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No need for Dickensian approach to voice-via-Web

It was the best of times, it was the worst of times.” Although Dickens wrote his oft-quoted novel, A Tale Of Two Cities, in the 19th century, his words resonate with prescient timeliness today. Consider the story of a technology that allows customers to by-pass traditional distribution channels with unlimited, low cost communication.

While many recognized the enormous power and potential of the Internet when it first burst onto the public’s radar screen in the mid-1990s, it has been the emergence of peer-to-peer technologies that have proven particularly disruptive.

Aided by high-speed broadband networks, peer-to-peer applications enable individual Internet users to connect to each other instantly, free to exchange all forms of data without regard for location.

If your business involves the sale or transfer of data, peer-to-peer leaves you with two options — you can either fight the technology or you can seize the opportunity by adopting many of the same technologies and competing on the basis of price, service, convenience, and reliability.

Therefore, depending on your perspective, peer-to-peer is either the best of times or the worst of times. Some content-based industries view this as the worst of times. They have pursued a “fight the technology” strategy, turning to the courts and lobbying campaigns.

This particular tale, however, does not concern those industries. Rather, it provides a contrast by focusing on another industry that faces many of the same challenges.

Voice over Internet Protocol — VoIP for short — refers to the convergence of the Internet and traditional telephony through the digitization of voice signals that are carried over the Internet. For the telecommunications industry, VoIP, particularly peer-to-peer based VoIP, is proving to be transformative as it creates new competitors, lowers costs to consumers, and embraces new business models and services.

With the rapid proliferation of Skype, the peer-to-peer based VoIP software from the creator of Kazaa, telecommunications providers could be forgiven if they were tempted by the “fight the technology” strategy.

For over a year, Skype users have enjoyed the ability to talk from computer-to-computer with fellow users anywhere in the world at no cost.

Moreover, the freely available Skype allows users to place computer-to-telephone calls for a nominal fee that takes the distance out of long-distance telephone calls.

VoIP is not limited to Skype and other peer-to-peer communications providers. Services such as Vonage and Primus’ TalkBroadband are quickly finding loyal followers as users gravitate to services that require only a broadband connection to enjoy cheaper long distance costs with innovative extras such as portable area codes.

These services appear to be the tip of the iceberg as ISPs and telecommunications providers of all sizes gear up to provide their own consumer VoIP offerings in the coming months.

While most industry observers seem convinced that VoIP is the wave of the future, the regulatory framework surrounding the emerging technology remains uncertain. This week the Canadian Radio-television and Telecommunications Commission (CRTC) will hold three days of hearings on VoIP regulation.

The telecommunications community will not use the opportunity to launch marketing campaigns claiming inferior and unreliable VoIP service, sue providers and their customers for “stealing” talk time, or lobby the CRTC to regulate the upstart services out of existence.

Instead, most will urge Canada’s telecommunications regulator to provide regulatory certainty by keeping VoIP regulation to a minimum and allowing the marketplace to evolve with an even playing field.

Earlier this year, the CRTC issued a preliminary opinion that signaled that it is inclined to adopt a regulatory model for VoIP. While it might exempt the peer-to-peer services such as Skype, other services that connect to the Public Switched Telephone Network would face CRTC regulation consistent with traditional voice telephony regulation.

The CRTC argued that VoIP fits within its mandate under the Telecommunications Act and that the social goals of telecommunications policy, including 911 emergency service, financial contributions to foster local connectivity in rural areas, and privacy protection, must be maintained.

While the CRTC is right that its telecommunications policy goals must be preserved, it would do well instead to seize this opportunity by working with Industry Minister David Emerson to reconsider how Canadians can achieve the same aims in a converged network environment that does not distinguish between bits of data that may be Web pages, e-mail, MP3 files, or “voice” calls.

The evolution of the marketplace should also weigh heavily in the CRTC’s analysis.

Unlike the movie and music industries, which claim legal protections such as the broadcast flag and the WIPO Internet treaties are needed before their members can offer innovative new services, many in the telecommunications industry argue that Canadians would be better served by regulatory intervention only after its need is demonstrated.

This leaves the CRTC with a significant challenge. Although light regulation may help promote technological innovation, a hands-off approach is not without its own risks.

Of particular concern is the potential for Internet service providers and incumbent telecommunications providers to use their customer connections and near-monopoly status to unfair advantage.

The CRTC must ensure that its VoIP policy does not directly or indirectly favour the dominant players and thereby leave smaller upstarts unable to compete effectively in the Canadian marketplace.

In A Tale Of Two Cities, Dickens follows his best of times, worst of times opening sentence with the line that “it was the age of wisdom, it was the age of foolishness.”

The headline-grabbing lawsuits and policy reform proposals of recent years have provided plenty of foolishness.

Participants at this week’s CRTC hearings will look to the commission to demonstrate wisdom by crafting a VoIP policy that maximizes consumer choice and marketplace competition while preserving the social goals that serve as the bedrock of Canadian telecommunications policy.

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