Internet Telephony Over the last year or so there has been increasing interest in Internet Telephony, properly called Voice over Internet Protocol (VoIP), from the telecoms heavyweights. The original Internet telephony was not particularly good because of the low bandwidth available, but today there is much more bandwidth available, even in the last mile, and VoIP software is a lot more sophisticated. This has lead to VoIP becoming mainstream. In the last month or so the pace has picked up - and, unfortunately, regulatory issues are starting to come to the fore (more about that later). There have been a flurry of announcements about VoIP products, services and analyst reports. In May IBM and Cisco announced that they would be working together to sell VoIP phones. At the same time Juniper Research published a report estimating that the VoIP market would be worth $32bn by 2009. That's a lot of money, even in a market that's likely to have a total value of $260bn, and so there will be a lot of people chasing that pile of cash. A few days later, Lucent, a major telecom equipment manufacturer, announced the take-over of Telica, a privately owned VoIP equipment maker. Meanwhile over here in the UK a new broadband VoIP service called 'Gossiptel' has been launched and news is seeping out of a VoIP service planned by Nick Ogden, founder of the WorldPay online payments system. The service is initially aimed at small and medium sized businesses, but is expected to offer consumer services later this year. Finally, just the other day, British Telecom (BT) announced that it was switching its entire infrastructure to VoIP by 2009 - ie within the next five years. All well and good - VoIP is much more flexible than ordinary phone systems, and a lot cheaper. BT, for instance,reckon they will save something like $1.8bn a year by switching to VoIP. But the question that raises its head is regulation. Since the telephone system is generally considered to be a natural monopoly, telecoms providers around the world are usually heavily regulated - for instance, in the UK we have OFCOM, the US has the FCC. The Internet, however is not regulated. Internet Service Providers (ISP) are not regulated, though the regulation bodies would dearly like to expand their empires by regulating them. The equation is, or has been up until now, quite simple. The big telecoms providers provide telephones and telephony services. The ISPs move packets of data around, providing data services. Telecoms is regulated, data services aren't. But with VoIP all that changes - voice telephony becomes just more data packets to be moved around. As the line between data and voice providers becomes more blurred so do the arguments about who should be regulated. There are fundamentally two options - you could deregulate telecoms or regulate ISPs. It doesn't take a lot to guess what the governments of the world would prefer! Regulation would fit in very well for most governments who have been unhappy for some time with the extent to which the Internet is outside their control. With the rise of VoIP and the user concerns about spam and viruses, most of them see an opportunity to start bringing it under 'proper' control. Of course once you have regulation the government starts dictating what you can and can't do, and the pace of change drops massively. Once the regulators are well established, they almost always start to favour the big players, with whom they develop a cosy relationship. Needless to say, the costs of doing business also rise dramatically. And those costs are inevitably passed on to the consumer sooner or later. Alan Lenton
The US Internal Revenue Service (IRS) has come up with an interesting wheeze to tax Voice over Internet Protocol (VoIP - see issue 120) phone calls using a law that was passed to fund the Spanish-American war in 1898! Never let it be said that government bureaucrats don't have imagination. At the same time Congress is debating a bill designed to provide a regulatory framework for VoIP. It's difficult to see how all this would work though - how would you know whether people are using VoIP or not when anyone can download free open source VoIP software and use it at will? It's not as though a central server which could be taxed is an essential component of the service. I'm rapidly coming round to the heretical position that the correct way to handle the issue of taxation on all these Internet services is to have some sort of flat rate tax at the point of access and then divvy it up between the taxing authorities. Of course, no one likes taxes, but to think that something which has as large a percentage of the national turnover as the Internet will have in the coming years, will not be taxed is living in cloud cuckoo land. It's best to get a nice simple system set up now than to wait for the inevitable death by a thousand mini-taxes that will otherwise be inflicted. No taxing authority is going to allow a large chunk of trading to go untaxed in its jurisdiction. |
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