Re: Help Setting Up a VoIP Regulatory Framework

It's not because of technology: TDM telephony can be even cheaper, in

> terms of bandwidth, than VoIP; it doesn't waste space on headers, and > while the switches tend to be a bit more costly, that's in the noise, > on a per-minute basis. No, it's because VoIP is not taxed the same > way. It's a different business model. Regular phone calls are still > governed by the principles of the 1850s International Telegraph Union, > which worked pretty well into the 1980s. But now that fiber optic > undersea cables are more common and their price has fallen, the fixed > cost of terminating a phone call exceeds the international transit > cost. And so any form of evasion becomes attractive.

Thank you very much for the pointers. You are right. It's a different business model. What is it they say? "Let the market work". VoIP, being a newer technology was not taxed, and even FCC (in US) worked really hard to evade 50 state regulations to let VoIP grow to hold its promise. Now, when VoIP has already taken its flight, small surcharges like USF won't hurt. That's perfectly fine when calls mostly generate from USA.

But, we can't compare Country "A" with USA. Being a poor country, "A" needs to earn some revenue what the service providers and illegal stake holders did so far. The model of revenue sharing might help this poor country to encash some of fortune for sometime. Though the (VoIP, especially call termination) was branded illegal, but most phone companies were doing it. We can't blame them, market needed it badly and flaws in regulatory policies provided these technologically superior foreign phone companies a huge advantage, which are not even listed in local stock exchange, let alone offering IPOs. One of their parent companies recently deenlisted themselves from NASDAQ. Don't get me wrong, I don't have anything against them, but the profits to be shared. When you enjoyed huge tax holidays and allocation of spectrum for almost free; you are entitled to contribute a little extra for the social development of that population.

You're going way wrong here, because what you're doing is replicating > a monopoly, so as to tax it. But if you tax VoIP (where "tax" may be > a fee to the telephone company, not the general fund, but enforced by > government power), then what's the point? Current VoIP is a tax > evasion scheme, and a valuable one at that, because the tax is so > harmful. So your scheme will result in avoidance too. The Internet > is famous for routing around blockages, which sometimes are merely > administrative schemes and fees, not real circuit failures.

I agree to your point. So far it was illegal, now all of a sudden you can't expect things to be free and open, when the policy makers are really skeptical about it. The technology was abused so far, you have to give it a time. Now, you may not brand it as a monopoly, because the service providers will have the liberty to choose their wholesale VoIP carriers, ITSP, pricings i.e., only thing, they have to share 5% of their earning from call termination. DPI is not good, I hate that too; but how would you know about their earnings? Gentlemen agreement?

The proper price for terminating a call into a country should be the > cost of carrying it from the point of termination to the destination, > perhaps subject to the same percentage tax as all calls (i.e., not > technologically discriminatory, and not high enough to encourage mass > evasion -- think VAT, not luxury tax). Operators could then focus on > minimizing costs and maximizing quality, not evading taxes or setting > up costly toll booths.

As you said, yes, I did also propose some percentage of tax on VoIP calls (i.e., 5-6%). Charging more will obviously end up users to pay more. That's should be avoided. On the other hand, when you don't have much technology to asses total call generation for VAT and QoS for the services they offer, you can't regulate them. Regulation needs more knowledge, and that costs money. I have seen plenty of documentations by ITU, World Bank, USAID on regulatory framework and case studies, how to tailor those down to country "A"s model?

The Internet is NOT technology. It's a business model. The PSTN is a > business model which is losing out to the Internet. The technology is > a side show, and should be allowed to evolve, not be locked in by some > master plan that forever locks in what was thought of as state of the > art in 2000 or so. > (I am the Telecom Policy columnist for TMCnet, so you can see some of > my essays on related topics there.)

I agree. The technology should be allowed to evolve to gain its momentum. All I wanted a short term plan for this transitory period. Plans are subject to review every or every other year. The PSTNs are dying and KPN, BT, Deutsche Telecom are moving to VoIP enabled NGN solutions. VoIP won't be taxed forever!

Country "A" may not be able to afford your telecom policy guidelines, but I assume you will be welcomed open arm to setup a regulatory framework for countries like "A". Ramifications of knowledge sharing are even greater for developing countries. And Newsweek once said, Nations that learn faster will prosper. But it will take something else -- wisdom -- to endure.

Thanks once again.

Raqueeb Hassan Bangladesh

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Raqueeb Hassan
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