TELECOM Digest OnLine - Sorted: Re: Help Setting Up a VoIP Regulatory Framework

Re: Help Setting Up a VoIP Regulatory Framework

Fred Goldstein (
Wed, 20 Jun 2007 23:02:45 -0400

At 19 Jun 2007 22:49:43 -0700 Raqueeb Hassan <>

> Let's say country "A"s telecom regulatory board is trying to open-up
> the VOIP (call termination) which was branded illegal since long
> ago. The new regulatory commission wants to empower the people by
> introducing a transparent VoIP regulatory framework with two goals:

> a. Cheaper international call rate for the resident of "A".

> b. Building nationwide IP infrastructure with local
> entrepreneurs' e.g. cable operators, broadband companies.

You made it pretty clear that you are referring to Bangladesh. Let's
look at the status quo. Why do people want VoIP? Because the cost
of ordinary telephone calls is too high. VoIP is cheaper. But why?

It's not because of technology: TDM telephony can be even cheaper, in
terms of bandwidth, than VoIP; it doesn't waste space on headers, and
while the switches tend to be a bit more costly, that's in the noise,
on a per-minute basis. No, it's because VoIP is not taxed the same
way. It's a different business model. Regular phone calls are still
governed by the principles of the 1850s International Telegraph Union,
which worked pretty well into the 1980s. But now that fiber optic
undersea cables are more common and their price has fallen, the fixed
cost of terminating a phone call exceeds the international transit
cost. And so any form of evasion becomes attractive.

Compare Bangladesh with its neighbor India. There, the cost of
landing a phone call is low. So wholesale rates from the US to India
are well under US$0.10/minute. Bangladesh costs 2-4 times as much.
Dhaka isn't all that far from Kolkata, so it's not really a distance
issue. The Bangladeshi authorities are trying to milk too much from
the cash cow. Look at what low cost calling has done for India.
They've taken over the world's call center business. Sure, the telco
gets less per minute, but they more than make it up in volume, and
even if they don't, the country as a whole has benefitted. Does
Bangladesh tax roads? After all, they're valuable, so if somebody
brings his rice to market on a road, should the road operator extract
a share of the cargo? Yet people still let "telecom" work that way.
It should be seen as vital national infrastructure, a way to
participate in the world economy, not a luxury to be taxed like Scotch
Whisky or BMWs.

> So, if you are asked to help on setting up framework of VoIP
> regulation which might help earning revenue for this developing
> country "A", what would you do?

> If you ask me, here is my plan. Please correct me if I go wrong.

> a. Setting up a EMUM server.

> b. The ENUM server will resolve all the calls routed inbound for
> Country "A".

> c. The ENUM server will be connected to a "packet clearing house"
> for necessary revenue collection.

You're going way wrong here, because what you're doing is replicating
a monopoly, so as to tax it. But if you tax VoIP (where "tax" may be
a fee to the telephone company, not the general fund, but enforced by
government power), then what's the point? Current VoIP is a tax
evasion scheme, and a valuable one at that, because the tax is so
harmful. So your scheme will result in avoidance too. The Internet
is famous for routing around blockages, which sometimes are merely
administrative schemes and fees, not real circuit failures.

> h. Operator should not by-pass IP packet (VoIP/Internet) using any
> other path (like VPN tunnels) other than they have registered. DPI
> (Deep packet inspection) technology can be utilized should any

DPI should be a crime everywhere; it's basically wiretapping. Of
course the telcos like it, but it can only be used in a monopoly
environment, since otherwise traffic will route around it. And if
you're going to set up a monopoly -- or try to -- then why should VoIP
be treated differently from TDM? That's picking favorites in the
technology world. Do you have different import duties on Windows PCs
vs. Macs or Linux systems?

The proper price for terminating a call into a country should be the
cost of carrying it from the point of termination to the destination,
perhaps subject to the same percentage tax as all calls (i.e., not
technologically discriminatory, and not high enough to encourage mass
evasion -- think VAT, not luxury tax). Operators could then focus on
minimizing costs and maximizing quality, not evading taxes or setting
up costly toll booths.

The Internet is NOT technology. It's a business model. The PSTN is a
business model which is losing out to the Internet. The technology is
a side show, and should be allowed to evolve, not be locked in by some
master plan that forever locks in what was thought of as state of the
art in 2000 or so.

(I am the Telecom Policy columnist for TMCnet, so you can see some of
my essays on related topics there.)

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