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On March 9, 2001, the ITU World Telecommunications Policy Forum (“WTPF”) released a final Report of the Secretary-General and adopted four “Opinions” on IP telephony.
The WTPF does not produce decisions with binding force. Instead, it prepares reports and where appropriate, Opinions for consideration by Member States. As a result, the Report and Opinions reflect the widely disparate views of the ITU membership on the issue of Internet telephony. Some developed countries led by the U.S advocated market-based, open architecture, decentralized policies that will promote the development of advanced networks and services.
Other developed nations advocated a functional approach based on the service offering to determine the applicable regulatory framework. Less developed countries expressed concern on the impact of Internet telephony on international settlement revenue, which is used to provide basic telecommunications services. These nations generally supported policies involving government regulations and subsidies on advanced broadband services including VoIP.
Nonetheless, the ITU-WTPF Report and Opinions provide general principles supporting pro-competitive goals and encouraging support for more widespread use of IP technology. In his Report, the Secretary-General underlined the following points:
1) IP-based networks represent a significant new opportunity for the membership of the ITU and are already an important part of the emerging new market environment, in terms of volume of traffic carried and level of investment committed.
2) From a technical perspective, IP-based networks hold the promise of providing multimedia telecommunications services and new applications, merging voice and data. IP may well become the unifying platform for emerging converged networks.
3) From an economic perspective, the use of IP-based networks promises to reduce prices to consumers, and the costs of market entry for operators, especially for long-distance and international calls.
4) From a regulatory perspective, the development of IP telephony is forcing a reassessment of existing telecommunications regulation, which may need to be reviewed in the light of the opportunities opened up, and the challenges posed, by this new technology.
5) IP telephony poses a dilemma for developing countries: on the one hand it offers cheaper prices and lower costs, but it may also undermine the pricing structure of the incumbent public telecommunication operator. The transition to IP-based networks also poses significant human resource development challenges.
Likewise, the first of the four Opinions stated:
a. That IP Telephony applications are best supplied in a market in which consumers have choices among multiple, alternative sources or means to address their needs, because only then will citizens, businesses and the overall economy reap the benefits of innovation and cost effectiveness;
b. That government regulation should aim to foster an effective competitive environment and that 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); for some countries, there may be other reasons for regulators to intervene, for example to ensure the rebalancing of tariffs;
c. That Member States should examine the implications of applying existing regulatory regimes to IP-based services and applications.
The Opinion went on to “invite” Member States to consider the possibility of the introduction and deployment of IP technologies and IP applications, including the exchange of information; to review their current regulatory frameworks with a view to encouraging investment, spurring innovation and advancing development; achieving public policy goals in the context of a converged communication services environment; and considering the possibility of opening their communication services market with respect to IP Telephony by opting a competition-oriented approach in order to achieve clearly defined public policy goals, taking into account, among other things, the concept of technology neutrality for fully-substitutable services
The EU and the U.S. have concluded that IP telephony should not be subject to the same regulatory burdens as traditional telephone service. Imposing the heavy-hand of regulation now would stunt the development of this technology before it reached its potential. As the EU and FCC determined, if IP telephony technology improves to seriously challenge traditional telephone service, then a country can always revisit the question. But now is not the time to regulate this young technology that holds such promise.
The promise Internet telephony offers is to enable people to communicate with others around the country and around the world at affordable rates. Countries would be smarter to not regulate IP telephony and to permit it to develop and provide benefits to the public. People everywhere will benefit most from a policy that enables many users and providers to take advantage of the technological capability offered by the Internet. The policy guidelines embodied by the ITU Report and Opinions provide a framework within which these same goals may be achieved.
Telecommunications carriers around the world have already introduced IP into their networks because it provides economic benefits over traditional telecommunications networks.
Greater Efficiency: The conventional circuit-switched technology of the PSTN requires a circuit between the telephone company’s switch and the customer’s premise to be open and occupied for the entire duration of a call, regardless of the amount of information transmitted. In contrast, on IP networks, all content — whether voice, text, video, computer programs, or numerous other forms of information — travels through the network in packets that are directed to their destination by diverse routes, sharing the same facilities most efficiently.
Lower Cost: IP systems will offer a more economical means for providing communication connections. Also — and this is one of the sources of concern on the part of incumbent voice long distance carriers — Internet technology makes available to anyone with a personal computer and modem the ability to bypass the long distance PSTN.
Higher Reliability: In some respects, IP networks also offer the potential for higher reliability than the circuit-switched network because IP networks automatically re-route packets around problems such as malfunctioning routers or damaged lines. Also, IP networks do not rely on a separate signaling network, which is vulnerable to outages.
Supporting Innovation: IP is a nonproprietary standard agreed on by hardware and software developers and is free to be used by anyone. This open architecture allows entrepreneurial firms to develop new hardware and software that can seamlessly fit into the network. In contrast, the circuit switched network operates as a closed system, thus making it more difficult for innovative developers to build and implement new applications.
Telecom carriers using IP for their internal networks can reap these benefits. However, individual users seeking to use VoIP over their PCs encounter other limitations. Specifically, IP technologies currently lack a guaranteed quality of service. The ordinary telephone network (if properly installed and maintained) is designed to offer end users a very high quality of service for real-time communications. The Internet Protocol was not designed for voice; instead, it is based on a “best efforts” principle, which means that some packets are “lost” and have to be resent, introducing time delays that are inconvenient at best for voice communications.
Despite quality of service concerns and the policy issues that need to be resolved (discussed more fully in the next section), there are several arguments why carriers stand to benefit from VoIP even in end-to-end applications
- Faced with an uncertain landscape and increased competition, incumbents must retain customers. By offering VoIP, in and of itself, carrier’s can retain customers and increase traffic.
- Moreover, introduction of IP allows carriers to offer integrated services (voice, text, audio and video) over a single connection, thereby further enhancing value to their customers and contributing to profits.
- Especially given the possibility of long distance savings, VoIP can boost consumer demand for local telephone service.
- Carriers stand to realize substantial cost savings as the IP switching equipment becomes less expensive.
- IP helps spur innovation and development. Infrastructure development on IP can take far less time and cost much less compared to the enormous costs of building out and maintaining a state-of-the-art PSTN network.
Here is how a VoIP transmission is completed:
Step 1: Because all transmissions must be digital, the caller’s voice is digitized. This can be done by the telephone company (which is how carriers use IP in their networks), by an Internet service provider (ISP), or by a PC on your desk.
Step 2: Next using complex algorithms the digital voice is compressed and then separated into packets; and using the Internet protocol, the packets are addressed and sent across the network to be reassembled in the proper order at the destination. Again, this reassembly can be done by a carrier, and ISP, or by one’s PC.
Step 3: During transmission on the Internet, packets may be lost or delayed, or errors may damage the packets. Conventional error correction techniques would request retransmission of unusable or lost packets, but if the transmission is a real-time voice communication that technique obviously would not work, so sophisticated error detection and correction systems are used to create sound to fill in the gaps. (This process stores a portion of the incoming speaker’s voice, and uses a complex algorithm to “guess” the contents of the missing packets and create new sound information to enhance the communication.)
Step 4: After the packets are transmitted and arrive at the destination, the transmission is assembled and decompressed to restore the data to an approximation of the original form.
As this explanation suggests, technology that works fine for sending data may be less than perfect for voice transmissions. The technology is improving, but still the quality of a voice transmission using packet technology is inferior to a circuit-switched connection, and that difference in quality would normally be obvious to any listener. As IP technology improves, the quality advantage for voice communication enjoyed by the circuit-switched will decrease, but most experts see parity in quality as still a distant prospect.
The terms Voice-over-Internet Protocol (“VoIP”), IP telephony, Internet telephony, and Voice-over-the-Internet (“VoN”) are given different meanings by different commentators and in fact have no universally agreed-upon meaning. There are, however, distinctions to be kept in mind, for IP can be used in various ways for the transmission of voice. As used in this memo, –
- VoIP is a generic term that refers to all types of voice communication using Internet protocol (IP) technology instead of traditional circuit switched technology. This includes use of packet technologies by telecommunications companies to carry voice at the core of their networks in ways that are not controlled by and not apparent to end users.
- ·VoN, also called Internet telephony, on the other hand is a service that end users decide to use — it is a specialized form of VoIP in which a regular voice telephone call is transmitted via the public Internet, thus bypassing all or part of the public switched telephone network (PSTN). Internet telephony can occur between computers (computer-to-computer), between a computer and a phone (computer-to-phone), and between phones (phone-to-phone).