VoIP is Free! Or is it?

It has been reported (here and here) that the NTC will open up Voice-over-IP to ISPs and other value-added service providers.  This is a legal landmark because it’s the first time in Philippine history that voice services will be offered by entities who do not possess a Congressional franchise.  This is a win for consumers because VoIP calls will be far cheaper than ordinary circuit-switched long distance phone calls.  For the VAS industry, this is also a win because now they can go head to head against the telcos and can grow considerably larger than they are now.

However, I caution against breaking out the bubbly just yet.

It will be recalled that the last time the NTC issued a ruling that did not favor the telcos, the latter just sued.  Now, 5 years after, the case is still pending at the trial court level.  If you factor in the appeals process, the case may be resolved in about 5 to 7 more years.

This is likely to be the fate of the VoIP ruling.  The telcos will surely litigate to protect their International Gateway Facilities (IGF) income.  And by the time our Judiciary is done with the case, VoIP will be an outmoded form of communication. 

For the NTC, it’s a win-win situation.  They get the good press and goodwill by issuing a consumer and IT industry-friendly policy.  On the other hand, the court system will ensure that the interests of the telcos won’t be affected any time soon.  So, it’s not NTC’s fault, it’s the judicial system’s  — for that matter, it won’t be NTC’s problem either.  It’s a case of a policy response that maintains the status quo. 

Meanwhile, the industry loses because foreign players will enter the market because the NTC can’t effectively regulate against Internet-based services.  By the time the dust settles, the VoIP market in the Philippines will be dominated by foreign-based service providers and of course, the local telcos.

So, the VoIP ship is all set to sail but outside forces will keep it anchored in place.