Editor’s Note: This practice note is based on the statement, Regulation of Internet Protocol (IP) Telephony, issued by the Hong Kong Telecommunications Authority on 20 June 2005. The statement sets out the Telecommunications Authority’s views and recommendations on the regulatory framework for Voice over Internet Protocol (VoIP). This note was prepared with the assistance of the Office of the Telecommunications Authority.
In June 2005 the Office of the Telecommunications Authority (OFTA) of Hong Kong announced its regulatory approach to Internet Protocol (IP) services in its statement, Regulation of Internet Protocol (IP) Telephony. This announcement followed the OFTA’s earlier consultation paper on Regulation of Internet Protocol (IP) Telephony.
The Telecommunications Authority (TA) states that the objectives of the regulatory framework are to:
- Apply the minimum regulation on IP Telephony to enhance long-term consumer interest and promote efficient investment,
- Continue to uphold “technology neutrality” and not to restrict the diversity and innovation of IP Telephony services,
- Facilitate the deployment of IP technology for innovative services, while at the same time giving adequate protection to consumers.
The TA’s statement sets out guidelines for its proposed regulatory treatment of VoIP operators in four key areas.
- Policy and licensing,
- Numbering resources,
- Interconnection and charge settlement, and
- Consumer protection and other issues (emergency services, responsibility for backup power supply, and general customer protection).
Policy and Licensing
The TA has adopted a two-class licensing approach for IP Telephony services:
- Class 1 services have all the attributes of the conventional telephone services. Class 1 services are required to fulfil the licensing conditions of either the Fixed Telecommunications Network Service (FTNS) or Fixed Carrier (FC) licences for the provision of local voice telephony services,
- Class 2 services do not have all the attributes of conventional telephone services, and are only subject to minimal licensing conditions to protect consumer interests and safeguard fair competition. In offering Class 2 services, operators should declare in their marketing materials (for example advertisements, tariffs, and so on) that the service is a Class 2 service and inform customers about the capabilities and limitations of the Class 2 service it offers.
In January 2006, the TA created a new service-based operator (SBO) licence for the provision of Class 1 and/or Class 2 IP Telephony services. The TA Statement on SBO licence (attached to this note) sets out details of licensing conditions and the licence fee structure of SBO licence.
In addition to SBO licensees, FTNS and FC licensees are also allowed under their existing licences to provide Class 1 and/or Class 2 IP Telephony services without the need for them to apply for separate SBO licences. In other words, both service-based and facilities-based operators are permitted to compete in the IP Telephony services market.
The TA allows three modes of provision of IP Telephony services over broadband connections:
- Mode 1: Where the IP Telephony services are provided by the supplier of the broadband connection to the customer,
- Mode 2: Where the IP Telephony services are provided by an IP Telephony service provider who has direct access to, and interconnection with, the broadband connection under a commercial agreement with the supplier of the broadband connection, and
- Mode 3: Where the IP Telephony services are provided by an operator as an application on the Internet, which is accessed through the broadband connection. In this case, the IP Telephony provider has no commercial relationship with the supplier of the broadband connection.
Numbering Resources
In January 2006, the TA announced the following numbering arrangements for IP Telephony services:
- For Class 1 IP Telephony services, 8-digit numbers with prefix “2” and “3”, currently deployed for conventional fixed telephone services, are to be allocated,
- Class 2 services will initially be allocated with 8-digit numbers of new number levels “57” and “58”,
- When the 8-digit numbers with prefix “57” and “58” are about to be exhausted, subject to the readiness of all carriers to route 10-digit numbers, the TA will then consider allocating 10-digit numbers with prefix “59” to Class 2 services.
Interconnection and Charge Settlement
All Class 1 and Class 2 services using numbers from the Hong Kong Numbering Plan are required to:
- Provide Calling Line Identification (CLI)
- Provide “any-to-any connectivity”. This means any calling party must be able to reach any called party by dialing the appropriate number or code, even if the called party is the customer of a different operator.
To facilitate “any-to-any connectivity”, all SBO licensees providing IP Telephony operators must be allowed to gain access to the Public Switched Telephone Network (PSTN). These operators will need to obtain a commercial agreement with one or more FTNS or FC licensee(s) for a hosting connection with other circuit-switched networks. The FTNS or FC licensee will then be responsible for routing the IP Telephony operator’s traffic to and from the networks of other FTNS or FC licensees. As there are numerous local fixed networks, the TA considers that market forces should ensure that the SBOs have fair access to the networks.
The hosting FTNS or FC licensee will be responsible for handling interconnection charges due to the IP Telephony traffic of SBO hosted on its network in accordance with existing charging principles for interconnection.
Consumer and Other Issues
Emergency Services
Class 1 and Class 2 service providers that assign numbers from the Hong Kong Numbering Plan are required to:
- Provide customers with free access to emergency services, and
- Provide databases for maintaining the most up-to-date location information of their customers in order to provide emergency centres with reliable location information.
For other types of Class 2 services which do not assign Hong Kong telephone numbers, provision of free access to emergency services is optional.
Backup Power Supply
Licensees providing Class 1 or Class 2 services must not sell the service to “lifeline” users unless they provide backup power supply to the customer premises equipment and network equipment. “Lifeline device” means a medical alarm or any other device for an elderly, infirm or invalid person to summon assistance in the event of an emergency without having to manually dial the telephone number of the emergency service.
Service providers should check with their customers, before or upon subscription for services, whether the services will be used by lifeline users and whether there will be any lifeline devices connected to their services. If so, they must ensure that backup power supply is available before providing the services to or signing service agreements with the consumers. The licensees should also affix a label onto the wall socket panel or any equipment installed on the customer’s premises, or take other reasonable steps (such as a cautionary remark in telephone bills) to remind the customers that the service is without backup power supply and is therefore not suitable for connection to lifeline devices.
General Consumer Protection
The TA encourages the industry to develop self-regulation to implement consumer protection and education measures. Service providers should clearly communicate the capabilities and limitations of their IP Telephony services to customers, before signing up agreements with them.