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Monday, September 15, 2008

Internet Telephony in India

TRAI had sent one letter to DOT dated 18th AUG 2008 It is about implementation of internet telephony by opening up connectivity between PSTN network and internet cloud for domestic calling as well (International calling is already permitted by TRAI). Though news of internet telephony (commonly also known as VOIP or SIP based calling) is covered by most of the national news papers, its immediate impact on voice call pricing is I believe little hyped.

I tried to cover my interpretation of internet telephony (IT) impact in domestic voice business under 3 major headings:

(1)Time factor, (2) Pricing pressure, (3) Quality of services,

1) Time to Market for internet telephony (IT) offered by ISPs:
a) DOT shall allocate numbering plan from E.164 number resources for ISP interested in providing net telephony. Page 3.13.13 page 52,53
b) TEC has to conduct study to appropriately block numbers for ISP's internet telephony in newly recommended 11 digit number plan
( Financial Express article argues time line required is about 30-60 days to implement)
c) DOT also has to notify the respective ENUM gateway domain name allocated to ISPs, UASLs, CMTS and BSOs for IT in advance.
Only based on this information, all NLDOs facilitating IT will able to update their records (recommended time line to NLDOs after receiving information is within 10 working days)
d) ISP has to integrate with NLDOs for providing net telephony for terminating calls to PSTN network or vice-a-versa
- It includes commercial negotiation for carriage and techno-commercial agreements
- And physical integration which need to consider media gateways standards, technical testing of connectivity through internet cloud, CDR UATs
e) Most important issue is prior-approval from concern security agencies for the lawful interception equipment put in place by ISPs. Only 40 bit encryption is permitted currently, which may not be enough for carrying secure voice traffic.

2) Pricing of internet telephony by ISPs:
a) Net telephony prices will be mainly driven by negotiated carriage charges with NLDO and termination charges (30p/min) for PSTN terminations
- ISP has to negotiate carriage charges with their NLDOs for terminating traffic to PSTN (within ceiling limit of carriage to 65p/min)
b) ISPs may able to drop down prices within peer groups (based on their peering agreements).
c) Other points to be noted is According to an industry estimates as high as 85% of revenue presently being earned by an ISP is used to hire resources. These resources are taken from access providers (UASL, BSO), NLDs and ILDs.
d) Besides that TRAI has recommended DoT to prescribe charges to ISPs for E.164 number allocation
ISPs providing IT will have impact on pricing as normally happens with increase in competition but it will be slow and should not be drastically different. Pricing pressure will be equally on all.

3) Quality of Service of internet telephony (IT) by ISPs:
a) TRAI has decided QoS should be kept market driven currently
b) For good voice quality minimum access to internet should be 256 Kbps (commonly known as broadband)
- Will there be dial tone every time receiver picked?
- Will the call quality be maintained most of the time and during the call ?
- Capabilities of ISPs for handling issues like Jitter, Echo, Delay and high level of network performance suitable for carrier grade voice quality is yet to be fully tested in Indian scenario
- What kind of SLAs will ISPs able to commit for voice services needs to be seen
Assuming ISP is able to provide high quality necessary for carrier grade voice, it will surely add up into their costing
c) At customer end, investment on SIP based communication equipment will be required (branded SIP phone equipments are costly as even mentioned in ET starting with Rs. 2,000 and going upto Rs. 15,000)

IT will surely have its impact as any other additional competition would have. But this impact and pricing pressure is not something which should come over night by just introduction of IT.
First step is ISP has to negotiate good carriage rates with NLDOs (ceiling rate of 65p per min), and as of now termination rates of 30p per min is same for all.
There will be additional cost ISPs needs to consider for maintaining high bandwidth available always for good quality IT.

Let us see how IT development shapes up in India...