November 10, 2016
When revolutionary technology or business models begin to outcompete their predecessors, in comes an inevitable question: ‘Ought this to be regulated?’
AirBnB is a familiar case. By forming opportunities for homeowners to make money on the side, while freeing up cheaper space for tourists, AirBnB was quickly able to outcompete hotel business models and rapidly expand worldwide. But naturally it is able to outcompete hotels when it is not strapped down by expensive insurance and health regulations. Before long, the regulation authorities began to catch on and question whether it should be able to continue operating in its regulation loophole.
It appears that VoIP is no exception. Unlike traditional services VoIP is unencumbered by the technological limitations of information transport via circuit switched networks. VoIP utilizes a more versatile technology: IP package switched networks. This service is not only more efficient than traditional technology but also allows VoIP to provide a variety of services such as video, voice and e-mail over the same IP package switched networks for a fraction of the price. Accordingly, VoIP has growth by 20 percent since 2012 and is expected to reach a market value of more than $130 billion by 2020. How VoIP has managed to revolutionised business and personal communication is inarguable. But is the success of VoIP at least partially down to the technology being unencumbered by the limitations set on traditional telcos?
Currently, voice services provided by telcos are heavily regulated. Telcos are liable for a license, taxes, security requirements and service obligations that all cost revenue that is naturally passed on to the customer. So, when paying for access to voice services provided by a telco the customer is paying for its legality as well as the service. VoIP, on the other hand, can be provided at a more affordable price because they are not governed by the same regulations and licenses.
Whether this is permissible is questionable and currently under debate. While some stakeholders argue that the nature of VoIP is fundamentally different enough from traditional telephony to demand its own regulations that are separate from telcos, others argue that they are similar enough to demand equal opportunity. Likewise, stakeholders argue that the government is not responsible for preventing the loss of defunct technology in favour of cheaper more efficient technology. Regardless it is this debate that is behind the move by many countries’ regulation authorities to place a ban on the provision of VoIP on services such as Whatsapp, Snapchat, Skype, Tango and Viber. The UAE, Morroco and India have all placed such bans in the past.
The Consultation Paper on Internet Telephony (VoIP) produced by TRAI addresses these questions and other considerations that should be undertaken before a decision can be made. Some countries, however, have already decided to work in favor of VoIP despite earlier objections. The telecoms authority in the UAE: The Telecoms Regulations Authority (TRA) announced at the end of September that they are in support and VoIP can be resold in the UAE.
John Carter, managing director of Cloud Telephones, has worked in the IT and communications industry for more than 30 years. He started his career selling printers for Brother and quickly progressed to become U.K. head of sales, overseeing a period of rapid growth for the company. He subsequently worked as a specialist consultant in sales and marketing for several high-profile channel-facing organizations, including BT.