Ofcom to regulate fast-growing VoIP telecoms sector
Friday, 30 March 2007
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Ofcom will start regulating the burgeoning internet telecoms sector this summer to ensure that customers are fully aware of the potential limitations of some computer-based phone services.
The new regulation recognises the growing popularity of internet-based voice services and is the first step in establishing a wider regulatory framework around emerging debates within the telecoms industry related to access to telecoms networks and different technological platforms.
Internet telecom companies - dubbed VoIP (Voice-over-Internet Protocol) providers - have attracted significant numbers of users by offering free calls between subscribers at both a national and international level and very cheap calls to other networks. Ofcom said that by the end of the year, there could be as many as 3 million VoIP users in the UK as companies such as Skype, BT and Vonage add more users. Most subscribers use the service as a secondary telecoms line within the home.
Ofcom has established a code of practice for VoIP providers so consumers have more information when subscribing to services. From June, VoIP companies will have to state clearly whether users can access emergency services numbers and the extent to which the service depends on the customer's home power supply. VoIP providers will also need to inform consumers whether they can keep their phone numbers when switching providers and whether traditional telecoms services such as operator assistance and itemised billing are available.
Some VoIP services do not provide access to fire and ambulance service numbers, meaning that customers must maintain a landline in case of emergency. Even if emergency services can be dialled using VoIP, the service would be unavailable in the case of an electricity blackout, so Ofcom has deemed that VoIP providers must get positive acknowledgement from a customer that they are aware of the limitations of the service.
Ofcom also said it will open a consultation later this year about whether certain VoIP providers might be forced to offer access to emergency services numbers.
Cyrus Mewawalla, an analyst with Westhall Capital, said: "There are three big issues around the VoIP sector. Firstly, not all companies provide access to emergency services; secondly, there are still significant security issues; thirdly, there is a significant debate around connection to other networks and who pays termination charges. The regulators in the UK and Hong Kong are leading the world on these issues and Ofcom's new regulatory code is positive. However, regulators need to get on top of these issues before VoIP becomes mainstream."
BT has more than a million VoIP users. Wendy MacMillan, director of service management at BT, said the new code would protect consumers keen to know more about what the service can offer. She said that Ofcom now has to ensure that companies comply with the codes without over-regulating the young industry.
But VoIP-only providers argued that Ofcom could place an unnecessary burden on the emerging industry and should instead focus on emerging technological trends such as "naked DSL" - where consumers can source broadband without paying line rental.
Kerry Ritz, the managing director of Vonage UK, said: "Ofcom has really only focused on a small part of the issue. The bigger issue is the barriers consumers face in being able to drop their regular landline and replace it with a VoIP service like Vonage."
ITSPA, the VoIP provider trade body, said it feared the code could trigger a stricter regulatory framework for VoIP than for other technologies used within the telecoms industry and that overburdening small service providers with regulatory requirements could hinder creative development.
Ofcom said it would be careful to take innovation and competition into account when establishing requirements for access to emergency services.
