Though it has only been a few years since its inception, projections indicate that by 2003, 300 million people will use Internet telephony. The growing popularity of Internet telephony world-over can be attributed to the substantial savings consumers make on their long distance telephone calls. Presently there exists a tremendous debate regarding the regulation of Internet Telephony. Since the Internet offers an extremely cheap medium of communication, traditional long distance telephone operators fear this unmatchable competition. Most countries do not have any particular law regulating Internet telephony and infact, several countries have banned Internet Telephony until some suitable resolution is attained. In India, the New Telecom Policy 1999 and the Internet Service Provider’s licence do not permit Internet Telephony.  

In the past, the Department of Telecommunications (“DoT”) has served show cause notices to some Internet Service Providers (“ISPs”), alleging that they have been carrying out or facilitating Internet Telephony and have thereby violated the conditions of the ISP licence.  

In view of the increasing regulatory challenges, the Telecom Regulatory Authority of India (“TRAI”) has initiated a consultation paper on the introduction of Internet telephony. There are several questions that arise in this context.  

What is Internet Telephony? 

Internet Telephony is a form of Internet Protocol  (“IP”) Telephony. IP Telephony is used as a generic term for the many different ways of transmitting voice, fax and related services over packet-switched IP-based networks.  The core of IP telephony lies in the conversion of the analog voice signal to digital format and compression/translation of the signal into IP packets for transmission over the Internet and a reversal of this process at the receiving end.  IP Telephony can be subdivided into two major groups: Internet Telephony and Voice-over-IP (“VoIP”), the difference being the means of transmission. Internet telephony primarily involves the usage of the public Internet rather than the Public Switched Telephone Network (“PSTN”) to transmit 'real-time' audio from one personal computer (“PC”) to another (or in some instances to another telephone itself). However, in the case of VoIP, it is generally an IP technology suite (i. e. a privately managed network) that is used rather than the public Internet. 

Following are the popular methods of Internet Telephony recognized by the International Telecommunications Union ("ITU"):

(a)        PC to PC  

Under the “PC to PC” method, no gateway with the PSTN is required, as calls are never switched by the PSTN. Rather, the principal means of transmission is always the Internet, using special software that is developed and installed on the users PC.

(b)        PC to Phone / Fax 

Under the “PC to Phone / Fax” method, the conversion of speech into packets takes place on the originating user’s PC. The process is reversed at an Internet Protocol Telephone Service Provider’s (“IPTSP”) gateway server, which then dials the called party’s telephone number and, when a connection is made, starts sending the caller’s speech and transmitting the called party’s speech in the other direction. The “PC to Phone / Fax” category includes PC to Phone Voice and PC to Call Centre services

(c)        Phone to Phone

“Phone to Phone” method of Internet Telephony is closely associated with the traditional telephone experience. IPTSPs are required to install their own gateways and enter into termination agreements all over the world, both with independent ISPs as well as established public telephone operators. In “Phone to Phone” Internet Telephony, the customer, using an ordinary telephone, dials an access code and then the telephone number; the access code then routes the call to a special computer gateway (the IP network). The gateways convert audio into data for transmission across the IP network and then convert incoming data back into analog signals. Local computer gateways for companies offering this service must be placed in strategic geographic areas. For instance, if a customer plans to call London (England) from Mumbai (India), then local gateways must be located in both London and Mumbai. 

Ambiguity in definition of Internet telephony 

Though the New Telecom Policy, 1999 of India and the ISP Licence prohibit Internet telephony, they have failed to define the term “Internet telephony”. The TRAI consultancy paper explains Internet telephony as “the transmission of voice over the Public Internet” and VOIP as “the transmission of voice over circuits employing IP, primarily over private managed networks”.  

In fact, one of the most foremost issues on the agenda of the International Telecommunications Union (“ITU”) is to define Internet telephony. For e.g. would voicemail or voice messaging services over the Internet amount to Internet Telephony? Would video conferencing on the Internet amount to transmission of voice and therefore include Internet Telephony?  

Further, since Internet telephony by itself transcends territorial boundaries, anyone intending to provide voice transmission services using IP would be well-advised to understand different definitions in other jurisdictions.  

(a)        European Union (“EU”) 

According to Article 1 of the Directive of the EU, “Voice Telephony” is the commercial provision for the public of the direct transport and switching of speech in real time between Public Switched Network termination points, enabling any user to communicate with another termination point.  

Further as per the said Directive, “Internet telephony” is defined as Voice Telephony if it meets the following criteria: 

• the communications are subject of a commercial offer;

• the service is provided for the public;

• the service is provided to and from public switched network termination points on fixed telephony network; and,

• it involves direct transport of speech in real-time.

(b)        United States of America (“USA”) 

Moreover, as per Federal Communications Commission (“FCC”) of USA, IP telephony services enable real-time voice transmission using Internet Protocols. 

(c)        Hungary and Switzerland 

In Hungary and Switzerland, a service is regarded as voice telephony only if it can provide instantaneous (i.e. real-time), two-way transmission of speech. If it cannot, the service is regarded as a store and forward messaging service, which is considered to be a ‘value-added’ or ‘enhanced’ service. Telephony over the Internet is considered to be voice telephony.  

Conclusion 

Keeping in mind that issues pertaining to Internet telephony have proved to be controversial, the Government must formulate an appurtenant definition for “Internet telephony” before permitting it in April 2002. While, devising the definition, the Government must consider the competing regulatory objectives such as benefit of new technology to consumers, loss of revenue to the basic operators due to “tariff arbitrage’, the quality of service norms and universal service obligations, in addition to the progress at the ITU level, since Internet telephony is an international communication channel.  

Given the current ambiguity, not only in India, but worldwide, it would be important for every company or service provider intending to provide voice transmission using IP to appropriately manage the legal and regulatory risks that may arise in different jurisdictions.