Telecoms sector grapples with how to regulate telephone by Internet

Internet telephony is steadily increasing Keystone Archive

Leading figures from the telecommunications industry are meeting in Geneva to discuss ways of meeting the challenge of Internet telephony.

Analysts predict that telephoning via the Internet is set to become a major growth area in years to come, undermining the monopoly enjoyed by traditional operators.

The Geneva-based International Telecommunications Union (ITU), which is organising the conference, says one in 33 voice calls were made via the Internet last year.

And it predicts that, by 2004, 40 per cent of all international telephone traffic will be Net-based. Industry insiders suggest the telecoms sector is about to go through a similar transition to the one it experienced around 20 years ago, when there was a shift from analogue to digital networks.

“Today’s networks are not being replaced. Rather there’s a migration from circuit-switching technology to Internet Protocol,” says Tim Kelly, head of strategy and policy at the ITU.

Today’s networks are largely based on circuit-switch technology, which transmits the voice through dedicated channels. Internet calls cut the data into “packets” and reassemble them at the receiver’s end. By using network capacity more efficiently, Internet calls are much cheaper – usually less than half the price of a regular call.

The gathering in Geneva is the first time that industry and government officials have discussed the impact of Internet Protocol (IP) technology on traditional telecommunications systems.

One of the biggest problems they have to grapple with is regulation: “In a fast-moving sector like telecommunications, regulation is always one step behind the cutting edge of technology,” Kelly admits.

“Traditional regulatory divisions are breaking down. We need to identify what are the challenges presented by the next generation of IP-based networks,” he told swissinfo.

The chief problem is that the protocols covering traditional telephone networks govern the transmission of voice, whereas the Internet Protocol concerns the technology that transmits data. However, that data can take many forms – including voice.

“We have a monopolistic switch-service telephony which is increasingly being invaded by IP-based networks, which offer the same services as traditional networks. One side is regulated, the other is not,” says Hassane Makki, scientific adviser at the Swiss Federal Office of Communications.

By contrast, Switzerland’s biggest telecommunications company, Swisscom, is dismissive of IP-based telephony: “We don’t consider it a threat. We don’t think it’s relevant for the mass market,” says spokeswoman, Pia Rogers.

“Among residential clients, it’s used by a small number of people, most them what we could term Internet freaks. At the moment, the quality and availability cannot reach the quality of normal telephone lines,” she told swissinfo.

She says that although Swisscom offers IP-based services, demand for them has decreased as it has reduced the cost of international calls.

However, Hassane Makki believes that the consumer will, ultimately, be the winner: “If there is a market need and it’s technically feasible, and the price and quality are reasonable, it will become a very serious tool,” he says.

“Swiss consumers and all those in the developed world, will benefit from the dynamics of the market,” Makki adds.

But can the same be said of people in the developing world? This special forum was called at the request of Third World countries desperate not to be left behind by this technical – end economic – revolution. While one of the attractions of IP-based telephone networks is their low cost, a personal computer is essential to utilise it.

“A PC can’t be bought for $10 like a telephone. When computers are reasonably priced and the networks are well-developed, then consumers in the developing world may benefit,” Makki says.

He says Switzerland can help developing countries by stressing the importance of switching their telephone networks to IP-based technology and ending state monopolies in the sector, in order to attract investment.

Tim Kelly believes IP technology offers a great opportunity to reduce the “digital divide” – the disparity in advances in information technology between the North and South: “IP telephony promises to bring cheaper services to those countries. That can only help them to be part of the global information economy,” he says.

Many analysts predict that, in the medium term, the two networks will live alongside each other, with the consumer able to choose between the better quality but more expensive circuit-switch system, or the cheaper, but poorer quality IP-based system.

“Traditional telephony will still play a big role, but I don’t believe it has a long-term future. I can see these two worlds converging, and all telephone technology being based on IP,” Makki suggests.

by Roy Probert