Do you know your VoIP?

Not all service providers are created equal when using VoIP on a global basis.

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When businesses start using VoIP, it’s easy to assume that you can use it wherever the Internet roams. After all, that’s the nature of the Web – open and free movement of data – and since the data packets constitute VoIP flow over IP networks, so should your phone calls.

For better or worse, the Internet is still the Wild West, and VoIP’s predecessors – TDM and the PSTN – come from a very different world. When VoIP emerged in 1995, these differences created some fundamental challenges to the status quo, and over the years a regulatory framework evolved. While any form of regulation runs counter to the spirit of the Internet, in the case of VoIP, it’s actually a good thing, and it is highly relevant to how you should be using it in your business.

The more global your operations, the more you need to understand how VoIP regulations can impact both your workforce and customers. By extension, this applies just as much to VoIP service providers. Not only do wholesale and retail operators regularly trade VoIP traffic, but your VoIP traffic will typically change hands many times across this complex ecosystem.

Regulated versus unregulated VoIP

The first thing to understand is the difference between these two types of service. Across both the E.U. and North America, these distinctions are clear, with the main idea being that any form of VoIP that connects to the PSTN – either/or both origination and termination – is regulated. In essence, this is about money to ensure legacy carriers are fairly compensated for the use of their networks.

For business users, this translates to cheaper telephony, but more important is the assurance that VoIP has to live up to legacy-type standards. VoIP may not be 100% carrier-grade, but it ties into the E.164 numbering plan and can support E911.

Conversely, unregulated VoIP does not touch the PSTN and can do none of these things – and it is not required to do so. These are basically PC-to-PC calling services like Skype that are wildly popular by being free or near-free. This is the true Wild West side of VoIP, and while businesses routinely use these services, they are always adjunct to the core telephony service in place. Their best-efforts quality and reliability make them unsuitable for anything more, not to mention a limited feature set and inability to integrate with anything else.

Where businesses need to be careful is the middle ground where some of these unregulated providers have varying degrees of PSTN interworking. They do this primarily to generate revenues, but are not beholden to the standards of regulated VoIP providers.  Depending on what regions your company needs to use VoIP in, this can prove problematic on many levels, and this is where you need to do your homework when partnering with a VoIP provider.

The world is not a free place

Politically speaking, this fact is plain as day, but it also holds true for VoIP. Aside from VoIP being either regulated or not regulated, there is the separate issue of whether VoIP is permitted or either banned or restricted. Regulations are generally in place in advanced economies with free markets. VoIP has become popular in these countries, not just because of lower prices, but also for all the innovation around it. Legacy telephony may still be the gold standard for quality, but there has been almost zero innovation for decades. Innovation is the engine of economic growth, and there is no doubt about what VoIP has brought to move telephony into the Internet era.

Conversely, there are many countries around the globe with less mature economies and closed markets. In these countries, the incumbent telcos retain their monopolies, often in cozy relationships with the governments or military regimes that protect the status quo. Predictably, this leads to high prices, no innovation, and lack of choice. VoIP challenges all of this, and it should come as no surprise that these types of countries will either outlaw or restrict the use of VoIP.

So, just which regions are we talking about? The most notable ones, with varying degrees of restrictions, are India, China, much of the Middle East and Africa, and parts of South and Central America. There are many ways to define these restrictions, and the benchmark to follow is the International Telecommunication Union (ITU).

The ITU recommends telecommunications policy and compiles industry-wide data on behalf of its members across 193 countries. Based on their 2013 data (see 2013 IP Telephony Report), 20 of 195 reporting member states restrict VoIP outright. Additionally, 65 have “specific VoIP policies and regulations in place,” so even among countries that permit VoIP, you may encounter restrictions.

There are many nuances on a country-by-country basis, and the ITU report is a great point of reference to map against the countries in which you want to use VoIP. Just to clarify, the ITU only provides recommendations, and the application of these policies lies with the in-country regulators. For specific countries whose VoIP restrictions might be unclear, your best plan will be to consult with local telecommunications regulators.

Your decision point

Whether you have employees or customers in those countries, you need to know that VoIP will be a trickier proposition. You will either not be able to extend VoIP there or you will need to rely on potentially risky options. One route is to use the gray market to bypass VoIP restrictions and use unlicensed operators, or go with unregulated providers, where the quality will be hit or miss.

As a business decision maker, you probably have no way to know these things, and my focus here is to make sure you ask the right questions of your VoIP provider in order to mitigate risk. They will know, and based on what they say, you have to decide if you want a VoIP partner that is quality-driven and complies with regulations, or one that is cost-driven and happily cuts corners.

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Copyright © 2014 IDG Communications, Inc.

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