It’s unlikely that Canada will take the same approach as the United States in regulating Voice over Internet Protocol (VoIP), according to the Canadian Cable Television Association’s senior VP of industry affairs and office of small systems. "U.S. precedents don’t carry a lot of weight in Canada," says Harris Boyd. "The Federal Communications Commission (FCC) and the CRTC look at the world differently." Boyd was responding to Network Letter questions about whether Canada might take the same approach as the FCC, which released proposed rules for VoIP and other IP-enabled services on March 10. Industry players south of the border have 60 days to comment on the rules and 90 days for reply comments. CRTC chair Charles Dalfen has announced that the commission will be launching its own public process on VoIP. CRTC sources had told Network Letter that a public notice on the subject was expected to be released by the end of March, but no notice has been released yet. But Boyd doesn’t expect a quick resolution to the process, which may not be a bad thing, he says. "Look at the way the Internet evolved without any regulation, except on the access side, and it has blossomed. So that might be a model, at least in the early days, seeing as they are related services," says Boyd. "Maybe the (regulatory process) will be an evolutionary process so that the rules that they start out with will be rules to encourage new entrants and then we’ll see how the marketplace develops. I think some sensitivity to the fledging market is going to be key to this." Boyd points out that the CRTC has the right people to get the job done. "(CRTC vice-chair of telecommunications David) Colville’s an old hand, and Dalfen has a telecom background. So at the moment, they’ve got the horses to do it," he notes. "(Colville) was instrumental in not regulating the Internet, so that’s a good background to come at this with. If you want to have a competitive service, you have to be very careful about how you deal with this because it could kill it before it ever gets started and there’s not a lot of money to be made in this thing. If you have to go on a price war with Bell, you might as well just forget about it." The FCC guidelines call for comments on regulating the inclusion of 911 on VoIP services, and whether VoIP and other IP-enabled services are technologically and operationally capable of delivering call-back and location information. "How should we weigh the potential public benefits of requiring emergency calling and other public safety capabilities against the risk that regulation could slow technical and market development?" asks the FCC in its notice. The FCC is also seeking comments on how to apply disability accessibility requirements to VoIP providers, and the extent to which access charges should apply to VoIP or other related IP-enabled services. The FCC further questions whether the regulatory classification of IP-enabled services, including VoIP, would affect its ability to fund universal service. Boyd says that the U.S. guidelines are based on what the National Cable and Telecommunications Association (NCTA) told the FCC in submissions should be the basic requirements for VoIP. But he cautions that the proposed rules released by the FCC are likely to meet opposition from the American Cable Association, which represents smaller U.S. cablecos. "The FCC doesn’t make any kind of a distinction in what I’ve read between a full-fledged VoIP service and some other kind of service that is maybe just a cheap long-distance service or it’s a secondary phone line," comments Boyd. "Maybe in the future, there will be more than one kind of local phone service, such as the smaller companies with paired down VoIP services." In Canada too, he sees a need for recognition that there may not be just one type of VoIP service. He expects that in Canada smaller cablecos will not have the investment dollars to introduce VoIP services with number portability, 911, wiretap capability and separate power to ensure the phone service remains operational during power outages. Rather than registering as a CLEC, he sees smaller cablecos partnering with an existing CLEC, such as 360networks, Big Pipe or Sprint Canada. This week, Vancouver-based Peer 1 Network Inc. and Melville NY-based Pulver.com announced a joint venture, named VoIP Acceleration Project, which is aimed at helping small players get into VoIP though the subsidization of bandwidth and co-location needs. "To be successful, VoIP companies need reliable high-quality bandwidth and secure servers to ensure that their product or service is always available. Their consumers demand it," says Peer 1 Network president and CEO Geoff Hampson in a media release. "Peer 1’s nationwide backbone and fully redundant data centres guarantee this high level of performance." Boyd predicts that there will definitely be some VoIP trials with paying customers in Canada this year, most likely small companies with partners offering VoIP without all the bells and whistles. It will take longer for larger cablecos, such as Rogers Cable Inc. and Shaw Cablesytems, to introduce full-fledged telephony options using the Internet, he adds. "People feel this is a good way to expand the high-speed business. It’s a logical pairing with that service, and somebody is going to do it anyway on your network if you don’t. The problem with Primus (Telecommunications Canada Inc.) and Vonage is that they can just come in and sell (VoIP) to your customer, and you pay for the traffic and you don’t get anything out of it," Boyd points out. "If you don’t do it yourself, someone else will do it. And we’ll have to see what the incumbents do, whether they launch it in competition with their own services, then they will be out in the marketplace as a brand and that’s what you’ll have to compete with." Boyd is adamant as well that new players to the telephony market, regardless of the technology they use, should be more lightly regulated. That will help them gain a foothold in the telephony business, which he says is currently monopolized by Bell Canada. "Our initial view is essentially what Dalfen has exposed in terms of the incumbents. That’s where we are worried, not so much about the rules for the new entrants, but whether the incumbents would have lighter regulation for their VoIP service and just sort of move their customers from the regulated to the unregulated and nobody would come our way because they already have all the customers now," he notes. "And they are much more ubiquitous than we are. So that would be the real danger that it would be opened up too quickly." Michael Sabia, president and CEO of BCE Inc., doesn’t share that view. Last month, Sabia called for the same rules for all competitors - cable companies, phone companies, Internet providers and systems integrators. The BCE chief claims that competitive technologies have already eroded local wireline use by close to 20% (NL, March 18/04). "Usually the incumbent looks at the world that way," replies Boyd. "I mean there’s less than half of one percent of people who don’t have a telephone, so there’s no available market to tap. The only way you can get any customers is to get them away from someone else. So it’s a very brutal business and the rates are low in Canada - a lot lower than they are in the United States and we have excellent service. There’s really no reason for people to switch at the moment." He says that if Bell Canada and other telcos get into VoIP, then bundling will be what differentiates the various players. "The issue will be that if the telcos do exactly as we do, and they go into VoIP, they would have all advantages of the technology that we would," he notes. "There would be no advantage of us over them, other than different brands, and who’s got a better telephone brand than Bell? It will come down to value for the customer and who has the better bundle. Can they bundle a VoIP service with a voice-switched service? At the moment, that wouldn’t normally be allowed because the switched service is a monopoly. They could go the second-line route given they’ve already got a first line in every home anyway, whereas we’d probably have to go the primary line." Boyd also predicts that the CRTC will look at protecting the public in its VoIP process. "They will look at it from a consumer point of view and they’ll have mandated requirements for lifeline services, such as 911, number portability and probably powering - at least for VoIP services considered primary lines." But he cautions, "I mean right now, it’s just people talking about (VoIP). It doesn’t exist. Unfortunately, we have more questions than we do answers right now."