Telco lawyers raise howl over new draft rules on VoIP

By Erwin Lemuel Oliva INQ7.net

IT was lawyers of large telcos (telephone companies) versus techies.

In Tuesday's jampacked public hearing on the National Telecommunications Commission's (NTC) draft rules on voice over Internet Protocol (VoIP), lawyers representing the Philippine Long Distance Telephone Co. and Globe Telecom, along with smaller phone companies in the country were up in arms, throwing every legal and regulatory issue against the NTC draft rules.

Close to 100 private and public stakeholders anxiously waited to hear various opinions on the proposed deregulation of VoIP in the Philippines.

For over two hours, the public hearing extracted concerns on: 1) constitutionality of the draft rules; 2) "soundness" of the NTC policy declared in an attached memorandum to the new draft rules and; 3) regulatory impediments preventing non-holders of congressional franchise to do business in commercial VoIP services in the country.

But, Internet lawyer JJ Disini pointed out, the public hearing skated around the "real issues" behind the telcos' opposition to the draft rules on VoIP.

"I'm concerned that the debates or opinions that were shared today are restricted to lawyers. I believe we should focus less on the legal issues, [and more] on issues behind the legal issues," Disini said.

This Internet lawyer urged the NTC to "try to get the real arguments against VoIP, which I think is more on financials and the viability of telcos. The NTC should try to get out the real issues on VoIP," added Disini.

A self-proclaimed consumer also voiced his concern during the public hearing, adding that VoIP is simply viewed by ordinary Filipino citizens as a service that will reduce public telecommunications services in the country.

"VoIP should be open to everyone, not just to the PLDTs and the local Internet service providers because in the end, we the consumers are [at] the losing end," said the consumer.

The public hearing was indeed divided between those who applauded the NTC for its strong position on VoIP and those who condemned it.

Robert Ceralvo, vice president of the New Jersey-based firm Idealtech Inc., said VoIP in the Philippines should be allowed to flourish because this will help bring in dollars spent by Filipinos to call relatives abroad using US-based VoIP services.

A "long-distance provider," IdealTech Inc. now offers three cents per minute for calls from the Philippines to New York.

"The current termination rate of PLDT has increased from 8 cents to 12 cents in the US. We now have three million Filipinos in the US alone, a captive market for VoIP services. Vonage is now selling its VoIP services to the Philippines through the Internet. So there's now VoIP revenues flowing out to the US firms," Ceralvo added.

Ceralvo also pointed out that deregulation of VoIP in the Philippines will allow wireless providers to set up services in areas not covered by telcos.

"My point is let the market decide. Let the consumers rule, as you (NTC) decide on the VoIP rules," the executive said.

Meanwhile Renato Garcia, president of Philippine Electronics and Telecommunications Foundation, said that while [deregulation of] VoIP will generally contribute to the development of the country, but urged the NTC to set "fair rates" allowing telcos and smaller players to compete with newer VoIP players -- now lining up to enter the Philippines.

Mosaic Communications President William Torres however stressed that deregulation of VoIP services in the country will bring in more revenues for Philippine telcos.

"There's much more money to be made in VoIP. While we're all focusing on issues of lowering the cost of telecommunications with VoIP, opportunities in the convergence of VoIP with other applications should not be fully discounted," said Torres, considered the “grandfather of the Philippine Internet,” also a member of the Philippine Internet Service Organization, a group of local ISPs.

PLDT and Globe lawyers remained unfazed by the benefits of VoIP to consumers, raised concerns on the "unconstitutionality" of the NTC's draft rules, and opening the telecommunications field wide open by the declaration of VoIP a value-added service.

PLDT Group lawyer Rogelio Quevedo did not mince words as he pointed out that the NTC draft regulation encourages "fly-by night" operators of VoIP to come into the Philippines and cause "chaos" in the telecom industry.

"Let's not create chaos in the telco industry which is a bright spot, or perhaps the only remaining bright spot in the Philippine economy.

The US firms who have filed cases against Philippine telecom executives previously are now using VoIP to disguise their real intent," he said.

Quevedo also pointed out that both the US Federal Communications Commission and the European Union have strong positions against allowing non-telcos from offering VoIP.

"There's no truth that VoIP will save dollars for the Philippines. It will in fact cause dollars to be lost to these US firms," the PLDT lawyer said.

For his part, Rodolfo Salalima, senior vice president for corporate and regulatory affairs of Globe, reiterated an earlier point he made to local reporters, stressing that the NTC should clearly state, "who can offer VoIP in the Philippines?"

"We're not against VoIP. The issue here is who can offer it?" said the Globe lawyer.

Salalima also pointed out that the attached memorandum in the NTC draft rules contract explains the draft rules.

"The memo itself destroys the draft rules. The memo in fact is clear evidence against the constitutionality and legality of the draft rules," he added.

The NTC memo declared that VoIP is a value-added service and not a voice service, paving the way for ISPs and other service providers to begin providing VoIP services commercially.

VoIP routes phone calls through the Internet instead of through traditional public switched telephone networks. Its lower cost has made it a popular alternative to traditional voice calls.

Prior to the new rules, VoIP was classified as a voice service.

Under the Telecommunications Act, this classification meant that only telecommunications companies with a government franchise to carry voice calls were permitted to offer VoIP commercially, though companies were permitted to make use of VoIP for private networks.

The classification had placed ISPs and traditional telcos at loggerheads.

The new rules identify the parties allowed to offer VoIP services, as well as standard agreements between telecommunications carriers and ISPs on service performance standards, interconnection charges, access costs, and consumer security and privacy.

The rules also outlined the NTC's mandate to intervene in failure of negotiations between carriers and ISPs.

The NTC Commissioner Ronald Solis said that the agency is expected to release the final rules 40 days after Tuesday's public hearing.

Commissioner Solid however indicated that another public hearing might be scheduled 30 days after they receive additional input from various stakeholders.

"Right now, a memorandum makes for a good start, but a law as proposed in Congress will give more teeth to VoIP implementation," Solis had declared previously.

Congress is scheduled to hold its own public hearings on VoIP Wednesday, May 4.