TCS Daily

VoIP of the people?

By Jeremy Slater - May 12, 2004 12:00 AM

Want more proof that things are different on either side of the Atlantic? Just take a look at the way regulators are dealing with one of the hottest new technologies around, Voice Over Internet Protocol, or VoIP. In an unusual twist, the good news for Europeans is that, unlike our American cousins, lawmakers here are taking a fairly laissez-faire approach to the whole thing.

This is because they already believe they have a regulatory framework in place. The European Commission claims it is engaged in a "technology neutral" policy initiative in which a regulatory framework is created to deal with new innovations, so there is no need for more regulation as a new market develops. The Commission says that all new services will be governed by the New Regulatory Framework, which was adopted late last year. It also says that electronic communication services such as VoIP can be divided into sectors such as closed user groups, broadband and publicly available telephone services, i.e. BT or France Telecom that for the moment need no extra regulation.

Brussels regulators realize that this apparent hands-off approach could be confusing to companies and are therefore trying to reassure them they will not tangle up the new market in red tape. This is relatively refreshing if you look at what is happening in the US, where concerns that Congress will move into the market seem to be increasing rapidly.

One Commission official told TechCentralStation that regulators believe there is enough existing legislation to cover any issues dealing with consumer protection, such as written contracts between service providers and users and price controls.

To reassure the business community that the Commission was not about to wade into this new market it recently held a symposium, at which it outlined the reasons why it was putting telecoms regulation on hold in this area.

VoIP would not be considered public voice telephony if it failed to meet each of the four elements of the Telecoms Services Directive's voice telephony definition: 1) voice telephony is offered commercially; 2) it is provided for the public; 3) it is provided to and from public switched network termination points; and 4) it involves direct speech transport and switching of speech in real time, in particular the same level of reliability and speech quality as produced by the PSTN.

However, as any physicist knows a vacuum will be filled, and even if Brussels decides not to do anything for the moment the national regulatory authorities may step in. Under the new regulatory framework they do have powers over the four markets for VoIP as listed above. As such they will have a role in areas like competition policy, security issues and pricing.

The problem therefore could become similar to that of the recent reorganization of how the EU regulates mergers and acquisitions. From May 1 much of the work previously done by the Commission has been passed back to the national authorities. This is all well and good in some ways as Brussels had become submerged in a sea of notifications about mergers that were not going to have any impact on the market the companies operated in. By sending such requests to national authorities this would free up the time of Commission's competition investigators to analyze bigger mergers and allow Europe to move closer to the US's anti-trust framework. This would help prevent the major rows between Europe and America when the EU blocks a merger that the US authorities had cleared, such as GE-Honeywell.

To all of the above Brussels competition lawyers nodded sagely and agreed this would be a good thing. But they added they were concerned about what would happen at the national level for various reasons. One of their concerns was about the clarity of national laws on what companies would need to report, another was about the competency of certain authorities to be able to interpret European guidelines.

Similar doubts could arise when national authorities start to analyze the local markets for VoIP. There is a danger that the deadening hand of regulation could come not from Brussels but from the member states. However, to be optimistic for a moment, the market is so new that such problems could be a way down the line, and operators might put this liberal approach to their business to the best effect.

Jeremy Slater is a writer living in Europe.


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