The CRTC got some praise by issuing its VoIP operator 911 service mandate, albeit the Commission has moved slowly in some areas such as VoIP and local number portability.  The sluggishness in taking and implementing a final stance on VoIP has been blogged ad infinitum by many, and the overall consensus is that the CRTC will hold its initial view on the subject.  In other words, that the ILECs will be subject to the same rules and regulations as traditional voice services in their own incumbent areas. 

This will restrict Bell and Telus inside their own regions, but not so outside their incumbent areas.  However, the costs to deploy VoIP remotely can be quite high, so there probably will not be too much action in that direction.  This will give MSOs (most noticeably Rogers, Shaw and Videotron, among others) and independent operators (such as Vonage and Primus) a chance to take market share away from the incumbents. 

Subjecting ILECs to having to file tariff applications is onerous and limiting to them, because every time a player wants to change the rates, it must file an application.  The new pricing, if granted, has to be applied across the band.  The only way out of price regulation is if the CRTC believes that the particular market is competitive.  Then, price regulation can be achieved via a forbeareance application, a slow process that could take up to two years.  Therefore, the only recourse of the ILECs (other than forbearance) is more aggressive bundling and/or pricing.  So under this scenario, we can expect more Michael Sabia-like moves of offering 1,000 monthly minutes worth of LD in North America for an additional $5.  The cablecos and other VoIP service providers will have an excellent opportunity to take market share away from the incumbent telcos in the highly competitive residential voice market.

But the key question is: will the key goal of creating a market as perfectly competitive as possible be served if the CRTC's initial stance is held?  I have already stated my case and believe that heavy-duty regulation should not be applied.  In due time, however, the details will be uncovered and we will know which way the CRTC is leaning towards.more »

Back in March, I wrote the following in a note regarding the importance of five 9s reliability:

"Of course five 9s is highly desirable, because of the possible consequences of a service outage (even as temporary as it might be).  Here, the notion of expected value takes hold - i.e. even starting with a low probability event, when factoring in the bad consequences associated with it, the expected value could be high (e.g. someone who is relying on VoIP service as a primary line and all of a sudden cannot call an ambulance due to a service interruption)."

Not surprisingly, a Florida couple is trying to shut down Vonage service after they could not reach 911 during an emergency, resulting in the death of their baby girl (hat tip: Om Malik).  Regardless of the stance of a regulatory body on VoIP ("light" versus "full" regulation), there are a few social obligations that have to be fulfilled no matter what.  E911 and CALEA should be addressed (at the very least, if there is no reliable E911, consumers should be warned, and any provider claiming to offer this feature is obliged to comply with the strict guidelines for the enhanced emergency service.  If it cannot, then it is incumbent upon that provider to explicitly state that the end-user is on the hook for another E911 alternative (e.g. cell phone).

Three states (Texas, Michigan and Connecticut) are now taking action against Vonage due to the E911 issue.  The emergency service does not come pre-installed with the basic Vonage VoIP package; in order to activate the service, users need to provide the company with their addresses. In Vonage's defense, the E911 technology is typically handled by the local carriers, and getting them to open up that technology is a challenge (as claimed in this Technology Review article).  Thus far, only Bell South has been responsive, albeit it is demanding Vonage to get a CLEC certificate.  In Rhode Island, Vonage could get an E911 trial off the ground because the state owns and operates their system.

Also not surprisingly, the new FCC Chair is rumored to propose at the May 19th meeting that the Commission should require VoIP service providers to begin delivering 911 calls by September.  In other words, Martin would give a 120 day warning for all these VoIP operators to implement the service or else... Now, the "or else" clause can range from explicitly state that the VoIP service is strictly "add-on" and not a "replacement" of traditional telephony to a drastic, outright "shutdown" of the service.  I am particularly in favor of the former rather than the latter measure.  Under such a ruling, Skype, which clearly states that they do not recommend that people drop their regular phone, would be OK.  But in either case, the FCC should demand that RBOCs should open up their E911 centers to VoIP operators - and why not?  Those ILECs are losing money with E911, so this should give them an ability to cover some of their costs.