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Summary

Introduction

1.1 Traditional telephone services have existed for over 100 years, but changes are underway that could significantly affect the way voice services are provided in the future. New voice services have the potential to deliver substantial benefits to consumers. Ofcom therefore considers it is essential to ensure that the right regulatory framework is in place to enable consumers to benefit from this change.

1.2 This consultation forms an important part of Ofcom's approach to new voice services and is published alongside the following documents:

• Ofcom news release
• New voice services - a regulatory framework for VoIP and VoB services
• New voice services - a consultation on consumer issues. A summary
• Numbering arrangements for new voice services

Scope

1.3 This consultation considers the regulation of all public voice services, though it is driven by the development of new services which use Voice over IP (VoIP) technology. Ofcom has identified a number of issues raised by new voice services, some of which require immediate consideration, others of which are more long term. The longer term issues regarding the impact of new voice services on the market are being addressed by Ofcom's Strategic Review of Telecommunications ^(-1-). The immediate issues regarding regulation and consumer protection are considered in this consultation. The consultation includes:

• an overview of the changes in the provision of voice services and the regulatory challenges these raise
• discussion of the appropriate policy aims in dealing with these regulatory challenges.
• the implications of the current regulatory framework
• three important initiatives that can be progressed to meet the challenge posed by new voice services

1.4 Ofcom invites written views and comments on the issues raised in this document, to be made by 5pm on Monday 15 November 2004.

Summary of initial views and proposals

1.5 Some new voice services have the potential to 'look and feel' like traditional telephone services but may not be able to deliver, in the same way or to the same standard, the same features consumers have come to expect as standard. Whilst these new services can bring benefits, in terms of increased opportunities for competition and reduced costs, there are also challenges, in terms of potentially lower levels of consumer protection. In dealing with this challenge Ofcom has identified its top level aims as follows:

• to help create an environment in which new technologies can be developed successfully in the market, so that consumers can benefit from a wider and more innovative range of services;
• to ensure that consumers are properly informed and protected in relation to the products they are using; and
• to limit the extent to which regulation creates distortions in the market

1.6 Ofcom has also identified a number of specific questions, in particular:

• Is it desirable for all voice services to be required to offer the same standard features and level of consumer protection as traditional voice services?
• What should we do about access to 999?

1.7 Ofcom recognises that a balance needs to be struck between creating the right conditions in which new voice services and new providers can enter the market, and ensuring that consumers are properly informed and protected. Ofcom favours an approach that allows new services to enter the market whilst enabling consumers to make informed choices and take advantage of these new services. In particular, Ofcom's initial views are:

• it is not desirable for all voice services to be required to offer the same features as traditional telephone services, and we should instead enable consumers to make informed decisions. This will help new companies to create new products and offer consumers more choice.
• it is not desirable to rely on criteria such as the appearance of a service or whether it is used as a second line in order to draw a distinction between those services that are regulated in a similar way as traditional telephone services and those that are not. Instead, providers should be allowed to offer a range of differentiated services and consumers should be enabled to make informed decisions about the products they are buying and using;
• although it is clearly desirable for access to 999 to be provided, it is not currently necessary or appropriate for this to be a requirement for all voice services. It seems likely that access to 999 will continue to be provided by most providers and most consumers would want to have at least one telephone line with access to 999 and would choose a provider that offered it. However, if services without access to 999 or with only basic access to 999 are offered, then consumers' decisions must be informed and all potential users of such a service should be aware that access to 999 is not available;
• because some new services may not be able to offer the same degree of reliability for emergency calls as traditional voice services, it is better that these services are able to provide less reliable access to 999 rather than preventing them from offering any access at all. However, Ofcom would be concerned if market developments and/or lack of consumer awareness led to poorer quality and availability of 999 over time, for example if lower reliability services were widely used as primary lines, and would expect to keep this issue under review as the market develops.

1.8 Ofcom recognises that in seeking to achieve these policy aims and meet the challenge posed by new voice services, the application of the existing legal framework to new voice services is unclear. The European Commission has published a paper in June 2004 on the regulation of Voice over IP services but this does not give clarity on some key legal issues ^(-2-) . The Commission has indicated that it will give more clarification on this matter later in the year.

1.9 In response to this situation, Ofcom would like to make as much progress as possible in terms of the practical policies it may decide to implement. Ofcom is therefore proposing initiatives in three important areas which it believes will help meet the challenge posed by new voice services in accordance with the aims and objectives it has identified:

1. An interim policy, pending further clarification from the European Commission, to allow new voice services to offer access to 999 without having to meet all the obligations of Publicly Available Telephone Services (PATS)
2. A consultation on whether to retain, re-issue or withdraw existing guidelines relating to network integrity. Ofcom's initial preference is to withdraw the guidelines. Ofcom is also consulting on its initial views that:
   • nomadic services not provided at fixed location fall outside the network integrity requirements;
   • line powering would not be expected where not practical, e.g. for VoB services;
   • it does not seem reasonable for network providers (e.g. providers of broadband access) to take direct responsibility for additional network integrity requirements when PATS is independently provided over their network; and
   • as an interim measure, providers of nomadic services should make sure consumers are adequately informed of the problems of making emergency calls using their services when they are away from their installation address.
3. A consultation on the appropriate framework for a consumer information policy for new voice services. Ofcom's initial preference is for a co-regulatory approach.

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Footnotes:

1:- Introduction to the Telecoms Review http://www.ofcom.org.uk/static/telecoms_review/index.htm

2:- The Treatment of VoIP under the EU regulatory framework - an information and consultation document http://europa.eu.int/information_society/topics/ecomm/doc/useful_information/library/commiss_serv_doc/406_14_voip_consult_paper_v2_1.pdf

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The full consultation document and a plain English summary are available via the links at the top right of this page

• New voice services [pdf]
  Full print version

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