India - Internet Telephony

Prices of domestic long-distance calls are expected to halve to around 50 paise a minute and those for international calls fall by a fifth if the recommendations of the Telecom Regulatory Authority of India (Trai) to permit internet service providers (ISPs) to offer unrestricted internet telephony are cleared by the government.
Allowing ISPs to extend their internet telephony operations will effectively create an alternative domestic telephone network and has been criticised by mobile service providers as being unfair.
Two years ago, the government permitted telecom licensees to offer unrestricted internet telephony as part of their licence conditions. None of the mobile operators has done so yet, principally because the service would drive down prices and impact average revenue per user, which is already among the lowest in the world.
ISPs are currently allowed to offer Net calls but subject to certain restrictions such as between two personal computers, one in India and the other anywhere in the world; between a subscriber with a voice over internet protocol (VOIP) phone in India and a subscriber with a similar device in any country; and also between a PC in India and a fixed or mobile number in another country.
If the new policy is accepted, consumers will be able to call through the Net directly to fixed line and mobile numbers across the country and vice-versa. They can do so either through the PC or through a VOIP phone or from a landline fitted with an additional device.

NET GAINS
(Key points of Trai’s internet telephony recommendations)
* Internet service providers will be allowed to provide unrestricted internet telephony within and outside the country and vice versa. They can now connect to landlines and mobile numbers within the country
* ISPs will be allowed to have interconnection with national long-distance (NLD) operators through the internet for such services
* The annual gross revenue (AGR) of an NLD for calculating the licence fee to include revenue from carriage of internet telephony apart from normal revenue
* Each service provider that intends to provide internet telephony service within India will install lawful interception equipment to comply with regulations set out by security agencies.
* Telecom Engineering Centre to conduct study on the basis of which appropriate number blocks will be earmarked for internet telephony under an eleven digit numbering plan
“The regulator has ensured that consumers who were not being offered a cheaper service provided by the march of technology despite the fact that mobile operators were allowed to do so will no longer be deprived of it,” said Indian Service Providers Association of India (ISPAI) President Rajesh Charia.
ISPs said the policy would go a long way towards boosting their revenue models. “ISPs on a standalone basis are not profitable, and internet telephony will add to their revenue stream and make them viable,” said S S Perhar, chief operating officer of ISP Tulip Telecom.
In a statement Nasscom added: "As a direct implication, this move will now allow voice transmission over the internet for a ‘PC to phone in India’, which will benefit the BPO industry to a large extent."
Mobile operators, however, said the move is unfair. Says T V Ramachandran, director general of the Cellular Operators Association of India (COAI): “If ISPs want to provide telephony they should take a universal access service licence and pay Rs 1,650 crore. Now they have been given the right on a platter and it violates the level playing field norms. The government is following the populist bandwagon.”
Consumers will have different choices to make internet telephony a reality. They can pay between Rs 500 and Rs 1,500 to buy a specialised device to convert a landline into a VOIP phone (broadband connectivity will also be required).
Another option is to buy VOIP cordless phones for Rs 8,000 to Rs 15,000 that also offer video facilities. By next year, VOIP phone could be completely mobile, competing directly with the GSM mobile players.
Of course, that would be possible only if the ISPs bid and win in the upcoming broadband wireless auction for spectrum, the radio frequencies that enable wireless communications, slated to be held simultaneously with third-generation (3G) services that offer high-speed data downloads on mobile phones. This will require users to buy a Wimax-enabled phone, which is expected to be available for Rs 5,000 onwards. PCs and the popular internet site Skype are other options.
But mobile companies say that the fear of a dramatic fall impacting their business might not be true. “I don’t see more than 2 to 3 per cent of the total STD and ISD calls shifting to internet telephony. Mobile tariffs within India are already at Re 1 per minute, and within the same network anywhere in the country it is already as low as 40 paise. Also ISD tariffs are falling dramatically. And we can easily offer the same tariffs on our GSM,” said an executive with a leading GSM mobile service provider.