Recommendations on opening up of Internet telephony

A. Background

1. In regard to Internet Telephony, the Government had taken the following decision in 1999 and the same was incorporated in the National Telecom Policy document released the same year:

"The Internet Telephony shall not be permitted at this stage. However, the government will continue to monitor the technological innovations and their impact on national development and review this issue at an appropriate time."

2. In accordance with the decision taken in 1999, the Government decided to carry out a review last year and an internal group was set up for the purpose. Subsequent to the Group's recommendation, the Government made a reference to the TRAI vide their letter No.820-1/98-LR(Vol.IV) dated 20.7.2001 (Annexure A). Annexure A also contains the recommendations of the internal group. One of the recommendations of the group was that the opening of the Internet telephony be considered after opening the International voice telephony, and be done after introduction of cost based tariff. In accordance with the established practice the process of decision making followed by the Authority has been transparent and after consultation with all the stakeholders/general public. The Authority would like to recommend as follows:

B. Recommendations of the Authority:

1. Timing of introduction of Internet Telephony:

Internet Telephony may be introduced with effect from 1st April, 2002 i.e. date of opening of the ILD sector for private participation.

2. Scope and Definition of Internet Telephony service:

2.1 The Authority would like to define Internet telephony as an Application Service, which the customers of ISPs can avail from their Personal Computers (PC) capable of processing voice signals. Other IP based Customer Premises Equipment (CPE) such as H.323 terminals/SIP terminals which are directly connected to the ISP node through point to point links (wireless/optical fibre) in the last mile, as per existing stipulation in the ISP licence, can also be employed to offer Internet Telephony, through the public Internet. Similarly, access to the ISP node through the facilities of authorized Cable Operators shall be permitted subject to applicable Cable Laws. The addressing scheme for such a communication involving transmission of voice in packetized data format through the public Internet, will conform to IP Addressing scheme of Internet Assigned Numbers Authority (IANA) and not E.164 numbering scheme of the ITU.

2.2 The scope of this service will include the following types of connections using the public Internet:

i) PC to PC (Both within the country as well as abroad)

ii) PC to Phone (PC in India, Phone abroad)

iii) IP based H.323/SIP Terminals in India to similar Terminals both in India and abroad, employing IP addressing scheme of 'IANA'.

2.3 The Authority is of considered view that at this stage of telecom development in the country, when the facility based operators such as Basic Service Operators including the incumbent, are obliged to provide telephones in uneconomic areas as well as uneconomic telephones in economic areas, to discharge their Universal Service Obligation (USO), it is important not to disturb significantly their revenue streams to which they are entitled in accordance with the stipulations in the Licences granted to them. It is, therefore, important to differentiate between the real-time telecommunication services offered by facility based operators, under their existing licences, and those offered by ISPs, which are multimedia applications & content services, not subject to strict time constraints of real-time telephony services. To have a clear distinction between Internet Telephony & telephony services offered by facility based operators under their existing licences, the latter may be defined as the provision of real-time voice communication from anywhere to anywhere by means of dialing a Generic Telephone Number (PSTN/ISDN/PLMN) as defined in E.164 recommendation of the ITU. Suitable modification to existing licences of the facility based operators as well as ISPs is recommended, to bring out this difference to avoid any ambiguity. Internet Telephony through PCs or IP based terminals should be made available also through the Public Tele-Info Centre (PTIC) & Internet Kiosks at Sanchar/Cyber dhabas for the benefit of those who do not own the Customer Premises Equipment required for this service. This will make Internet Telephony an integral part of the USO programme on which the Authority has already given its Recommendations, and which includes provision of PTICs as an essential element, to help address the issue of digital divide. Internet Telephony through PTICs is likely to provide a cheaper option to conventional telephony, in rural & remote areas.

3. Use of VOIP as a Technology option by existing Facility Based Operators

3.1 The licences issued in early 90s to BSOs & CMSOs had specified a Switched Circuit Network i.e. PSTN/ISDN for BSOs and GSM technology for CMSOs, mainly because of maturity of these technologies and their proven ability to provide guarantees in respect of Quality of Service (QOS) parameters such as Delay, Grade of Service (GOS), excellent voice quality (MOS better than 4), and a large number of features and facilities such as calling line Identity Presentation, Detailed Billing, Call Transfer etc, called "custom calling services", and also Intelligent Network Services (Premium Services), which the subscribers routinely expect to get from such a network, at an affordable price. A large number of these features/facilities i.e. teleservices/supplementary/ Intelligent Network Services are not available at present from PC based voice application service from the public Internet, as these are mainly derived from the Access Nodes (ANs) of the ISDN/PSTN/PLMN, as well as Intelligent Network nodes, interconnected, by a powerful signaling system called Common Channel Signalling System-7 (CCS7).

3.2 However, the Authority has taken note of the recent deployment of VOIP backbones by a number of carriers globally to provide NLD & ILD services, in their respective countries, as an alternative transport mechanism. In some countries, such deployment of 'managed VOIP' networks have replicated the carriage services traditionally provided by PSTN backbones and have provided a cheaper option to engineer the backbone networks. This has not necessitated any change in the licensing and regulatory regime, as the Tele & Supplementary services derived from the Access Nodes (ANs) remain the same i.e., as specified in the original licence, thus not disturbing the licensing regime. Such a deployment has the potential of providing integrated carriage services for not only voice but also data in not too distant a future, thus providing economy of scale and scope for the carriers in building their respective networks. It also enables the operating companies to gain experience of this new technology, which has potential of providing a converged service platform for multimedia services. The Authority would therefore recommend that the existing facility based operators such as BSOs, CMSOs and NLDOs be permitted the option to deploy 'managed VOIP' backbones, as a means of providing various types of bearer services to derive the range of Tele and Supplementary services as specified in their respective licences, subject to meeting the quality of service norms specified by the Authority in its QOS Regulations issued from time to time.

4. Issues relating to Digital Divide:

4.1 A concern has been expressed that the digital divide could get wider, in case Internet Telephony is permitted to the ISPs. The apprehension in this regard is that if the ISPs, by providing Internet Telephony cause a serious dent in the revenue stream of the facility based operators, particularly the BSOs, the latter (BSOs) who have to meet the USO, they may not be able to do so, thereby adversely affecting programmes covered under the U.S.O which are required to bridge the digital divide. Because of similar concerns, a large number of developing countries still do not permit Internet Telephony of any type. However, the Authority is of the view that VOIP Technology should be fully exploited to provide cost effective services without disturbing the existing licensing regime. Such a policy has been adopted successfully in number of developing countries including China, where an explosive growth of NLD traffic was witnessed after deployment of VOIP Technology in the national backbone by facility based operators. By permitting 'managed VOIP' backbones as a substitute to the PSTN backbone, the Authority would like to bring in greater technology neutrality in regard to engineering of networks by operators. Such an approach is likely to give the facility-based operators, a wider choice while deciding upon the most cost effective technology option in their service areas. This would improve teledensity in these areas, and reduce the digital divide, besides exposing the country & its R&D institutions to this new technology. Any cost saving in the backbone should enable the operator to invest more in the access network, i.e. the last mile, thus extending the telecom network to rural & remote areas.

4.2 In the light of what has been stated above, the Authority recommends that the facility based operators i.e. BSOs & NLDOs, CMSOs be permitted to employ 'managed VOIP' backbones in their networks, subject to their meeting the existing norms in respect of voice quality, grade of service etc., so as to provide end to end toll quality service. For achieving toll quality service, a Mean Opinion Score (MOS) of 4 and above (on a scale of 5) should be stipulated. The 'managed VOIP' backbone should be transparent to Fax as well as calls made from voice band modems, as is the case with existing PSTN networks.

4.3 To give greater flexibility to operators and more options to customers, the Authority recommends that the facility based operators be permitted to also offer a 'lower than toll quality' telephony service for customers who are prepared to accept some degradation in the voice quality, by engineering a separate 'managed VOIP' backbone accessible by a different service code. On this backbone, the quality of service offered may be 'lower than toll quality i.e. with MOS less than 4, but greater than 3. The subscriber should, however, be made fully aware of the lower quality of service being offered and the lower tariff applicable for such a service, as well as its distinctive service code.

5. Quality of service (QOS):

The Authority in its recommendations in previous sections has laid special emphasis on customer's right to get a specified Quality of Service (QOS) from a 'Managed VOIP' backbone, deployed by Facility based operators. Issues relating to QOS and standards relating to VOIP network, need to be studied in detail, both in regard to performance parameters and their monitoring in real time as well as specification of Network - Network Interface (NNI) between PSTN & IP Networks. The Authority therefore, recommends setting up of a high level technical committee under the aegis of TRAI with the participation of experts from TEC as well as Telecom/IT industries to carry out an in-depth study and issue detailed guidelines for monitoring of voice quality both by objective (R-Value) as well as subjective (MOS) methods, to ensure that the VOIP networks are engineered to meet the customers' expectations of voice quality on both types of networks i.e. one for the 'toll quality' and the other for `lower than toll quality'. The Committee would also define technical interfaces for VOIP gateways in conformance with best international practice, so that seamless interoperability between various types of networks in a multi-operator environment is ensured. In this context, the Authority would like to mention that generally the customer's expectation from any new technology is quite high, and therefore the issues relating to network performance, QOS as well as seamless interoperability would need to be addressed urgently.

6. The Tariff

The tariff for the VOIP based toll quality service offered by facility based operators should be same as that for equivalent PSTN based services. For VOIP based lower than toll quality service, the tariff should be lower than that for the toll quality service. It should be provided through a different dialing code. The Authority would initially let the market determine the tariff for lower than toll quality service. The Authority would also forbear with respect to tariff for Internet Telephony offered by ISPs over public Internet, because of sufficient competition in the ISP market, where the entry barrier is practically non existent, and also because at present, it is not functionally equivalent to the telephony (real-time) services offered by facility based operators.

7. Explanatory Memorandum:

The rationale behind these recommendations is set out in the enclosed Explanatory Memorandum.

Enclosure: Explanatory Memorandum along with Annexures