VOIP: To Regulate or Not

The future of Internet telephony in Canada has reached an important juncture with three days of hearings before the Canadian Radio-television and Telecommunications Commission. Among the participants making presentations are Bell, Telus, Vonage, Call-Net and Primus. In a preliminary decision earlier this year, the CRTC made it clear that it is leaning towards a regulatory environment where incumbent carriers such as Bell and Telus will be regulated while new entrants such as Vonage and Primus will be allowed to set prices as they wish. The idea is that this will encourage more competition within Canada's $30-billion telecom market. Of course, this does not sit well with incumbent carriers who believe they will be put at an unfair disadvantage because non-regulated rivals will be able to carve out market share by offering rock-bottom prices. It makes for an interesting philsophical decision for the CRTC – regulating the market to boost competition, which seems to be somewhat of an oxymoron. Personally, I think the idea of giving new players a small – but necessary – head start is a positive because it would make consumers aware of their services before the market is deregulated completely. If the CRTC doesn't go this route, Bell and Telus will likely swamp smaller rivals with massive marketing and bundling campaigns, and likely kill any kind of competition before it has a chance to flourish. The question how much of a head start do VOIP upstarts need? Six months? A year? For the sake of argument, let's say six months given that Internet telephony technology is ready to go, high-speed Internet penetration is high, and a growing number of consumers are becoming aware of Internet telephony services. There is no doubt Internet telephony will dramatically change the telecommunications industry. The question is how, or whether, regulators should play an active role in the technology's emergence. For those looking into what's happening with VOIP in the U.S., Lightreading.com has a good analysis piece.