NBI urges passing of anti-cybersex laws

By Alexander Villafania INQ7.net

THE NATIONAL Bureau of Investigation (NBI) is urging lawmakers to come up with anti-cybersex laws to help the agency capture suspected cybersex shop operators in the Philippines.

NBI Anti-Fraud and Computer Crimes Division Director Elfren Meneses said that they could not conduct proper monitoring and entrapment cases against suspected cybersex operators in the absence of a cybersex law.

Meneses noted that current anti-pornography laws have no provisions covering cybersex. Instead of charging suspected operators, the NBI uses Article 201 covering "immoral doctrines and obscene publications" in the Revised Penal Code or Republic Act 8484, otherwise known as the Credit Card Law.

"Even these laws do not have enough teeth to stop cybersex operators,” Meneses added. “For instance, we can only invoke RA 8484 if the suspected owner of a cybersex shop makes a money transfer from the Philippines to another bank account. Article 201 does not even mention digital mediums of pornography."

The NBI official said that the number of cybersex dens in the country has grown in the last four years, most of them owned by foreigners but managed locally by Filipinos.

Normally, cybersex operators have their computer servers hosted in the Philippines. Their "cyberbabes" stay in a secret room with an Internet camera where paying customers can watch. Payment is done via credit card to an account in a country with loose regulations on pornography.

He said the closest the legislation the agency could invoke against cybersex operators is Section 33 of the Republic Act 8792, otherwise known as the E-Commerce Act, imposing penalties on illegal transfer of data through the Internet.

Attributing the increase of cybersex operators to lack of cybersex laws, Meneses warned that the trend could continue if no law is passed against them. The NBI has been monitoring several cybersex operators in three to four areas, which he did not specify for security reasons.

Meneses added that the NBI already has a representative in the US Federal Bureau of Investigation (FBI) headquarters in Washington. Since many of the suspected operators are Americans, the FBI can conduct a similar raid in the US once the NBI targets cybersex facilities in the Philippines.

So far, two legislators have filed anti-cybersex bills, Senator Ramon Revilla Jr and Catanduanes Representative Joseph Santiago.

Congressmen quiz telcos on impact of VoIP deregulation

By Erwin Lemuel Oliva INQ7.net

FOR more than two hours, Congressmen grilled lawyers of Philippine telephone companies on the issue of whether or not Voice over Internet Protocol (VoIP) will mean the death of their voice business.

Wednesday’s Congressional hearing on several proposed measures to deregulate VoIP in the Philippines generated heated debates -- some even happening in the background -- as lawmakers tried to comprehend this major inflection point in the Philippine telecommunications industry.

Lawyers of the Philippine Long Distance Telephone Co. (PLDT) and Globe Telecom were singing a different tune this time. They stressed that the proposed measure will deprive government of taxes paid by Philippine telephone companies, as mandated by the Congressional franchise they were granted.

"Mawawala na ang tax na binabayad namin sa government (taxes we're paying to government will be lost)," PLDT lawyer Florentino Mabasa Jr. said, as he indicated the telephone company's vehement opposition to the proposed measures.

House Bills 3476 and 3644, filed by Representatives Clavel Martinez and Abraham Kahlil Mitra respectively, would open commercial VoIP to non-telecommunication companies.

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 long-distance voice calls.

Prior to the new draft rules, VoIP was classified a voice service, which means that -- under the Philippine Telecommunications Act (RA 7925) -- only telecommunications companies with government franchises to carry voice calls were permitted to offer VoIP commercially. But companies were permitted to make use of VoIP for private networks.

Telecommunications companies have opposed the reclassification.

"How can we survive? How can we pay taxes to the government [if we pass such legislation?] Also, will we allow foreign firms now to come into the Philippines and offer VoIP? Only Filipino-owned companies are allowed to offer public services such as telecommunications, as stated in the Constitution," Mabasa continued.

The PLDT lawyer also pointed out that Congress should at least ensure that they would be able to monitor those who can or cannot offer commercial VoIP services in the country.

For the first time, though, Froilan Castelo, assistant vice president for corporate and regulatory affairs of Globe Telecom, admitted that the deregulation of VoIP services threatens the viability of Philippine telephone companies.

But he also agreed with PLDT, adding that the proposed measures would pave the way for US-based firms to come into the Philippine telecommunications market without the need for them to set up physical presence in the country.

"This will again deprive Philippine government of telecommunication franchise taxes," Castelo insisted.

National Telecommunications Commission chief Ronald Solis assured local telcos that the new draft rules on VoIP deregulation will address concerns on "access charges."

"This draft is a work in progress. We will address issues raised on nationality requirements enshrined in the Philippine Constitution," he added.

During public hearing, Representative Roilo Golez dropped the bomb on the local telephone companies when he asked whether or not Philippine telephone companies consider a digitized voice clip attached to an e-mail as a VoIP application.

"You said that anything that is transmitted as voice is under the telecommunications act. So my use of this application is in violation of the law? Are you proposing the ban on voice over the Internet to also impede e-commerce? Is sending a voice clip via e-mail now considered VoIP?"

William Torres, president of Mosaic Communications and member of the Philippine Internet Service Organization, offered an explanation.

"A value added service is called as such because it adds value to the transmission medium, which is now regulated under RA7925. Before, only voice was transmitted. But with the advent of the Internet, marami ng nagbago at marami na rin ang paggagamitan nito (a lot has changed and there are now emerging applications for it). There is a big difference between those who own the transmission and the value-added service (VAS) providers. But VAS providers don't own the networks. So they will need the owners of these transmissions to make money," Torres said.

In a Powerpoint presentation during the hearing, NTC Deputy Commissioner Jorge Sarmiento said the NTC has decided to classify VoIP as VAS because existing laws could eventually become outdated.

"The market should be allowed to evolve with minimal regulation," he added.

NTC said that the benefits of VoIP deregulation are simple: it will increase broadband Internet usage, lower the cost of telecommunications, and encourage competition not only in telecommunications but also in the information and communications technology industry.

"Our draft rules are based on law and sound public policy," Sarmiento said, adding that the draft rules will surely provide fair and just compensation to Philippine telcos if VoIP providers will use their networks.

Philippine Electronics and Telecommunications Federation President Renato Garcia admitted that expected volume business generated out of VoIP services is enough to create a new market for Philippine telephone companies.

"The current total revenues that will be created is in fact predicted to exceed the current total revenues generated by the current market," he added.

Golez, for his part, posed a hypothetical question, asking whether the deregulation of VoIP in the Philippines will cause the collapse of the telecom industry. PISO's Torres said that such a scenario would also mean the death of the ICT industry.

With all this opposition by the local telcos, will the proposed law or even the NTC draft rules fly? Representative Simeon Kintanar, chairman of the House committee on information and communications technology, posed this question to attendees of the public hearing.

NTC Commissioner Solis was succinct, as he replied that local telcos are expected to challenge its draft rules in Philippine courts, thereby delaying deregulation of this technology in the country.

"I believe this is the direction they are headed," the government official added.

Reacting to Solis' statement, Representative Gilbert Remulla said that Congress should now find it crucial to pass a law to deregulate VoIP in the Philippines to "avoid falling to the whims of the courts."

A representative of the Philippine Internet Commerce Society stressed that Congress must ask itself whether it needs to "change policy or adopt a new policy to suit changes in this industry."

Representative Villafuerte, vice-chairman of the committee on information and communications technology, hammered in the best point, as he stressed that Philippine telephone companies are in the best position to compete in the emerging commercial VoIP market in the country.

"It is wrong for them to say that they only have the right to capture the revenues generated from VoIP. Philippine telcos have the inherent advantage over other players to compete in this space," Villafuerte said. His remarks elicited strong applause from the attendees.

Lawyer Gwen Grecia de Vera who represented the Philippine Internet Commerce Society and the academe cautioned Congress about passing laws that might affect the industry.

"VoIP will surely have an adverse effect on their financials. We should admit that our existing laws are biased toward the fixed line business," she said.

De Vera also stressed the lack of information on the cost structure for the telecommunications industry, which will guide lawmakers in the creation of a regulatory framework that will not be ruinous to an industry.

A PICS representative referred to an old case when Sony introduced the Betamax to the movie industry. Movie houses cried foul, and filed a case against the Japanese company. However, years later and after Sony won its case against Columbia Pictures et.al, the movie industry realized more revenues from distributing movies via the new Betamax innovation.

So in the case of VoIP deregulation in the Philippines, the PICS representative said that PLDT and other telephone companies in the country should not be surprised that technological innovations such as VoIP can become very disruptive, and will mean that they too have to keep up or miss the potential revenues generated by applications riding on this new technology.

Mass migration to VoIP expected within a decade

By Erwin Lemuel Oliva INQ7.net

CARRIERS around the world are starting to map out plans to migrate to next-generation telephone networks. And part of the plan is gradual adoption of voice over Internet Protocol (VoIP), whose deployment is predicted by the market research firm In-Stat to go massive within the decade.

While the international telecommunications industry is at the early stages of VoIP adoption, mass migration to it is likely from 2010 to 2014, according to the latest In-Stat study.

Consumer and small business ramp-up period to VoIP could begin from 2005 to 2009, with migration peaking in the 2010-2014 time frame, added the study.

The market research firm however indicated that this time frame of VoIP adoption is largely dependent on carriers' strategies in rolling out Next-Generation Networks (NGNs).

The move to NGNs will be influenced by many factors: the increasing cost of maintaining traditional public switched telephone networks (PSTN), available investment funds, technology, regulatory policies, pricing trends, and competition, according to the In-Stat analyst Keith Nissen.

Each carrier is expected to develop its own unique NGN migration strategy in the next few years, but the general direction is for carriers to gradually replace their PSTN with IP-based networks, Nissen said.

In the Philippines, the dominant carrier Philippine Long Distance
Telephone Co. announced plans to migrate its existing PSTN to an IP-based network early this year.

PLDT was silent, however, on when it will roll out VoIP since it’s currently blocking the planned deregulation of this technology and related its services.

"In-Stat has concluded that as VoIP competition and demand increase over the next five years, incumbent carriers will increasingly opt for PSTN replacement to lower operating costs," the high-tech market researcher noted.

In-Stat recently issued a report titled "Carrier NGN Migration Strategies Set VoIP Timing," profiling selected carriers worldwide to illustrate alternative network migration strategies.

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.