A member of the national information technology (IT) task force, a representative of the country's first private internet service provider (ISP) and a columnist, have jointly urged the Union government to permit Internet telephony in the country.

The technology allows people to make international and long-distance phone calls at a fraction of the current tariff. "You can't fight technology. A situation has been created where the incentive to evade the law is phenomenal," said Montek Singh Ahluwalia, a member of the IT task force.

Participating in a recent meeting on IT and the law, organized here by the National Law School of India, Ahluwalia said there were administrative problems in India due to which cheap international phone calls via the Internet, unlike other countries, were not being allowed.

Ahluwalia said the "root cause" of many of India's telecommunications policy problems was the "desire to protect the monopoly of the Department of Telecommunications." But at the same time, he said, the telecommunications sector had been opened up at vastly differing rates charged to private operators manning cellular, basic and Internet service provider (ISP) services.

"ISP licenses were issued at Rs. 1 (2 cents) per license. So operators have no revenue sharing license and the quality is almost as good (as a usual phone)," said Ahluwalia.

There was no way officials could check whether data or voice was being sent over an Internet line out of India. "It's going out as bits of data. Nobody can tell whether it's voice or data, unless you tap the phone at the other end," he said.

R. Ramaraj, managing director of the private ISP Satyam Infoway, told India Abroad that despite the government's faulty and "painful policies" in auctioning cellular licenses at high costs -- leading to distortions in telecommunications tariffs -- the same was being repeated when domestic long-distance (STD) calls were being opened up to private players.

"Let the customer decide (what he wants to choose). Revenue sharing should be with the networks (like DOT, if their facilities are used) and not with the government," said Ramaraj.

Atul Chitnis, a cyber-consultant and high-profile computer magazine columnist, was more upbeat. "Who says voice-over-Internet is illegal, even currently? Show me one law in the country that says I can't do it!" he said.

INTERNET TELEPHONY, is increasingly emerging as a cheaper alternative for making international long distance calls. While the growth in usage is largely driven by technology savvy internet users, governments the world over, including India, have resorted to banning this service to protect incumbent telecom operators.

Only 31 countries, at the moment, permit the use of internet protcol (IP) telephony - the US, all 15 countries in the European Union, Hungary, Iceland, Paraguay, the Czech Republic, Hong-Kong, Japan, New Zealand, Poland, Singapore, the Slovak Republic, Switzerland, Australia, Canada, China and Korea.

Going by the experience of these countries, the Indian government will have to take a close look at legalizing this service. In doing so, it can take into account the Chinese scenario, where the rampant use of internet telephony in the grey market not only forced the government to legalize it in 1999, but, led to overall decrease in telecom tariffs in February, 2000.

The use of IP was largely driven by internet service providers, computer shops and local cable TV networks.

Reacting to this, the Chinese government granted licenses to state-owned China Telecom, China Unicom, Jitong and China Netcom to offer internet telephony for a six month trial period in 26 cities.

Following this, in March 2000, it awarded commercial licenses to IP telephony service providers (IPTSP's) and indicated that an additional license would be given to China Mobile for IP telephony using wireless application protocol. Enthused by the response, China Telecom is setting up the world's largest VoIP network.

The fears and reasons that led the Chinese government to legalize IP telephony are relevant to our domestic case. Price (free or low cost of calling), that has led to its popularization among consumers, is the distinguishing factor as in the medium term its quality might be the same as traditional telephony.

Loss of revenue, both directly (collection charges) and indirectly (settlement charges), is a cause of concern to the public telecom operator (MTNL and BSNL in the Indian case).

Moreover, internet telephony does not necessarily mean promotion of internet. IPTSP's bypass the incumbent operators and in some cases lead to the decline of the local access networks by avoiding universal access payments.

So what does it all mean for India? Should we follow China or go our own way ?

Sounds unbelievable? Welcome to the world of Voice over IP (VoIP) or Internet Telephony. VoIP has been around for half a decade. What it simply means is that you can make a voice call to any part of the World using the power of the Internet. The most common examples for VoIP-enabled software are MS Netmeeting, Media Ring Talk, Net2Phone and others. All you need is a connection to the Internet and (theoretically) a multimedia-enabled computer or similar device.

Most software and the services are free, and thanks to recent advancements in codec technology, voice quality is decent even over dialup access.

So why is VoIP still not prevalent in India? The guidelines for Indian ISP licensees state: "Telephony on the Internet is not permitted. The licensee will be liable for termination for any violation of this clause of the License Agreement. The licensee shall also take measures on his own and as and when directed by the Government at his own cost to bar carriage of Telephone Traffic over Internet."

As you can see, private ISPs and even the government-owned VSNL are prevented from allowing VoIP on their networks. Three reasons exist for the Government being reluctant to allow VoIP:

1. The Department of Telecommunications has invested a considerable amount of resources into building voice networks and wants a return on its investments by charging special rates for international calls. With VoIP, both intra-country and inter-country voice call costs are substantially lowered. This would mean a loss of revenue for DoT as well as VSNL, with the latter being the sole international carrier of telecommunications for India.

2. VoIP requires fat pipes or high bandwidth. However with recent advances in codec technology, one can expect a reasonable voice quality even over a 33.6k-dialup line. Unfortunately, India is rather bandwidth starved, and with implementation of VoIP, telephone networks and switches will get severely clogged.

3. VSNL is opposed to Internet telephony, as the organization does not have any such cost-sharing arrangement with telecom providers worldwide. With IP Telephony the pulse rate system of accounting for DoT or whatever system of accounting is in vogue with VSNL is bypassed which is directly proportional to fall in VSNL's revenues.

The language used in the ISP License agreement declares that Internet telephony is "not" permitted. However, it does not say that VoIP is illegal. The Indian Telegraph Act, 1885 is too young to handle such issues. Even the new Telecom Policy 1999 states: "Internet telephony shall not be permitted at this stage. However, government will continue to monitor the technological innovations and their impact on national development and review this issue at an appropriate time."

Whatever the Government may say, VoIP is a perfectly valid technology. It is just the Government trying to sustain a monopoly in the form of DoT and VSNL. Certainly, it is a matter of time before the Government agrees to VoIP. This process can be hastened if:

• Consumer groups advocate the use of VoIP and force the government to take notice of new technology.
• Private ISPs come together to oppose the government's stand on VoIP.
• The DoT is dragged to court on VoIP issues for preventing access to cheap, affordable and reliable technology.

As regards VSNL banning access to certain Web sites advocating the use of VoIP technology, it is bound to do so on account of the guidelines for Indian ISP licensees to bar carriage of telephone traffic over the Internet.

The government should lift the ban on VoIP. PC penetration is still low in India, which is why the government may not feel the pinch even if it allows VOIP. A PC or a comparable device is necessary for VoIP. However, VoIP will ensure much needed competition for monolith VSNL and as an added advantage, ISPs can attach a 'value-addition' to their services through the VoIP tag. The government has realized that there is no way it can enforce a ban over VOIP because current networks cannot distinguish between data and voice. Better late than never, but is the government listening?

With the Indian Voice over IP market becoming a hotbed for corporates, the new question thats being raised by service providers, equipment vendors is -- how illegal is VoIP in India currently.

Union Minister for Communications Ram Vilas Paswan recently said Internet Telephony would be allowed from April 1, 2002, two years before the stipulated time. It's not surprising then, that players within India and abroad, waiting in the wings to start operations, have been in an upbeat mood with the proceedings at the iLocus.com show on IP Telephony, the first of its kind in India.

To protect the interests of the state-owned telecom service operators, the government has decided to permit Voice over Internet Protocol only after April 2002. But for how long can such barriers prevent the inevitable consequences of this emerging revolutionary technology?

Internet telephony will not be cheap nor will it revolutionise communication but only evolve. Internet telephony will not be cheap nor will it revolutionise communication but only evolve according to industry experts at the Convergence India 2001 seminar.

Internet telephony will not be cheap nor will it revolutionise communication, but it would definitely evolve. But India would be the fourth-largest market in Asia-Pacific region.

Internet telephony will not be cheap nor will it revolutionize communication but only evolve according to industry experts at the Convergence India 2001 seminar.

Experts were of the opinion that India, with its recent initiatives in the telecom sector, is expected to be the fourth largest market in the Internet telephony sector in Asia-Pacific by 2004 after China, Japan and South Korea.

Exploding the myths around Internet telephony, Vijay Yadav, country manager, CommWorks - India a subsidiary of 3 Com networks, said: "Internet telephony will not be as cheap as is expected. It may be the same as that of the traditional voice carrier or slightly cheaper at best. Internet telephony is also not going to bring about a fast change in communication it will take time and slowly evolve."

Yadav added, when compared with traditional networks Internet telephony has an advantage on offering value-added services and not on cost. "Service providers will be able to score through enhanced web services, unified messaging services and a host of other value adds." said Yadav.

Highlighting the benefit for the existing service operators in migrating to Internet telephony, Jahangir Raina of iLocus.com, said: "The real reason for migrating to Internet protocol network is the fact that public Internet is on a growth path and there is a new generation of computer friendly consumers who would want such a service."

Giving details of a recent study conducted by iLocus, Raina said , 72 per cent people believe that IP telephony offers better network utilisation and cheaper equipment and 83 per cent think that migrating to IP would enable them to create new services.

The survey has pointed out that Asia is the most promising market but the opportunities may soon disappear as other markets like the East Europe are growing fast. He also said that service operator must now concentrate on the local calls market rather than the long distance and international calls.

There are over 1,600 companies offering Internet telephony of which 50 per cent is backed by financial institutions. The global IP market is growing at a rate of 120 per cent annually with PC to phone traffic reaching 280 million minutes per month.

According to the survey the manufacturing sector in IP networks is growing at 149 per cent annually but soon the services growth figures will soon take over the equipment growth rate.

The government is likely to finalize guidelines for telephone calls over the Internet by 2001, sources said today. These regulations will now legalize Internet telephony in India.

The New Telecom Policy 99, strictly prohibits telephone calls using the Internet in the country. Under the existing act, there are separate regulations for the delivery of voice and data through telecommunication channels, but the act does not allow transmission of Voice over Internet.

IT minister Pramod Mahajan on Sunday said that the government has decided to scrap the Indian Post and Telegraph Act 1885, and replace it with the Convergence Act that will allow making telephone calls through Internet.

Mahajan also said that the new act will have uniform laws regarding the delivery of voice, picture, digital and other forms of data through the medium of telecommunications. He also said that the Convergence Bill has been drafted taking all these aspects into considerations.

It is learnt that with the tariff rebalancing happening in the STD and ISD, tariffs will set the tone for introducing the guidelines for Internet telephony. "With the tariff rebalancing of ISD and STD charges happening, the issue of voice over Internet becomes a non-issue for incumbent telephone operators," he said.

Allowing voice over Internet has come under stiff opposition from existing ISD and STD telephone service providers.

Indian communications minister Ram Vilas Paswan has announced that the country would allow Internet telephony in the country from April 2002, ahead of an earlier plan to do so in 2004.

"We have advanced the decision to allow Internet telephony in the country to April 1, 2002 from 2004. If we allow it now it will only help those with Internet connections...when the Internet reaches villages and towns we will allow Internet telephony," the minister said.

Earlier, in February, the Economic Survey of India for 2000-1, a report card on the country's economy, found that permitting Internet telephony and a single licensing regime would lead to a convergence of services in the telecommunications sector.

"Internet telephony needs to be opened up so that Internet access and telephone can be bundled together to take the information communication to the rural areas," the survey said.

A panel advising Prime Minister Atal Behari Vajpayee on economic issues in its recent report had advocated that the government should consider allowing voice telephony over the Internet to bring down the costs for users significantly.

Dashing all hopes of an early legalisation of Internet telephony, the Department of Telecommunications (DoT) says it will make Internet telephony legal, only after VSNL's monopoly over international long distance ends in 2002.

DoT secretary Shyamal Ghosh said: "The challenge is to give universal access to people and after the monopoly ends, there will be no question of digital divide." "Right now, we are going through a phase of tariff rebalancing and international calls made using Internet telephony can adversely impact the revenues of VSNL," said a senior DoT official. However, once the premium over price gets compromised, people will not mind paying a premium for quality, he added.

Internet telephony is legal in most European countries and in the US, but most Asian companies have not allowed people to use PCs connected to the Internet for making phone calls. However, Internet telephony is different from Voice over Internet Protocol (VoIP), which is allowed in India, explained DoT officials.

Even DoT plans to use the VpoIP to transfer voice data in the forms of packets and offer this service to people at a discount. For this service, people call at a particular number and their voice is sent in packets to the destination. However, the quality of transmission suffers as some packets get lost or don't reach in sequence, so quality of service suffers.

Internet telephony, on the other hand, allows people having PCs with Internet connections to make calls using a software, which can be downloaded for free from a number of sites. This technology is used for voice chats and voice mails. And lack of a legal sanction has not stopped people from using technology, which they also use to make international and domestic long-distance calls, at the cost of a local call. While quality of voice is not as good, the price difference more than makes up for the poor quality.

However, other than the hopes of the individual user, business interests of corporates, specially those in call centre and medical transcription services, are also likely to suffer if Internet telephony is not allowed for two more years.

Says, Vijay Kaul, business development manager, Spryance, a medical transcription company: "This would mean bottlenecks, loss of business and opportunities. At a time, when India is targeting revenues of $100 billion from IT-enabled services, this decision is likely to be a limiting factor.

The way the government policies were developing over the last year, we were hopeful that there would be a dynamic government decision on the issue of Internet telephony."

However, D. J. Dutta, chief operating officer, Parsec Technologies, which is a call centre player, feels that "this decision will only have a limited impact, because VoIP is allowed." In the international call centre market, where callers are outside India it does not make a difference whether calls originate from a PC or elsewhere. Call centres based in India just need inbound traffic handling, he added.

Basic service operators are crying foul over what they call "predatory and anti-competitive practices" by the Bharat Sanchar Nigam Limited (BSNL).

BSNL has slashed STD rates for up to a distance on 200 kms for its customers, but is not extending this benefit to the customers of private operators, who will ride on the BSNL network.

According to S C Khanna, secretary, Association of Basic Telecom Operators (ABTO), "This is unfair and will hit the basic operators, whose networks are not big enough to cover the entire 200 km radius."

The basic operators have now appealed to the Telecom Regulatory Authority of India (TRAI) to intervene. In a letter dated January 19, 2001, addressed to the TRAI chairman, M S Verma, the ABTO has urged the Regulator to ensure that the benefit of concessional tariffs announced by BSNL a fortnight ago, be made available to the subscribers of the private basic operators also.

Bharti Telenet Limited, which operates the basic telecom services in Madhya Pradesh and Chhattisgarh has slashed its STD rates by up to 85 per cent for up to a distance of 200 kms, in a bid to combat the new concessional tariffs of BSNL, which will come into effect from January 26.

As per the latest tariff plan, which will also come into effect from January 26, Bharti Telenet will charge Rs 2.40 per minute for calls from 200-1000 kms. As per new rates, AirTel has introduced two tariff plans - AirTel Standard and AirTel Special. All existing AirTel customers will be migrated to the Airtel standard tariff plan free of cost.

The Minister of Communications, Ram Vilas Paswan had announced the reduction of call charges for BSNL subscribers on January 5, 2001.

As a result, with effect from January 26, 2001, BSNL subscribers will be able to dial on local call basis for distances up to 100 km-implying a reduction in tariffs to 1/8th the original. Beyond 100 kms upto 200 kms, the tariffs have been reduced by half.

However, the basic operators are incensed at the fact that the BSNL has issued instructions to its field units in a letter dated January 12, 2001 wherein it has clearly mentioned that "the revenue sharing arrangement for basic operators will remain at the standard rate as was being charged earlier." This, according to the ABTO, will compel the private basic operators to pay heavily from their pocket.

The rationale for the argument: For a call of 2 minutes duration, for a distance of above 50 km and up to 100 km the subscriber will pay only Rs 1.20 to private basic operators, whereas the private basic operators with therevenue sharing arrangement of 60:40 on standard tariff as applicable before the concessional tariff, will have to pass on Rs 3.84 (1.20 x 8 x 0.4 = 3.84).

Thus, the private operators will incur a loss of Rs 2.64 per call. The ABTO, therefore, has asked the TRAI to help make the concessional tariffs uniformly applicable, adding that the revenue share for calls in the slab from 50 km to 200 km between private basic operators and BSNL should be Bharti Telenet slashes STD rates.

However, to avail the Airtel Special, under which a one-minute call to Raipur from Bhopal under AirTel Special tariff plan will cost Rs 2.4 in place of Rs 14.9, the customers will need to pay an additional monthly fee of Rs 100.