Telcos lose bid to bar ISPs from offering VoIP

Telecommunications operators lost their bid to prevent Internet service providers (ISPs) from offering voice over Internet Protocol (VoIP) services for compensation after the National Telecommunications Commission (NTC) ruled that both telcos and ISPs can go into Internet telephony.

In a just released set of guidelines, the NTC classified VoIP as a value-added service (VAS) instead of a basic telephony service as telcos insist. Being a VAS, even ISPs that do not have a congressional franchise can offer VoIP. Offering basic telephone services requires a legislative franchise as provided for under the Public Telecommunications Act.

Through VoIP, ISPs can offer voice services using computers, thereby allowing them to circumvent the networks of the traditional telcos. VoIP is an application that digitizes and transmits voice communications in packets via the Internet, enhances or improves upon traditional telephony that is conducted through circuit switched connections by allowing the convergence of voice with other data applications, and by providing economic benefits in the form of greater efficiencies and lower costs, according to the NTC.

The commission noted that new technologies, such as VoIP, are blurring the traditional boundaries between computers, telecommunications, and broadcasting; and continue to fundamentally alter the structure, economics and nature of competition in the telecommunications sector.

The new rules provide that any person or entity seeking to provide VoIP for use by the public for compensation shall register themselves as such with the NTC prior to operation as a VoIP provider. No distinction was made as to whether the entity is Filipino or foreign-owned.

Local exchange and interexchange operators and overseas carriers are hereby allowed to offer VoIP without need of further registration, provide they ensure that such VoIP offerings are not cross-subsidized from the proceeds of their utility operations; other providers of VoIP are not discriminated against in rates nor denied equitable access to their facilities; and separate books of accounts are maintained for VoIP.

No VAS provider shall provide VoIP services to the public for compensation — where such services require access to and/or use of a network provider’s network, facilities and/or equipment — unless it has entered into an agreement with such network provider as to the terms and conditions of fair and reasonable access and/or interconnection charges for such access and/or use. 

In cases where the VAS provider and network provider refuse to negotiate for the interconnection of their networks, the NTC may mandate interconnection of the networks of the parties.

Network providers are also required to ensure equal access in terms of quantity and quality, at the same prices for substantially similar services to VAS providers; and shall not discriminate between VAS providers. This is to avoid situations where a telco that in itself has an ISP affiliate offers lower rates to its affiliate than to an independent ISP.

In justifying its classification of VoIP as VAS, the NTC noted that the latter is not strictly a public service offering in the way that voice-to-voice lines are, but is merely supplementary to the basic service. 

It added that given that it is not possible to accurately know or predict what other VAS would be available in the future, and consistent with the national interest in encouraging competition and innovation, services ‘ordinarily offered by local exchange and inter-exchange operators and overseas carriers’ must be construed strictly in terms of services ordinarily offered by such operators and carriers at the time the Public Telecommunications Act or RA 7925 was passed.

"Services ordinarily offered by the aforementioned operators and carriers at the time RA 7925 was passed were limited to voice services offered through circuit switched networks. A forward-looking definition of the term VAS would serve the interests of clarity, innovation, competition, and regulatory consistency," the NTC said.

It also pointed out that added competition in and deployment of VOIP can help achieve the broader policy objectives of RA 7925 to develop and maintain "a viable, efficient, reliable and universal telecommunications infrastructure using the best available and affordable technologies," and to improve and extend "services to areas not yet served."

The commission noted that widespread use and deployment of VOIP is hampered by the absence of formal rules or guidelines that will clarify the legal and regulatory rules for VOIP, and govern the provision and use of VOIP by the public.

It stressed that premature intervention in or regulation of VOIP as a nascent technology risks stifling innovation and competition in information and communications technologies (ICT).

"Minimal regulation on VOIP will encourage the development of new applications and services that can enhance Philippine competitiveness in the global ICT market," the NTC emphasized.