Net telephony freed, call rates set to plunge further

REVENUE IMPACT TELCOS ALREADY UP IN ARMS

 CONSUMERS will soon be able to make STD calls as cheap as 10-40 paise and possibly make free local calls from their computers. Telecom Regulatory Authority of India (Trai) on Monday removed all restrictions on internet telephony in the country, allowing internet service providers (ISPs) to terminate internet telephony calls on phones, including mobile phones. Till now, a call from a computer could legally be made only to another computer within the country and not to a phone. (The policy regime allowed domestic users to make international calls to a phone from their computer.)
    For consumers, this implies they can make calls from personal computers to fixed line and mobile phones in India. Subscribers can also make a call to PCs from their handsets.
    Rural India will be the biggest beneficiary of this move, as users would be able to make ultra-cheap calls from PCOs using this technology. Broadband growth is also likely to get a boost. WiMax, a wireless broadband technology, getting ready for launch in India, is a potential gainer from the move. Challenges remain in the form of low PC penetration of 3.6% in the country. The move is also aimed at clamping down on the grey market in the country where players have been offering such services illegally.
    At present, voice calls over the internet can be made only between two computers and not between a computer and a mobile/fixed phone. Net telephony allows ISPs to challenge the dominance of telcos in the domestic communication market. Most telcos are ISPs as well. However, net telephony can also impact revenues that telcos such as Bharti Airtel, Vodafone Essar and others earn from long distance services. This has resulted in telecom operators already protesting Trai's move on the grounds that it would destroy their business viability. Telcos also said that they would lobby with the government against accepting Trai's proposals to open up the sector.
    For ISPs, internet telephony will open up significant new revenue channels. Additionally, cheap internet telephony can also lower the operating expenditure of domestic call centres and BPOs. COAI wants ISPs to pay entry fee
    NET telephony can also bring in new revenue streams to several national long distance (NLD) licence holders and act as an catalyst for them to extend their fibre networks beyond metros and Tier-I cities.
    Opposing Trai's recommendations, the Cellular Operators Association of India (COAI), the body representing all GSM operators, said that since telcos had obtained licences after paying huge entry fee (Rs 1,651 crore), ISPs too must be charged this fee before they are permitted to offer net telephony services. "Many of the new applicants are still waiting for allotment of spectrum so as to enable them to start the service. Against this backdrop, it is very unfair to allow unfettered access to ISPs. Hence, in order to maintain a level-playing field, it is imperative that ISPs are asked to migrate to UASL licence and subjected to the same entry fee, licence fee revenue share and other terms and conditions as are applicable to existing licensees," COAI said in a statement.
    According to COAI director general TV Ramachandran, unrestricted internet telephony would infringe upon the scope of access providers and destroy the business viability of existing service providers. "To assume that the impact would be limited because of a low number of broadband subscribers was incorrect. As the number of broadband subscribers grows, the issue of a level-playing field will become even bigger," he added.
    Rubbishing the concerns of telcos, Trai has said that it's in the interest of consumers that unrestricted internet telephony be permitted. Trai has also blasted existing telcos over their failure to provide Net telephony despite having the licences to do so. "It was expected that access service providers will provide highly-popular services like internet telephony and boost broadband penetration, but it has not happened. As such, our subscribers are denied advanced valueadded services in contrast to global scenario where such internet-based services are popular. Such regulatory restrictions discourage technological advancements and the result is grey market activity to provide these services to common masses," Trai added, while justifying its moves to open up the sector.
    Trai chairman Nripendra Misra added that telcos cannot cite level-playing field issues to block technological progress. "Globally telecommunications are being shaped by steep growth of broadband and wireless subscribers. The regulatory environment should be dynamic, enabling, efficient and should encourage competition. Hence regulatory framework for internet telephony has to be considered in view of convergence and other similar developments taking place across the globe," he said.
    ISPs said that telecom operators would only benefit with the opening up of net telephony. ISP Association of India president Rajesh Chharia said: "ISPs are globally considered as resellers. About 70% of our revenue goes to telcos. To terminate these calls, we would have to use their networks and hence, rely on them. Instead of looking at us as competition, it should be seen as a way to reach untapped markets."
    In a bid to address security concerns, Trai has said, "All ISPs interested in providing unrestricted internet telephony shall install lawful interception equipment". The regulator also added that ISPs will have to enter into mutual agreements with NLD players for offering this service. Trai has also added that ISPs will not be mandated to offer emergency number dialling services. It has also declined to specify quality of service (QoS) norms for net telephony. COAI said that internet telephony was not in the interest of consumers because emergency number dialling was not mandated and QoS norms were not specified.