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TELECOM’S HOLY GRAIL So is VoIP the Holy Grail of telecommunications? Well, it would seem so. More and more businesses and Internet users are discovering the benefits of using VoIP. And despite the current debates over the VoIP rules recently released by the National Telecommunications Communications, both detractors and adherents believe that VoIP will redound to the benefit of the Filipino consumer. It’s no wonder even congressmen are getting into the act and proposing laws to enhance VoIP. VoIP, or simply Internet voice, is a technology that allows us to make telephone calls using a broadband Internet connection instead of a regular phone line that uses circuit switches. We can either make a call directly from our computer or use a regular phone with an adaptor to call other phones or computers. We can also use our mobile phones and personal digital assistants or pocket PCs to make the calls. It works by converting the voice signal from our telephone into a digital signal that travels over the Internet. When calling a regular phone number, the signal is then converted to voice at the recipient’s end. FRIENDLY VOICE TECHNOLOGY Dr. William Torres, president of Mosaic Communications (Mozcom), the country’s first Internet Service Provider, showed us how easy it is to make a VoIP call. First, he connects a memory stick to the USB port of his desktop computer, then a small window (a dialer) appears where he can dial the number using the number pad on his keyboard. Using his headset with microphone, he then talks to the person at the end of the dialed number. The memory stick, which is really a hard disk, contains the software that allows Torres to make the VoIP call. He bought it in Hong Kong, costs about US$158, and “already includes a US$10-load.” It has its own unique phone number registered to the service from whom he bought the gadget from. He merely uses his credit card to load additional funds to extend his use of the VoIP service. Similarly, other Filipinos have discovered Skype, which allows users to download a software from its web site and make VoIP calls. Likewise, service fees are paid through the credit card. Calls made to other Skype users are free, while those made to non-subscribers can be as low as US$0.03 a minute. Because the Internet is used, VoIP calls are not subject to the usual toll charges or termination fees that telecommunication firms usually charge each other for completing calls. That is why VoIP calls cost lower than most local telecommunication companies’ rate of US$0.30 to US$0.40 a minute (to the U.S.). REGULATOR’S GO-AHEAD While VoIP users are still a minority in the country, the recent draft rules on VoIP issued by the NTC is shining a spotlight on this “revolutionary” technology, as the Philippine Electronics and Telecommunications Federation (Petef) dubs it. Local telcos are understandably nervous. VoIP technology threatens to render the telcos’ usual circuit switching networks obsolete. In the United States, for example, AT&T has already stopped offering regular and local long distance telephone services and instead has forged ahead into the broadband universe offering VoIP solutions for homes and offices. ISPs, information technology experts, cable TV providers, VoIP retailers, and even IT journalists have lauded the NTC’s rules effectively favoring the deregulation of the budding VoIP sector. “Forward-looking,” is how many of them see the NTC’s move. On the other hand, telcos such as giant Philippine Long Distance Telephone Co., Globe Telecom Inc., and rural telephone firms have howled in protest over the rules. TEETH GNASHING Basically, telcos oppose the classification of VoIP services as value-added services (VAS), which they point out, even Republic Act 7925 (The Public Telecommunications Policy Act of the Philippines) does not actually define. In an interview, NTC Commissioner Ronald O. Solis said: “The telcos are partially correct in saying that (VoiP) is really a voice communication … it’s part of telecommunications and therefore should be defined a telecom service. But we also looked at it, both from the legal and technical aspect, and as we have pronounced in our memorandum, we believe it is to be defined as a value-added service.” In its memorandum on VoIP released last March 29, the NTC said it based its pronouncement on VoIP on RA 7925’s identification of a “VAS provider” as a category of telecommunication service. To wit, a VAS provider is “an entity which relying on the transmission, switching and local distribution facilities of the local exchange and inter-exchange operators, and overseas carriers, offers enhanced services beyond those ordinarily provided for by such carriers.” (NTC’s underscore) INDUSTRY POSITION But telcos point out that in reclassifying Internet Voice as a value-added service, any Tom, Dick and Harry can then offer VoIP. Not only is the recent VoIP memorandum unconstitutional since RA 7925 reserves public utilities for majority-owned Fililpino companies, the move could also lead to the collapse of the entire telecommunications industry. In its position paper submitted to the NTC, PLDT said: “The telecommunications industry may collapse because the (telcos’) stable source of revenue, like voice service for both domestic and international, and inbound and outbound calls, which are sources of subsidy to local exchange carriers, will be eaten up by the (VoIP providers).” The decisive factor in the telcos’ arguments against the NTC’s rules on Internet voice is that the government, in the end, will be at the losing end because they will be deprived of the roughly Php50 to Php60 billion in taxes that telcos pay annually should their business lose to VoIP service providers. Lawyer Rogelio V. Quevedo, group head for the legal and carrier business of Smart Communications, PLDT’s cellphone subsidiary, stresses that the telco is not against VoIP. “PLDT is not really against VoIP. In fact we are already using it,” he says, adding that the reason the firm’s international call rates have dropped over the years is because of the firm’s use of VoIP. He also cites PLDT phone cards as enabling consumers to call the U.S. for as low as 18 cents a minute with the use of VoIP technology. “What we are against is the (NTC rules) which allow even non-Filipinos to offer VoIP… Since voice service is a public utility, under the Philippine Constitution it can only be provided by Filipinos or companies 60-percent of who are Filipinos.” This means, a VoIP provider must seek a Congressional franchise, just like telcos; obtain a certificate of public convenience and necessity from the NTC; and also put up land lines in the rural areas,” Quevedo says. He also warns against “fly-by-night operators just skimming money, by riding on the public telephone networks and cellular phone networks,” by going through the public Internet. He says VoIP providers should pay access charges especially to those operating rural telephone lines. He says the PLDT group will be seeking the redress from the Supreme Court if the NTC decides to adapt the rules. “I am really interested in pursuing the patrimony… public utilities are reserved for Filipinos. Unless you change the Constitutional provision, then we have to comply with that. (And) if we need to change this, then we have to amend the Constitution and I’m really for that.” Globe, in a recent public hearing on congressional measures to deregulate VoIP, has also threatened the same court action. NEW PLAYERS’ VIEWS Mozcom and Petef, however, allay the fears of a collapse of the telecom industry when VoIP is deregulated. “In fact, they (telcos) will generate other revenue channels if they allow VoIP and other VAS. (A phone line) when connected to the Internet, allows you to do more than a voice call, more than Internet access, allows you to do so many things – surfing, email, entertainment, chat. So the point is, on that same infrastructure, you can generate applications from which you can generate revenues. So if more people can develop more applications, they will get more lines from PLDT,” says Torres. Petef, in its position paper to the NTC, projects that “VoIP will exponentially expand the market for ‘land lines’ and broadband. Geometric double-digit growth rates may be expected over the next 10 years, comparable to the more than 25% growth in cellular over the past 15 years.” It looks to the overseas Filipino worker as a possible source of the projected boom in VoIP use and demand for broadband. (PLDT and Globe both offer broadband or high-speed Internet connections.) Petef also posits a possible marketing play for telcos: “The Philippines’ eight million OFWs alone may generate 16 million subscribers in the short term. The OFWs would purchase VoIP at approximatedly US$10 a month to US$30 month for their relatives and friends, using numbers of Philippine telcos for themselves in their foreign countries and with their relatives and friends at home. A VoIP number is typically sold considering family (and friends) ties, this at least sold in multiples of two. In addition, the local friend or family member would acquire broadband and/or telephone connections with DSL (digital subscriber line), currently priced at Php1,500 to Php2,500 per month.” CONSUMER’S SIDE Jay Pefianco, an Antique-based environmental activist, has
been using VoIP for the last four years to talk to his relatives
abroad, especially his sister, now working and living in the
U.S. “It (VoIP) has kept us closer to relatives, sometimes
talking for hours at a fraction of the cost as compared to
an overseas phone call, even if it’s not as convenient.” Torres likewise defends the reclassification of VoIP as a value-added service. In the recent hearing at the House of Representatives on two measures seeking to promote VoIP courtesy of Reps. Abraham Kahlil Mitra (House Bill 3644) and Clavel Martinez (HB 3476), Torres said: “A value-added service is called as such because it adds value to the transmission medium, which is now regulated under RA 7925. Before, only voice was transmitted. But with the advent of the Internet, a lot has changed and there are now more applications for it.” Eager to get a slice of the emerging VoIP market, Mozcom has already begun offering Internet Voice to its subscribers. For subscriptions “roughly Php400 and more,” Mozcom clients are entitled to two hours of free VoIP calls every month. Torres said the service “will be free until the rules are passed.” He adds that ISPs are willing to pay access charges to rural phone firms. “It’s just that it’s got to be fair. The interpretation of fairness here is whatever the telco gives to its own bus, must be given to another bus. That’s fair.” EARLY WAR Not to be outdone, PLDT will soon be offering its own VoIP products. According to Quevedo, “there will be new PLDT products that will be making extensive use of the VoIP which will result in lower prices to the subscriber.” He declined, however, to reveal any more details about the product, only assuring that the rates will be “competitive” to existing VoIP products. For his part, NTC Commissioner Solis asks would-be VoIP providers to be a little more patient and wait for the agency’s final rules before offering Internet voice. “The VoIP / VAS providers, the ISPs have been waiting for so long for regulatory clarity, so I don’t think it would hurt them to wait for a little while.” Solis says that by July, NTC will be coming out with a matrix of the comments and suggestions of those who gave position papers on the issue. After giving the public another chance to comment, the agency will then decide whether to hold another public hearing or issue the final rules. Meanwhile, VoIP users like Dominguez and Pefianco eagerly
await for the NTC to finalize its VoIP rules. Pefianco sees
the technology as definitely a wave of the future that telcos
will have to deal with. “In our community alone, I was
the only one doing this four years ago. Now I can no longer
count how many are using VoIP now.”
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