Earlier this month, the CRTC made public its preliminary view on VoIP.  The initial verdict is not good news for any entrepreneurs wishing to take advantage of this disruptive technology in Canada.

The announcement sent shockwaves across the VoIP community, including south of the border, where several cognoscenti echoed their surprise, including techie guru and entrepreneur Jeff Pulver, who made the following comment in his blog:

"Canada faces some of the same social policy issues as the United States and it was my hope that the CRTC would have followed the leadership of the FCC rather than following in the footsteps of Panama". 

Nonetheless, despite these rather harsh words, it is easy to understand the frustration of folks like Jeff, particularly after several recent VoIP friendly FCC rulings.  Among these, there was an interesting public forum held in December 2003, and a Memorandum Opinion and Order (hat tip: Pulver.com) with regard to the Pulver.com FWD (Free World Dialup) petition, which was released in February of this year.  This memorandum declared that FWD is an unregulated interstate information service, effectively keeping the Internet free from any regulation.

The Canadian pronouncement is a bit surprising also because a few CRTC observers were present at FCC's December 2003 public forum.  During that event, there was a general consensus that given the fast and disruptive evolution of VoIP, the key goal should not be how to classify the technology, but rather, what policy goals should be pursued. 

In that vein, the end objective should really be "light regulation" that is premised upon public service goals such as emergency service (E-911), law enforcement (CALEA) and universal service funding.  The rationale of this focus on light regulation is to allow this nascent industry an opportunity to flourish.  VoIP is still in its blossoming stages and innovation in this area should not be choked before the industry has a chance to grow. 

Hence, it was not surprising to see the FCC lean at least initially towards a VoIP innovation friendly approach.  This was achieved via the classification of VoIP as an information service.  Another consensus arrived at the hearing was that the current US access charge regime is obsolete and should not be forced on VoIP. 

But the CRTC, by contrast, is apparently leaning towards classifying VoIP as a telecommunications service.  Another twist is that the playing field for VoIP will not necessarily be a level one.  Cable companies and new entrants will not initially subject to the same regulations as the incumbent carriers.  That will only change when there will be real competition at the local level.  Hence, at least for the early stages of the market, the cable companies and new entrants will have an advantage over the incumbents.  In other words, should Bell and Telus offer VoIP services, they will be subject to the same regulations as they had for circuit-switched networks. 

Despite the initial posturing, the discussion is still ongoing and the CRTC will be holding a public hearing on May 19-20 in Gatineau, Quebec.  We can only hope that a friendlier VoIP policy is undertaken - preferably, one that views the technology as an information service rather than as a telecommunications service.