International communications players are calling on the CRTC to take a light-handed approach to regulating voice services over the Internet, but also say that the commission should look to regulate more effectively last mile access and interconnection. AT&T Global Services, pulver.com and Vonage Holdings Inc. generally agree in comments to Telecom Public Notice 2004-2 that the CRTC should adopt a layered regulatory approach because its technology neutrality concept doesn’t work in the VoIP environment. The three companies tell the CRTC that it is inappropriate to treat VoIP services in the same manner as traditional circuit-switched telephony because in an Internet environment voice can be considered an application, much like email or instant messaging. They argue that local residential competition hasn’t materialized due to the market dominance of incumbent telcos, and say the commission can adopt rules that will allow for greater competition in VoIP by all providers, incumbent and new entrant alike, without having to use archaic old world telecom rules. Vonage suggests the commission consider content, applications, logical network and physical network as the four distinct elements in a layered regulatory model. A layered approach, the company writes, will provide the commission with the tools to effectively apply regulations to different layers to achieve "net neutrality". "By adopting a layered approach to regulation, the commission can specifically target different types of regulation to distinct layers. For example, economic regulations should be targeted at the physical and logical layers that are subject to control by firms with market dominance. In the current marketplace, a few firms that provide last mile access connectivity control the logical and physical networks. The commission should therefore narrowly tailor regulations that prohibit such firms from using their control of bottleneck facilities to engage in unfair practices in order to obtain market share in content and application layers," Vonage writes. Pulver.com tells the commission that it should resist regulating VoIP unless it is necessary and ensure that no entity can use its market dominance to stifle choice and innovation. The group notes on the second point, however, that the CRTC will have to continue to subject the transmission paths - wireline, wireless and satellite networks - to some regulatory oversight. "While there are conceivably an infinite number of IP application providers, economics and technology logically limit the number of last-mile access providers. Therefore, competition, alone, would be an insufficient check on an entity’s market power or monopoly control over an essential choke point in the network," writes pulver.com. AT&T Global Services notes in its comments that the CRTC’s view that VoIP services are equivalent to traditional telephony is an improper application of its technology neutrality principle, and that in fact its preliminary views will actually impede, rather than promote, competition. This, writes the company, means the commission needs to adopt a new regulatory framework centred around the separation of the applications layer and the network layer, and look at how it can allow non-Canadian carriers offer local VoIP services. The commission would be required to do two things under this approach. First it would have to forbid Internet access providers from inhibiting access to content from other service providers. Secondly, the CRTC should prohibit any "broadband transport provider" from requiring subscribers to purchase a service as a condition of receiving high-speed Internet access. "These reasonable conduct restrictions at the network layer would promote competition at the application layer and thereby eliminate the rationale for applying many economic regulations applicable to voice services among the current CRTC LEC rules," AT&T Global Services writes. WorldCom Canada Ltd. finds itself opposing its international brethren on some key points, however, with respect to the commission’s preliminary views. The company, operating as MCI Canada, supports the CRTC’s view of VoIP being functionally similar to traditional voice services. But MCI Canada proposes that the commission begin looking at ways of how it can allow resellers to participate in a much greater manner in the provision of VoIP services. The company believes that given the weak state of competition for the provision of local telephony services, it is time for the CRTC to consider other market entry models, which might facilitate a greater degree of local exchange competition. "Specifically, MCI Canada believes that the commission should give consideration in this proceeding to allowing switch-based resellers to obtain the same rights as those which are enjoyed by CLECs provided that they comply with the obligations that were imposed on CLECs by the commission in Decision 97-8," the company writes. Vonage agrees with MCI Canada that the commission needs to revisit reseller regulation in the VoIP context, that is, if it decides not to adopt a layered approach to VoIP regulation. The Internet telephony provider notes that if the regulator is going to subject VoIP service providers to regulation under reseller rules, then it will need to modify those obligations to fit the technical and social realities of VoIP services, adding that VoIP providers should be treated as a unique subset of resellers for regulatory purposes. "The commission should only subject VoIP service providers to those regulations that are technically feasible and necessary to protect social goals. And in that regard, the commission should also recognize that keeping the Internet free from regulation is an important public policy goal," Vonage writes. MCI Canada also raises the issue of local network interconnection and unbundling. The company notes that the ILECs and incumbent cable companies have been upgrading their networks to handle IP-based applications, and the commission needs to ensure that competitors can interconnect to these networks in the most efficient manner possible. "Put differently, competitors should not be forced to interconnect with other service providers using a set of legacy interconnection arrangements that do not support VoIP and other IP applications," the firm writes. The company notes that the commission has yet to make a decision regarding Public Notice 2001-126, a proceeding on interconnection arrangements and points of interconnection. MCI Canada says that the outcome of this proceeding could have an impact on interconnection issues that could potentially arise in the VoIP proceeding and urges the commission to quickly rule on the matter. The company also expresses concern that ILECs and cable companies are still refusing to unbundle essential services in their entirety or to price the services at Category I Competitor rates. "Indeed, the longer these issues remain outstanding, the longer the ILECs have to gain a head start in the retail market and wholesale markets for these IP-based services," writes MCI Canada.