Special: A chequered history for VoIP in India

Analysts have blamed DoT for killing the VoIP industry in India and are now very unsure whether the technology will now make any sort of progress in the country

Idhries Ahmad

NEW DELHI, INDIA: Internet telephony industry in India after years of suffocating strangulations looks to make a new beginning in the country.

The recent TRAI recommendations, which makes case for allowing Internet telephony on PSTN networks opens doors for industry, which analysts say will boost technological convergence, push competition and will drastically reduces voice tariffs in the country.

History of Strangulations
VoIP in India: History of Strangulations

However the recommendations which allow ISPs to provide unrestricted Internet telephony (termination of Internet telephony calls on PSTN/PLMN and vice-versa) within the existing IUC regime is subject to DoT clearance.

The recommendations have been received with cheer from the majority of ISP for whom it is sign of hope after years of unnecessary state interventions.

TRAI has now permitted National Long Distance (NLD) operators to connect to ISPs through public Internet (Internet cloud) for unrestricted Internet telephony, on condition of mutual agreement between the ISPs and NLD operators for unrestricted Internet telephony.

Explaining the rationale behind recommending the removal of restrictions on Internet telephony, TRAI said the regulatory framework denied technological advancements to the common people. Level playing field issues were advocated against permitting these services under various licenses.

Too Little Too late

World over VoIP is now become as an essential part and parcel of telecom industry. However DoT has for some reasons has been extremely skeptical to allow the VoIP industry in the country.

Analysts have blamed DoT for killing the VoIP industry in India and are now very unsure whether the technology will no make any sort of progress in the country

Government has basically killed VoIP and the overall NGN initiative in India. VoIP could have done much more if allowed fully five years back”, says Jahangir Raina, CEO and director of research at iLocus, a VoIP industry analyst group. .

Raina has been tracking telecom industry specifically VoIP industry for close to two decades now.

“Assuming you are regulating a market driven segment of an economy, you would ideally protect the consumer interest by strengthening the competition in the segment. That is why resellers were free to price their ISD services in the UK while BT pricing was regulated. In India, however, DoT let its former government department (BSNL, which is essentially DoT) to drop prices before the competitors could come into the market.” opines Raina.

“That took the life out of several competitive measures including network migration towards VoIP”, he adds.

History of strangulated regulations

India opened up to VoIP in April 2002. Previously, VoIP use in any form was banned in the country. VoIP within closed user group such as an enterprise network was allowed though. Post April 2002, DoT (Department of Telecommunications), on the recommendations of Telecom Regulatory Authority of India (TRAI), opened up the telecom sector to VoIP services in a limited manner.

Says Satyan Gupta, advisor to TRAI on VoIP issues in 2002, ” At TRAI we clearly understood benefits that VoIP accrues to the economy and had presented a paper to Ministry of Telecom about opening up VoIP in India,”

The recommendations says, Gupta were immediately accepted by telecom ministry headed by late Pramod Mahajan, ” The ministry within seven days accepted some of the recommendations and allowed VoIP technology in the country,”

The department set up guidelines for Internet telephony on 21st March, 2002, As per these guidelines, only Internet Service Providers (ISPs) were allowed to offer PC-to-phone for international long distance calls. ISPs were not required to pay any additional license fee, since PC-to-phone was defined as a value-added application service.

“Though not in toto, at least the government set the ball rolling for the technology in the country,” says Gupta who is now the Head of government regulatory affairs at BT India.

Though the department allowed ISPs to offer VoIP services, the regulations set out by DoT meant that the VoIP service would be availed by the ISP customers only from Net-connected PC to any other Net-connected PC (within or outside India); AND Net-connected PC to telephone (PC in India and phone abroad, not in India);

AND IP phone to IP phone in India or anywhere in the world (provided on each end there was a dedicated IP connectivity typically found among enterprises only). And provided that the service provider on the Indian end was an Indian ISP).

This meant that origination in India was allowed only from PCs, SIP and H.323 devices and not from PSTN. The termination was allowed on IP devices in India as well as abroad but not on PSTN in India.

TRAI the lone crusader

TRAI on its part is pushing the case of VoIP in the country though it is facing some problems from DoT in enforcing its decisions. The regulator has pitched for the introduction of unified licensing regime in the country, saying this would help in unification of networks and services leading to advanced and cheaper telecom services to customers through next generation networks. VoIP would form a natural part of such a license thus eliminating most regulatory hurdles for VoIP.

In a paper on ‘Next Generation Telecom Networks,’ the regulator had argues way back in 2003, that regulatory problems related to VoIP in the access networks can be sorted out through a unified access service license. The regulator argues, “If we are to move further towards convergence, we have to be in a unified licensing regime.”

However DOT had been reluctant to to implement any of these recommendations.

Says Satyan Gupta, “I fail to understand why the process slowed down so badly. The recommendations were clearly spelt out and the benefits were there for all to see. DoT for some reasons seemed very disinterested to carry on the recommendations”

Slow progress

Given the limits imposed on VoIP, the progress had been very modest. From June to August this year, only 39.1 million minutes of PC-to-phone traffic was generated inIndia. During the year Sept 2004 – Sept 2005, 159.62 million minutes of PC-to-phone traffic was generated.

And that traffic is shared by as many as 51 ISPs that are offering PC-to-phone services. DoT has given permission to a total of 121 ISPs to offer PC-to-phone services as on March 2005. The list includes companies like the Bharti, BSNL, Mahanagar Telephone Nigam Limited, Primus Telecommunication India Ltd, Sify Ltd, Net4, VSNL, Bharti Infotel Ltd, Vebtel Obconic Internet Protocol Pvt. Ltd, Tata Teleservices etc.

Another round of regulations

Since 1st April 2002 till 31st December 2005 only ISPs were permitted to offer Internet telephony in India. Finally on Nov 10, 2005 DOT gave permission for unrestricted Internet Telephony to access providers in India

However, from January 2006 ISPs were asked to pay 6% revenue share as license fee for the Internet telephony service. ISP cannot provide termination within India nor can it offer carriage within India which means that IP telephony is restricted for an ISP.

The new regulation of DOT, which is the unrestricted telephony to access providers and the restricted approach for ISPs, changed the VoIP market in India.

“The access providers were in no hurry to provide VoIP service. This is because they are the same people who are offering the regular long distance services and by offering a cost effective service like VoIP they do not want to cannibalize their own long distance revenues”, says Raina

“The access providers are not facing enough competition from the ISPs at present due to the restrictions that have been imposed on them. Had there been robust competition from ISPs, the access providers would have rushed in to provide VoIP in a big way”, adds Raina.

Have regulations already killed the golden goose

The continuous strangulated approach to offer VoIP in India; analysts felt, scuttled the growth of VoIP in India.

“While in most countries migration towards VoIP resulted in price reductions, in India, VoIP is still struggling to find itself a role. That is particularly so because prices have already hit rock bottom” adds Raina

The result, says Raina, is lack of VoIP infrastructure in the country.

“A big opportunity has been lost. The absence of VoIP infrastructure means absence of innovation around voice. By rendering VoIP impotent and a silent spectator, DoT has denied an Indian consumer a ubiquitous network/platform needed for new productive application”

Still hopeful about the Future:

However TRAI and ISPs, still have belief in the technology.

The present Recommendations, TRAI said, if implemented are a step forward towards developing supportive regulatory environment, encouraging technological advancements, enabling convergence, making unrestricted Internet telephony available and boosting of broadband penetration.

“The TRAI consultation paper has been an extremely welcome step for the ISP’s. The usage of Internet telephony has been restricted on account of policy for over six years since international calls were allowed using the internet in 2002″, says CEO, Net4, Jasjit Sawhney.

“TRAI policy is well received and relatively clear cut on other important factors such as interconnection and numbering plan. This initiative will undoubtedly lead to greater uptake of broadband services and act as a catalyst for the overall growth of the internet ecosystem in India.” he adds.

On the sidelines: Tussle between Mobile Operators and ISPs

Though TRAI has only made recommendations and they are yet to get a patient hearing from DoT bosses, the war of words has started between ISP and mobile operators,Mobile operators argue that ISP will not be paying the pan India UASL and hence will give them undue advantage over them. Bharti and RCom argue, that since ISPs are allowed to make calls between PCs and fixed and mobile phones, they need to be asked to migrate to UASL

Naresh Ajwani President Sify Technologies Limited argues the brouhaha raised over the issue is completely unwarranted, “ISPs and Mobile operators are completely operating in two different markets hence the conditions of paying the UASL fees is unwarranted”, says Naresh.

Narish argument is echoed by Rajesh Chharia, President Internet Service Providers Association Of India (ISPAI), who argues that since making a VoIP call needs one to have broadband, the too target segments are completely unrelated.

There is deliberate confusion being created in the market to confuse people, Rajesh adds.

Satyan Gupta of BT India agrees, “Actually mobile operators stand to gain from the recommendations. The calls when they leave the ISP network will hit the operators network which will give them more revenues, “

Vendors excited about policy in offing

Not surprisingly, vendors are excited about the whole recommendations.

If recommendations, find acceptance from DoT, operators in India will be actively evaluating VoIP and next generation switching infrastructure projects, whether it is in the core or the access side. And this is something that vendors are anticipating in glee.

Although major new entrants such as Tata Telecom, Reliance, and Bharti all went for predominantly TDM based networks upon their entry into the service market a few years back, the maturity of VoIP solutions since then and the favorable regulations will change the scenario somewhat.

This will excite many vendors likes Cisco, UTStarcom, Juniper who already have a strong base in India as well as new entrants like Netcentrex and Sonus. The vendors will be vendor will be taking a fresh look at India as a potential market for its VoIP solutions. .

Says Sanjay Jotshi, Head Enterprise and Channels Juniper, “We are excited bout this decision and we have array of products ready for ISP to roll out internet telephony services in India”, said Sanjay.

The article first appeared on Cyber Media Online Limited on Friday, November 07, 2008

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