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Panama cracks down on Net telephony

Regulators in the country order Internet service providers to block ports used to carry voice-over-IP telephone calls.

The Panamanian government has ordered local Internet service providers to take steps aimed at blocking Internet telephone traffic that passes through the country.

The Oct. 25 decision requires ISPs to begin blocking 24 UDP ports, including the gateways most commonly used to shuffle so-called VoIP (voice over Internet Protocol) telephone calls. VoIP is currently banned in the country, whose phone services are provided under an exclusive contract through January 2003 with Cable & Wireless Panama, a joint venture between the government and the U.K.-based phone giant Cable & Wireless.

Analysts predict VoIP will take a big bite out of traditional phone services in the coming years as technical glitches are put to rest. According to a recent report by consulting company Frost & Sullivan, VoIP is poised to take off in Europe, the Middle East and Africa, and traffic in those areas could reach 57 billion minutes by 2008.

Panama is one of dozens of countries that ban VoIP services. As of April 2002, other countries included Cuba, Egypt, Israel, South Africa, Kenya, Mexico and Argentina, according to an article in the Boston University School of Law Review.

Cable & Wireless has fought VoIP providers in the past, winning a 1998 lawsuit against VoIP provider Net2Phone that banned Internet phone service in the Cayman Islands.

Cable & Wireless spokesman Peter Eustace said the recent Panama decision reflects the opinion of local phone regulators. "The decision by Panama telephone regulators is aimed at the unlawful offering of voice telephony services in Panama from unlicensed operators," he said, adding that the company offers VoIP services to corporations in countries where it is allowed.

Cable & Wireless Panama, which is 49 percent owned by the Panamanian government, is the U.K.-based telecom company's second-largest regional subsidiary. The unit booked revenue of $471 million (296 million pounds) in 2001, down 2 percent from the previous year, according to the company's 2002 annual report.

The company has been expanding its IP business, having acquired the assets of bankrupt Exodus Communications in February 2002. The company is also pushing Internet and data services through its Cable & Wireless Global subsidiary in the United States, Europe and Japan.