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Regulating VoIP in Canada

Jeff Pulver went to Ottawa monday to talk with the CRTC about regulation, amongst other things.  This morning’s Globe has a Dave Ebner piece on a talk Jeff gave yesterday as well, on the same topic.  Yesterday at VON Canada I also heard Brooke Shultz of Vonage, and Dave Epstein of Broadvoice express the same sentiments.

The CRTC’s position is different from that taken by the FCC.  The CRTC has said that the service delivered, not the technology, should be the deciding factor in regulation.  The CRTC out of the gate has decreed a level playing field between the VoIP carriers and the incumbents.

Practically speaking, that will have two effects.  The first is that competition in Canada will be fundamentally different from competition in the US.  Price will be less important, features more important, and well funded competitors will be the survivors.  There is little to no room in Canada for a little guy, like a VoiceGlo, or Packet8, to try to invade the markets here.  It will be AOL Canada, the cable providers, and the incumbents duking it out here.

In some ways, that is as it should be.  The ITSP is a smaller, faster, nimbler player than an incumbent, but fundamentally the business model is identical — tax traffic moving from one network to another.  In other words, if they paint the picture of the incumbents as dinosaurs (as ITSPs are prone to do), then they themselves are really nothing more than smaller, faster, nimbler dinosaurs themselves.

The second impact of the CRTCs rulemaking is to encourage the rise of the “voice is an application” players, like Skype.  In a world where voice is no longer a service, but simply a tool I use at an endpoint on the network, like a PC, the regulatory regime is meaningless.    The regulators job will be to tax and regulate the broadband pipe, and not the application at the end of that pipe. Voice becomes a nimble, big-brained mammal, rather than remaining a dinosaur.

We live in interesting times.

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