VoIP Services to be Regulated in Canada

jeffcm writes "It seems that the CRTC, Canada's equivalent to the FCC has decided that VoIP pricing and services should be regulated. From The Globe & Mail: "The CRTC confirmed that it has rejected arguments from Bell and Telus that VoIP should be left unregulated like other on-line applications. If their argument had won the day, their competitors say, the incumbent phone companies would have been allowed to limit the number of new entrants by slashing prices in the short term.""

Comments

Regulating internet traffic? Hm.

[ScrewMaster]

Regardless of the merits of regulating (or not regulationg) VoIP, at the core I'm uncomfortable with the idea of regulating specific types of Internet traffic ... kind of a change from the traditional egalitarian data-cloud "all packets are equal" ideal. I haven't really thought this out, but I just have a bad feeling about it.

There's only one important criterion.

[Anonymous Coward]

It seems pretty obvious to me that shared public resources (physical lines connecting private property together) may need to be regulated to prevent monopolies, while anything that isn't intrinsically limited (multiple protocols over the internet) doesn't need such regulation.

The only reason for the regulation, after all, is to permit competition. Right?

With the VoIP regulation debate, this dichotomy between limited and unlimited resources is often overlooked, when it's actually the only important issue.

The physically shared and limited public connections should be regulated to prevent monopoly. Purely software protocols should be completely immune to regulation.

Re:There's only one important criterion.

[Russ Nelson]

Um .... if you regulate them, then you create monopolies. The problem is not monopolies per se, but is instead monopoly prices. If they don't charge monopoly prices (reduced production -> higher demand for less product -> unmet demand but more profit), then there's no problem with a monopoly. Alcoa was a monopoly, but they just kept lowering their prices. This angered their competitors so much that they lobbied Congress to investigate their "monopoly practices". But monopolies aren't regulated to protect the would-be competitors, but instead consumers.
-russ

Re:There's only one important criterion.

[Anonymous Coward]

The only reason for the regulation, after all, is to permit competition. Right?

No. The primary raison d'etre of the CRTC is to ensure that a shared, national resource (originally radio spectrum) is used in such way that canadians as a whole benefit.

Yes, time has marched on and telecommunications no longer require airwaves, but the CRTC is still there.

Re:There's only one important criterion.

[ShieldW0lf]

You don't seem to get it. I've never heard of Alcoa, but Microsoft was "giving away" a lot of stuff like IE and Media Player to the detriment of competitors like Netscape and Real. Are you next going to argue that the regulators cracked down on the practice to protect us from getting this stuff for free?

Getting back to the topic at hand... if you're going to allow your VOIP service to communicate both ways (inbound and outbound calls) with people using POTS telephones, you need to bridge the gap. That means using the phone networks, and it means issuing extra telephone numbers.

Which means that while other VOIP providers are required to pay the existing carriers like Bell Canada for the use of their services, the existing carriers are under no such financial pressure. So they can undercut the startups until they fail, then start adding in "service fees" until we're back right where we started in terms of cost.

If you want to have competition between the monopoly that owns the lines and their competitors that rent the lines from them, you NEED regulation. How else are you going to do it?

Did anyone else find amusement in their description of "Primus Telecommunications, Vonage, Rogers Communications, Shaw Communications and Vidéotron" as startups?

Personally, I think the way to go is to seize control of the wires back from the telcos and give it to the government, then take advantage of the "efficiencies of the market" by hiring the private sector to maintain and improve it. Same as we do with roads, sanitation, etc.

Who benefits from reg and who does not?

[LordZardoz]

It appears that Bell and Telus (Canadas two largest telphone companies) were against regulation. Is it possible that a lack of regulation would have permitted Telus and Bell to pull some shenannigans with respect to Shaw / Rogers (two cable TV and cable internet providers) VOIP customers attempting to call POTS customers of Telus and Bell?

Also, for those whom compare this to regulating AOL Instant Messenger, the difference, I think, is that you cannot use that sort of client's voice capability to speak to someone using a simple telephone. The entire point of VOIP is that you can.

END COMMUNICATION

This is price regulation, not traffic regulation.

[ashitaka]

This ruling has little to do with technology and more to do with business and competition. Skype, FWD et. al. will still be able to offer their free services (which are actually financed by advertising and other means).

This will allow new companies to start offering value-added, non-PSTN phone service without being shut out by the two current major phone service providers using artifically low prices.

Basically, a Good Thing because competition is good.

Re:This is price regulation, not traffic regulatio

[Russ Nelson]

Um .... and what happens when somebody comes along who can charge less than the minimum price and still make a profit? Their competition is good for the consumer, but will be outlawed. Basically, this is anti-consumer and pro-producer legislation. The Canadian legislature is contemplating screwing the Canadian citizen. But why should that surprise anybody?
-russ

General question on regulation...

[Adrian Lopez]

Those who support regulation of VoIP often say that interaction with POTS as the reason why regulation is warranted. On that line of thinking, if some company created a VoIP system that does not interact with POTS, should it still be subject to regulation? Likewise, if POTS should become obsolete an be replaced by VoIP systems, would regulation still be justified?

Regulating Crime

[Doc Ruby]

They're regulating the service quality of telephony, an essential service upon which Canadian society depends. If they don't, VoIP will displace more reliable circuits with unreliable ones. And then catastrophe will occur when people find out just how unreliable is their unregulated service.

There are laws against fraud, which phishing and 419 scams (for example) violate. Those laws don't regulate "the Internet" per se - they regulate the transactions, which use the Internet to reach victims. The Internet isn't a grand loophole for all kinds of communication abuse. Or else we're doomed.

Re:Switch from an Authoritarian ISP to a Free ISP

[tomhudson]

Canadians seem fine with their government picking their pockets. I'm not surprised they don't complain about it picking their packets too.

Would never happen here in the USA anyway, this story should be moved to slashdot.ca

... which is why Canada is #3 in cheap, affordable broadband penetration world-wide, and the USA is what, 16th as of last month?

http://www.broadbandreports.com/shownews/62949

U.S. Now 16th in Broadband Penetration Slips three spots in global ITU rankings Posted on 2005-04-26 18:42:25 There has been rabid debate over whether the United States is (or isn't, depending on your political slant) falling behind in broadband penetration. That debate was fueled by an ITU report stating we were 13th in that category. According to the latest ITU data, we're now sixteenth. The U.S. ranking is something ITU and OECD researchers attribute to a lack of a cohesive government infrastructure policy - but free-market fans and incumbent supporters attribute to geography. The data indicates there are 11.4 broadband subscribers per every 100 U.S. inhabitants.

Over-regulation is bad, but so is under-regulation. Think about it - not only are you behind, you're falling further behind every month.

Re:This is price regulation, not traffic regulatio

[IgnoramusMaximus]

Um .... and what happens when somebody comes along who can charge less than the minimum price and still make a profit?

Then the "unfair" price will be adjusted downwards. The whole point of the regulation is to prevent what is known in other industries as "dumping", i.e. using size and profitability in other (usually monopolized) markets to outlast a smaller, specialized competitor in a niche market by writing off the losses in this small market which the competitor cannot afford to. In other words: to stop an anti-competetive and thus subversive to capitalism practice.

This has been going on in other industries (RAM memory, CDs, vitamins etc) and the various governments (some of them anything but socialist) slap this type of activity down quite rightfully.

My personal view on fixing this permanently is a globally enforced (via progressive taxation) limit on the size a company can grow to, thus forcing ongoing competition and avoiding this issue alltogether. But I realize its not likely to happen that way, so every government is left to come up with their own method of playing anti-monopolistic whack-a-mole as capitalism is moving more and more into oligarcho-corporatism despite these haphazard efforts.

Re:This is price regulation, not traffic regulatio

[Russ Nelson]

The whole point of the regulation is to prevent what is known in other industries as "dumping", i.e. using size and profitability in other (usually monopolized) markets to outlast a smaller, specialized competitor in a niche market by writing off the losses in this small market which the competitor cannot afford to.

Back in reality, it turns out that companies that try to maintain a monopoly in this manner (predatory pricing) usually never make money on this tactic. It costs them more to maintain their monopoly than they can ever recoup through higher prices. Let's say that they lower their prices by ten cents for a year, and drive somebody out of the business. In order to make back that money, they need to raise their prices by ten cents over their original monopoly price. But the party that they put out of business went into business precisely because they saw a way to suck off excess profits by competing with the monopoly. Now the market price is ten cents higher, and the profits are even more attractive to a new entrant. So somebody else goes into the business, and the monopoly can't even go back to their old price. They have to go back to the old "lose ten cents per" price, because that's what's necessary to drive the competition out of business.

Do you see? You have been taught something which is not true. Predatory pricing doesn't work the way you've been taught. Oh, I'm not saying that companies never do it. I'm just saying that it's not profitable for them to do so.
-russ

Rogers, again

[ratboy666]

So the CRTC has been convinced that VOIP should be regulated.

By Rogers, the dominant Cable company (and thus data supplier).

Since Rogers sells the data pipe, what is the additional "surcharge" needed to support VOIP? Yes, the sale/rental of the converter.

Now, Bell has been told (by the CRTC) that they can't just sell you the VOIP adaptor.

Because... that would hurt Rogers business.

Its a big win by Rogers. Makes them a "Bell" in that they are protected now too.

What IS the value of VOIP (pricing). Why is is NOT a few pennies a month, to support some QOS infrastructure? I pay Rogers for 60GB of traffic a month (used to be unlimited) -- why can't I use that for voice communications? 3 hours of talk a day, compressed, would be 30MB of traffic. Just data.

Is there another reason why Rogers is concerned about WHAT the data is? Oh, yeah, I remember... they are a phone company too (cell phones). So, VOIP would be a great way to charge a LOT more for that 30MB per day.

Ratboy