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Canada leans toward regulating VoIP

Net phone service providers brace for regulation in Canada, where a telecom commission tentatively rules that traditional phone rules apply to VoIP in most cases.

Canadian utility regulators on Wednesday said that their existing telephone rules apply to most Internet phone calls--a tentative decision that phone executives say worsens an already haphazard regulatory landscape governing Net phone service providers.

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Any Net phone provider that supplies 10-digit phone numbers to subscribers, then lets them make or get calls from traditional dialers, would have to follow the regulations, according to the nonbinding decision released Wednesday by the Canadian Radio-television and Telecommunications Commission (CRTC).

Net phone services, which use the Internet rather than traditional circuit-switched phone networks, share enough "functional characteristics" to their circuit-switched competitors to merit regulating, according to the CRTC. "VoIP service providers...should be subject to the regulatory framework for local competition," the commission wrote.

Reaction from U.S. VoIP providers signals an oncoming fight. "On the surface, it sounds like CRTC got whole thing wrong," said Jeff Pulver, whose free VoIP dialing service, Free World Dialup, recently won an exemption from the Federal Communications Commission's telephone rules. "They are treating the service the same, whether it's VoIP or traditional, and not taking into account the major differences."

Pulver and other U.S. VoIP executives believe not only that Canadian authorities are wrong, but that they're complicating an already confusing VoIP regulatory landscape that threatens the spread of commercial services. In the United States, the FCC wants a light approach to coddle the young industry, while dozens of individual U.S. states would like VoIP regulated in order to receive the essential services funding they usually get from traditional phone companies.

An FCC representative could not be immediately reached for comment.

Meanwhile, outside North America, VoIP regulation is also mixed. Because the technology is still predominantly a North American phenomenon, the services are generally unregulated, but some countries are creating policy. Panama has been particularly proactive in trying to regulate VoIP calls that originate or terminate within its borders.

The CRTC's decision could impact 8x8, VoicePulse, Vonage and other U.S.-based Net phone providers that sell dialing plans across North America, U.S.-based Net phone executives say.

A Vonage representative said the decision supplies some measure of clarity to the Canadian rules. However, the representative added that, because the decision is still under review, it is too early to comment further.