Canada Regulates VoIP… Sort Of

from the and-so-it-goes... dept

While the US still tries to figure out how it wants to handle VoIP regulatory issues, compared to traditional telcos, our neighbors to the north have pulled the old “looks like a duck, quacks like a duck,” test and announced that VoIP that replaces a local landline should be regulated like a regular landline. However, things aren’t as clear as it may seem. The details seem to suggest that the only companies who will be regulated are the traditional telcos who already offer regular phone service. That means that cable providers and VoIP startups aren’t regulated — even though they’re offering what is, basically, an identical service. The claim from some that this ruling makes sense or the telcos would use predatory pricing to keep them out of the market, isn’t supported by any evidence. In the US, for example, most of the telcos have clearly priced their service well above the upstarts. Verizon and Qwest both offer VoIP, but most of the independent VoIP providers are noticeably cheaper. While it’s good that the upstarts aren’t being regulated, it’s hard to see how it’s fair to set up different rules on nearly identical services, based on whether or not the company has a legacy system to deal with.

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Comments on “Canada Regulates VoIP… Sort Of”

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Anonymous Coward says:

Data, VOIP, and Taxes! Oh my!

The whole “should we tax VOIP or not?” question should cause us to rethink why we tax and what we tax in regards to communications and data services. I agree that slapping the raft of existing phone regulations and taxes onto VOIP, while exempting all the other uses of your broadband connection, doesn’t make sense. But neither does “no taxes, ever, no sir!” on data transport services. What does make sense is for some form of taxation to pay for 911 interoperability, as well as universal service (I know the USF is currently abused by telcos, but stay with me). (We’ll probably have to do sales tax as well to make local gov’t happy, too. Oh well.)

As far as 911 goes, for VOIP to be a real replacement to traditional telephone services 911 is essential, as is some means to make sure that there is power to the VOIP device (except if it’s a computer) in the event of a power outage (I’m thinking power over ethernet to keep you VOIP phone running). As for USF: the costs to do telephony via VOIP are ridiculously, infinitesimally cheaper then traditional switched services. Why not use that advantage to build out the data transport infrastructure to rural and low-income areas – which would enable not only universal VOIP, but universal broadband as well.

We can do two things: (1) rationalize the taxing of telecommunications services, currently telephone services provided by traditional telcos are taxed by every boy and his dog, usually multiple times by the same entity; and (2) leverage the strengths of newer transport technologies (they are cheap and they are multi-use) to make the whole situation with our transport infrastructure better.

glomar says:

I don't get it.

I still don’t understand why VoIP should cost anything more than what one is already paying for internet service from one’s ISP.

What’s involved? A domain name. DNS. Port number. With that in mind, I have to ask why not use a zone file resource record of some sort, or even the existing TXT record with some structured data in the record to indicate that VoIP is accepted there? … This is, after all, how SPF is implemented.

If one absolutely must have some “telephone number”, then a mechanism much like the domain registration model is appropriate. I’d pay GoDaddy $8.00USD per year for VoIP. I will NOT pay $20.00USD per month for what should be one hell of a lot cheaper.


DJ says:

Historical Evidence

You comment that “…or the telcos would use predatory pricing to keep them out of the market, isn’t supported by any evidence.” Maybe not in the U.S. but telephone companies in Canada have used predatory pricing in the past to inhibit competition. Back in the beginning of the mobile phone wars a large telephone company in Canada starting pricing their services at a loss in order to prevent competitors from starting up. In areas where there was no competition the consumer had to pay more money than in areas where there was competition. This has also occurred in the cable industry in Canada. While the historical precedents are in the article, believe me, it has happened and would likely happen again.

Right now I pay $32 per month for the same service that I can get from Vonage for $19.95. Don’t you think that Telus wants to keep me as a customer? They don’t want to compete with Vonage, they want to wipe them out as a potential competitor.

I have to pay $7 per month for caller ID from Telus, even though it costs Telus no additional money to provide that service to me. Pure profit. Vonage would severely cut into that profit margin.

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