes on an entity… costs which are an undue burden, our legislation does allow for some compensation for that cost,” Argyris said. “I emphasize that those costs must be calculated on a net basis.” EC supports language in draft opinion that invites ITU member states to review regulatory frameworks “with a view to a competition-oriented approach to IP telephony to achieve universal access on service,” he said. Under previous regulatory frameworks in EU, voice-over- IP wasn’t considered to be a service that was “a full substitute for switched voice,” Argyris said. As result, service providers weren’t required to contribute toward cost of providing universal service, he said. “In the new framework, the situation is not quite so clear. Contributors are not quite defined in the same way.” One point of proposal, however, is to spread costs of providing universal service as broadly as possible across relevant providers, he said.

“We cannot deal with IP technology as a new type of service which should merit different regulation,” said Renato Guerreiro, pres. of Brazilian regulatory agency Anatel. “Such an approach could lend itself to different objectives, such as being used in favor of powerful companies that are already established in order to give them the right to operate services and force differentiated regulations,” he said. Wrong approach could give incumbents unfair advantage based on existing market power, which would allow discriminatory treatment of new competitors, Guerreiro said.

Regulators also outlined creative approaches to usher in IP telephony when national regulations still favored incumbents. Sandor Szilagyi, dir.-communications regulation for Hungarian regulator, said that as deregulation measures were implemented in that country starting in 1993, exclusive concession agreements were struck for carriers based on geographically defined regions. Hungary’s incumbent operator also received exclusive right for international and long distance service, scenario that provided complication when ISPs wanted to provide competing offerings, Szilagyi said. One concern at that time was potential harm to concession agreements that could arise from allowing voice service to be provided over IP networks, Szilagyi said. Govt. solution was to let IP-based service provider offer international or long distance service at quality levels worse than voice telephony offerings of concession-holders, he said. Standards also include minimum delay times and requirement that IP-based providers not guarantee package loss better than 1%, he said. “The quality must be worse, that was the only way to bypass the concession agreements,” he said. Forty service providers are now providing voice over IP, he said. Hungarian IP telephony providers also face similar numbering problems as their counterparts elsewhere because country doesn’t contain a numbering block for them, he said.