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THE TELECOM REGULATORY Authority of India's recommendation (reaffirmed by the Communications Minister at a public forum) to open up Internet telephony from April 1 is one more progressive step in liberalising telecom services. And as an icing, TRAI has made some practical recommendations on the terms of opening up, for instance, allowing Internet service providers to offer Internet telephony as a value-added service (within the framework of the existing licence regime). TRAI has done well not to bow to the pressures of restricting Internet telephony to facility-based — basic, cellular or long distance — operators.

If the TRAI recommendations are accepted, the Internet, accessible to millions, will straightaway widen and deepen the market for international and national long distance telephony. However, these recommendations come with a rider: While consumers can use Internet telephony to make international calls from their computer to a friend's computer or telephone, they can make domestic calls only from one computer to another. Restricting Internet telephony on the domestic network to only calls from PC-to-PC and leaving out those from PC-to-phone, is not the right step, and needs to be immediately corrected. TRAI has not recommended phone-to-phone service via the Internet as that may disturb the level playing field and affect the revenues of facilities-based players. This rationale appears rather tenuous as the current technology offers the phone-to-phone option (though without any guarantee on quality). This recommendation is a needless curb on technology to protect the revenue streams of incumbent operators, including private players. It goes against user interest. The Government must redress this anomaly in TRAI's recommendation. It is true the ISPs, unlike the basic or cellular operators, do not have to contribute money to the Universal Service Obligation (to bridge the digital divide between metro and rural areas), and granting them telephony rights without that does tilt the playing field. Therefore it may be prudent for TRAI (or the Government) to prescribe a nominal USO fee, of 1-2 per cent of ISP revenues.

Introducing a `technology neutral' regulation by allowing flexibility to the facilities-based operators to set up either pure IP-based (also called managed VoIP or Voice over Internet Protocol) networks or circuit switched networks is yet another big boost for the telecom industry. As data traffic is poised to outpace voice traffic over the next few years, this technology option of investing in `managed VoIP' networks (by those rolling out national long distance networks) will give existing players the choice of broadening service offerings in the near term and a scope for additional revenues in future. TRAI has acted prudently by allowing the tariffs on both low-quality toll service (to be offered by the facilities-based operators) and Internet telephony to be dictated by market forces. After stoically putting up with high rates and indifferent service quality from the Department of Telecommunications, telephone users are finally being deluged by choice and treated to rapidly falling tariffs. They deserve all the goodies they are getting.

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