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Introduction

1.1 This consultation document sets out Ofcom’s proposed approach to regulating voice telephony services in the light of new technological developments. In particular, it addresses how different types of VoIP services should be regulated to ensure that consumers’ interests can be best protected.

1.2 Traditional telephone services have existed for over 100 years. However, changes are underway that could significantly affect the way voice services are provided in the future. In particular, Voice over Internet Protocol (“VoIP”) services change the way voice services are delivered. These services typically use a broadband connection to provide voice calls using VoIP technology via a PC with handset/headset or a special adaptor connected to a traditional telephone handset. They have the potential to deliver significant consumer benefits through reducing the cost of delivering existing services, enabling new and innovative services and increasing competition.

1.3 Consumers benefit most when new technology can be adopted quickly, when regulatory rules do not prevent new services from being offered, and when competition between old and new services occurs on a level playing field. It is also important that as technology develops, measures to protect consumers are revised to ensure that they remain fully effective.

1.4 In response to the early developments in VoIP services and discussions with stakeholders, Ofcom published a consultation document entitled New Voice Services: A consultation and interim guidance on 6 September 2004 (the “2004 consultation”) . That document set out Ofcom’s proposals for the regulatory framework for VoIP services to help ensure that consumers’ interests were best met. The proposals reflected both the constraints of relevant European Community directives and also the relative infancy of the market.

1.5 Since September 2004, there have been a number of further developments that require a reassessment of Ofcom’s previous proposals to ensure our objectives in relation to VoIP services are achieved.

1.6 So this document sets out Ofcom’s revised approach for fostering the development of VoIP services to ensure they best meet consumers’ interests.

Scope and key proposals

1.7 This document will be of relevance to all providers of VoIP services (whether or not they provide ‘publicly available telephone services’, known simply as “PATS”). It is not primarily aimed at operators deploying next generation networks (NGNs) although some issues may be relevant. As this document discusses regulation that is imposed on providers to protect consumer or end-user interests (including number portability), it may be of interest to consumers using and operators providing public voice services by means of other technologies (such as PSTN).

1.8 This document discusses a number of proposals and makes statements on a number of aspects of regulation of VoIP services. The key proposals are:

• to discontinue Ofcom’s interim forbearance policy for VoIP services (as introduced in the 2004 consultation) to ensure compliance with Community obligations under the relevant European Community directives;
• to withdraw the Essential Requirements Guidelines given the inappropriate nature of these guidelines for VoIP services and for NGNs;
• to establish guidelines on how Ofcom will investigate potential contraventions of obligations in relation to network reliability and emergency calls, to aid transparency and understanding of the requirements and increase the incentive for VoIP services to offer 999 access ;
• to discontinue Ofcom’s interim policy for number portability (as introduced in the 2004 consultation); that allowed a communications provider to restrict number portability to those PATS providers who were not complying with PATS obligations under the interim forbearance policy.
• to modify General Condition 18 to clarify the availability of number portability rights to consumers of services using receive only geographic and non-geographic numbers and increase the incentive for VoIP services to offer 999 access;
• to specify the information that providers must offer their customers to ensure customers are well informed of the capability of VoIP services and a proposal to modify General Condition 14 to mandate this code in respect of certain providers;
• a planned approach to encourage and enforce the maximum level of compliance by providers of VoIP services; and,
• a planned approach to monitoring and reviewing so that as the market and technology develops regulation can be quickly adapted to meet consumers needs continue to be met particularly the need to maintain widespread availability of high quality 999 access.

1.9 The consultation also highlights other relevant proposals and consultations that Ofcom has or is carrying out that may be relevant to providers of VoIP services.

Structure of this document

1.10 The key elements of this document are described below.

1.11 Section 2 (Introduction and Background) provides some background to VoIP services and Ofcom’s previous policy activity in the area. In particular, it discusses:

• Ofcom’s 2004 consultation, the key objectives we identified and the main proposals that we made
• a summary of responses to that consultation from over 50 stakeholders who responded; and,
• recent developments in VoIP services that have, in part, shaped our approach in this consultation.

1.12 Section 3 (Regulatory Approach to VoIP Services) discusses the overall policy and regulatory framework that has shaped our regulatory proposals including:

• a summary of Ofcom’s objectives in developing its policy and regulation;
• a review of the key legal regulatory framework;
• the challenges that this framework creates in respect of VoIP services;
• a summary of Ofcom’s regulatory proposals; and,
• links to other projects such as NGN access and interconnection that may be relevant to VoIP service providers.

1.13 Sections 4 to 9 describe the proposed measures to address these challenges.

• Section 4 (Application of General Conditions) outlines proposals, guidance and links to other projects that affect obligations on VoIP service providers particularly GC 3 and GC 4
• Section 5 (Number Portability) describes proposed changes to number portability obligations and rights including a consultation on a proposed change to General condition 18 to correct an inconsistency in definition
• Section 6 (Consumer Protection – consultation on draft code) describes Ofcom’s detailed code for the content of consumer information
• Section 7 (Consumer Protection - Legal framework for implementation of the code) Consultation on a change in General Condition 14 to mandate the code
• Section 8 (Monitoring, enforcement and review) explains Ofcom’s approach to enforcement of obligations on providers and how Ofcom intends to consider future changes to policy and regulation
• Section 9 (Other issues) discusses other concerns that VoIP service providers have raised such as naked DSL and the blocking of VoIP traffic

Next steps

1.14 A number of the measures in this document will have immediate effect in particular discontinuance of the interim forbearance policy and withdrawal of the Essential Requirements Guidelines.

1.15 Ofcom is consulting on some other elements of this document and is inviting representations on specific questions addressed in this document. Written views and comments on these matters should be made to Ofcom by no later than 5pm on 10 May 2006.

1.16 Ofcom expects, at present, to make a statement on these aspects in August 2006.

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