Telof — A New Hope for VoIP

The Internet’s openness makes it a perfect tool for disintermediation (a seven syllable word for something as simple as “cutting out the middle man”).  One of the earlier mottos of the Net (attributed to John Gilmore) was “The Internet sees censorship as damage, and routes around it”  implying that no  obstacle whether economic, political or social would be insurmountable in a connected world. 

Alas, as we’ve seen, the disruptive nature of Internet technology has not fulfilled that promise to the extent envisioned by early net libertarians.  It turns out people are like cows when they’re on-line.  They’re not smart enough to route around the simplest of obstacles.  Prof. Zittrain calls this the Bovinization principle (or was it a theorem?).

The same is true to a certain extent when it comes to VoIP.  Here, the obstacles were the regulatory regime and the dominant telcos.  While Filipinos can enjoy the benefits of VoIP through foreign providers like Vonage and Net2Phone, inbound traffic must still route through the telco’s local exchanges.  This means that any VoIP provider interested in offering services for inbound calls must have some sort of arrangement with the telcos.  Even the NTC’s draft VoIP rules anticipate as much.

And then this comes out in INQ7.    Apparently, the DOTC’s Telecommunications Office (Telof) is going to deploy a VoIP network in unserved areas.  This comes as a mild shock to me.  I thought Telof was going to be disbanded after it had been grudgingly made a part of the CICT. After all, noone makes enough phone calls through Telof to make it worth the government’s while. 

But now, I have a renewed interest in Telof.  Suddenly, CICT’s budget makes sense.  According to documents I saw presented to Congress, the CICT asked for a little over 1 billion pesos for its budget.  Out of that less than 20 million would go to the CICT itself with something like 900 million or so going to the Telof.  When I first saw that I recall thinking “What gives?”  Maybe it was all a ploy to get a VoIP network rolled out under Telof.

Anyway,  the value of the Telof network, I think, is that it’s probably already interconnected with all major telcos. So, here’s a back door that the government can use to allow VoIP providers through just in case the telcos resist the VoIP regulations.  During the recent NTC hearing on VoIP, I was trying to think who could serve as a back door.  Initially, I thought it could be the cable TV operators who already have the last mile but unfortunately no interconnection with the local telcos. Then I thought about the provincial or municipal telcos who are already interconnected.  But I abandoned that when I considered the large telcos might question the small telco’s authority to carry the traffic.  Telof solves that problem because it is authorized to carry that traffic.  The telcos can’t complain and VoIP services enter the market.

But perhaps Telof can go one step further by opening up the market to all VoIP providers.  All it has to do is allow any VoIP provider to connect to Telof’s network.  The interconnection rates can be published by the government to avoid discrimination.  Then, Telof just sits back and watches as a thousand VoIP companies bloom.

Okay, so this isn’t the standard Net disintermediation story.  In this case, it’s the government that routed around the middle man.  Isn’t this what government is for anyway?