Wednesday, May 11, 2005

Canada to Regulate VoIP as a Local Service

The Canadian Radio-television and Telecommunications Commission (CRTC) ruled that VoIP should be regulated when used as a local telephone service. The CRTC said its overall aim is to create regulatory conditions that allow competition to grow. As each telecommunications market becomes sustainably competitive, CRTC would then refrain -- or forbear -- from regulating that market. Ultimately, the CRTC aims to eliminate price regulation in local telephone service, including VoIP, in Canada.

"We believe that VoIP represents a key moment in the evolution of local exchange telephone services," said Charles Dalfen, Chairman of the CRTC. "This is precisely the moment when Canada needs a regulatory framework that will provide the quickest road to competition."

The decision also means that the CRTC will not regulate computer-to-computer (peer-to-peer) VoIP services which reside solely on the Internet.

Some key parts of Canada's VoIP regulatory framework:

  • VoIP Service Provider Registration: All local VoIP service providers that are not operating as Canadian carriers are to register with the Commission as resellers, as a condition of obtaining services from a Canadian carrier or other telecom service provider (TSP).

  • Numbers and LNP: All LECs providing local VoIP services are required to implement and follow local number portability (LNP) requirements. Local VoIP resellers, like resellers of circuit-switched services, are able to obtain numbers and number portability from any number of LECs in the marketplace, and are not unduly constrained by the lack of direct access to either. VoIP service resellers would be permitted to obtain numbers directly from the Canadian Numbering Administrator (CNA).

  • Directory Listing: ILECs are required to provide complete directory listings to each subscriber. CLECs are required to provide the telephone numbers of their subscribers to the ILECs for that purpose. Given the Commission's determination that local VoIP services should be regulated as local exchange services, the Commission considers that the same reasons for requiring ILECs to provide a comprehensive directory of local telephone numbers in each local calling area, and for requiring CLECs to provide their local listings to ILECs for that purpose, apply in the case of local VoIP services. The Commission does not consider that there is anything specific to local VoIP services that would justify modifying the existing rules for ILECs and CLECs, nor does it consider that there is anything specific to local VoIP services to justify imposing new obligations, either on local VoIP resellers or on ILECs, with respect to local VoIP service providers' directory listings.

  • Equal Access to Networks: An equal access obligation was originally applied to ILECs in order to ensure that competitive IXCs would be able to provide services to their customers on the same footing as the incumbent IXCs. The Commission later extended the equal access obligation to CLECs to prevent limiting competition through exclusive agreements between CLECs and IXCs. A number of parties to this proceeding submitted that equal access should not be required in a VoIP environment, arguing that a dissatisfied VoIP customer could choose from another VoIP provider, or could subscribe to a circuit-switched offering, in order to obtain more satisfactory service. The Commission considers that maintaining the equal access obligation on LECs providing VoIP service is consistent with the principle of technological neutrality. In the Commission's view, it would be inappropriate to relieve LECs offering local VoIP service from providing equal access when their circuit-switched competitors are subject to the obligation. Indeed, as ILECs are migrating their circuit-switched networks to IP, to relieve them of their equal access obligation with respect to local VoIP services, would allow them ultimately to abandon the obligation entirely. The Commission considers that the possibility of a LEC conferring undue or unreasonable preference with respect to access to its networks continues to be a valid concern and further considers that consumers should continue to have options by being able to select IXCs, when selecting VoIP service from a LEC. Accordingly, the Commission determines that the existing equal access obligation will apply to LECs providing VoIP services.

  • Customer Winback Rules: The Commission has considered winback rules to be necessary and appropriate to prevent anti-competitive behaviour from ILECs. The Commission considers that, absent the winback rules, the ILECs could use their incumbency advantages to win back local VoIP customers as they could use to win back circuit-switched customers. However, the Commission ruled that it is not necessary to apply winback rules for VoIP services to cable incumbents.

  • Access for the Disabled: The Commission ruled that VoIP service providers should address issues regarding accessibility for the disabled to IP services and ensure that applications and technologies are being developed. However, it views these as important issues which require further investigation and is seeking public input.

  • Access for Hearing Impaired: The Commission concludes that local VoIP service offerings must function with the existing Message relay service (MRS) system and the related TTY equipment. MRS allows hearing-impaired subscribers to communicate with others connected to the PSTN by providing operator intermediation. A hearing person who wishes to communicate with a hearing-impaired person dials a toll-free number to be connected to an operator who contacts the hearing-impaired user and relays the communication using a teletypewriter (TTY). Conversely a hearing-impaired person, with a TTY, contacts a hearing person through the relay operator by dialing 711.

  • Consumer Privacy: All the existing regulatory requirements designed to protect customer privacy apply to all local VoIP service providers, to the extent technically feasible. The Commission directs all LECs to comply with these requirements, to the extent feasible, and as a condition of providing telecommunications services to local VoIP service providers, to include in their contracts or other arrangements with the service provider, the requirement that the latter make the privacy safeguards in question available to consumers, to the extend technically feasible.

  • ILEC VoIP Tariffs: When ILECs provide local VoIP services in their incumbent territories, they are required to adhere to their existing tariffs or to file proposed tariffs as appropriate, in conformity with applicable regulatory rules.

  • Non-dominant Carriers: To provide local exchange services in Canada, non-dominant Canadian carriers must fulfill the requirements of a CLEC.

  • Contribution to Subsidize Rural Phone Service: Revenues associated with VoIP services are contribution-eligible.

  • VoIP over Unbundled Loops: DSL service providers that are not CLECs and that obtain unbundled loops, connecting links and co-location from the ILECs, are now permitted to provide VoIP services, in addition to retail Internet service.

  • Equivalent quality of service: VoIP competitors petitioned the Commission asking that any quality of service enhancements introduced by the ILECs and cable carriers in their capacity as the underlying Internet access provider, such as packet prioritization, should be made equally available to all VoIP service providers, on an unbundled basis. The Commission considers that VoIP service providers should be encouraged to develop their own quality of service improvements and capabilities, which can best be provided through facilities-based competition or through a service provider subscribing to TPIA or an unbundled loop. The Commission considers that mandated unbundling of quality of service improvements available from broadband providers would result in competitors having less incentive to invest in order to provide their own managed VoIP service. The Commission further considers that ISPs, DSL service providers and CLECs have the ability to offer their own forms of managed VoIP service through TPIA, DSL over unbundled loops, wholesale high-speed IS or through facilities-based competition.


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