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Executive Summary

Introduction

1.1 Voice over IP (VoIP) services continue to have a greater and greater impact on the UK communications sector. Over the last year, a range of new services has been launched and uptake has increased significantly. In time, VoIP services have the potential to offer significant new benefits to consumers, including more competition and choice, lower prices and new services such as second lines and nomadic services.

Regulatory aims and proposals

1.2 To ensure that appropriate regulation keeps up with these developments, Ofcom published a consultation document^(-1-) 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 could be best met. The proposals reflected both the constraints of relevant European Community directives and also the relative infancy of the market.

1.3 On 22 February 2006, Ofcom published a further consultation document^(-2-) entitled Regulation of VoIP Services: Statement and further consultation (the “2006 consultation”). This consultation document set out Ofcom’s revised proposals, taking into account both the responses received during the initial consultation period and also developments that had taken place in VoIP services since 2004. The proposals were designed to be consistent with Ofcom’s regulatory objectives in relation to VoIP and to further the interests of citizens and consumers. In particular, we identified three such objectives as central to achieving this:

• enabling innovation in a technological neutral way;
• ensuring consumers are well informed; and
• ensuring maximum availability of emergency services access.

1.4 In addressing those objectives, Ofcom made the following two main regulatory proposals in its 2006 consultation:

• to modify General Condition^(-3-) 14 (“GC 14”) requiring providers of Public Electronic Communication Services (to the extent it comprises the conveyance of speech, music or sounds) to comply with a code of practice (i.e. the Code on the provision by Service Providers of consumer information to Domestic and Small Business Customers for the provision of Services (“the Code”); and
• to modify the definition of a ‘Publicly Available Telephone Service’ (“PATS”) for the purposes of General Condition 18 (“GC 18”) so that only services available to the public for originating and receiving national and international calls and access to emergency services through a normal telephone number have the right to number portability under GC 18, with the only exception of Public Electronic Communications Services for only receiving calls.

1.5 In addition, the 2006 consultation set out a number of additional measures that are relevant to the application of the General Conditions of Entitlement^(-4-) (“GCs”) to providers of VoIP services, including:

• the discontinuance of Ofcom’s interim forbearance policy as set out in the 2004 consultation. This policy meant that Ofcom would forbear from enforcing obligations in the GCs applying to providers of PATS, so as to reduce any potential disincentive for VoIP providers offering access to emergency services to their customers;
• the withdrawal of the Essential Requirement Guidelines^(-5-) (and instead applying the ‘reasonably practicable’ test set out in General Condition 3 (“GC 3”) on a case-by-case basis); and
• the publication of draft guidance on the application of PATS obligations in the GCs to VoIP service providers to ensure that they meet their obligations.

Responses to the consultation and our conclusions

1.6 We received nearly 50 detailed and useful responses to the 2006 consultation. Overall, there was broad support for our proposals, although there were some notable disagreements with particular elements.

1.7 After considering stakeholders’ responses to the 2006 consultation and further developments in the market, Ofcom has concluded that it is appropriate to make the modifications to GC 14 and GC 18. The statutory notification regarding the modification to GC 14 is set out in Annex 1 of this document, and the deadline for compliance with the Code is 29 May 2007, i.e. two months from the date of publication, i.e. 29 March 2007. The statutory notification regarding the modification to GC 18 is set out in Annex 4 of this document, and will come into effect on the date of publication, i.e. on 29 March 2007. However, it is to be noted that in light of certain consultation responses in respect of GC 14, Ofcom has made some minor modifications to its original proposal. Those modifications include:

• Making it clear that labels to inform consumers of the capability to call emergency services may be either in the form of a physical label or on a computer screen to ensure that the requirement is reasonable and proportionate;
• Extending the Code to require point of signature acknowledgement that access to emergency services is not possible in the case of a power cut to ensure well informed consumers;
• Developing a more detailed approach to enforcing the Code; and
• Extending the deadline for compliance with the Code from one month to two months from the date of publication, i.e. 29 March 2007.

1.8 This statement explains Ofcom’s reasons for reaching these decisions and how it expects providers of VoIP services to comply with obligations applicable to them. In addition, this document also outlines Ofcom’s current thinking on a number of other issues that are relevant to providers of VoIP services, such as naked DSL, net neutrality, approach to regulation of nomadic services and the European Framework Review. Although Ofcom is not proposing any such additional regulation at this stage, we believe it is important and useful for stakeholders to be aware of Ofcom’s emerging views in these areas.

1.9 Ofcom continues to see VoIP services as an important element in the overall communications market. As the market develops further, we intend to continue to review and adapt regulation to ensure that citizens and consumers continue to benefit to gain the full benefits from VoIP developments.

Further consultation on mandating access to emergency services

1.10 In response to the 2006 consultation, a number of stakeholders expressed strong views about Ofcom’s proposed regulation being insufficient to ensure an adequately high level of access to emergency services. In particular, they considered that the lack of emergency services access on VoIP services would lead to delays in consumers and citizens successfully connecting to the emergency services and that this would result in serious consumer detriment.

1.11 We have completed initial research that suggests that there is potential for detriment. Therefore, we will consult on whether, and if so how, certain VoIP services should be required to offer emergency services access. In assessing the need for any new requirement, we will continue to carefully consider the impact of such regulation on market entry, innovation and competition. This consultation will take place this summer.

Footnotes:

1.- http://www.ofcom.org.uk/consult/condocs/new_voice/anew_voice/nvs.pdf

2.- http://www.ofcom.org.uk/consult/condocs/voipregulation/voipregulation.pdf

3.- http://www.ofcom.org.uk/telecoms/ioi/g_a_regime/gce/cvogc.pdf

4.- A consolidated version of the GCs as at 19 December 2006 (including annotations) can be accessed at: http://www.ofcom.org.uk/telecoms/ioi/g_a_regime/gce/cvogc.pdf

5.- See document entitled Guidelines on the essential requirements for network security and integrity, published by Oftel on 9 October 2002; http://www.ofcom.org.uk/static/archive/oftel/publications/ind_guidelines/guid1002.pdf, referred to throughout the rest of this document as the ‘Essential Requirements Guidelines’.

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