Press Release
OFTA Seeks Views on the Regulation of IP Telephony

The Office of the Telecommunications Authority (OFTA) today (4 October 2004) launched an industry consultation to invite views on the regulation of Internet Protocol (IP) Telephony. IP Telephony refers to the service offering of voice, fax, data and multimedia services using IP technology.

Recently, some local fixed network operators offer IP Telephony services which allow customers to make telephone calls over a broadband Internet connection instead of the traditional telephone line.

"In this new era of IP-based telecommunications, we believe that IP Telephony or any new IP-based services would bring new business opportunities to the industry and provide consumers with more choices of innovative multimedia features. Like major overseas carriers, local carriers are investing in IP-based networks, and capitalising on new revenue potentials brought by VoIP and other innovative services. We find it opportune to review and develop the appropriate regulation and licensing arrangements for IP Telephony," a spokesperson of OFTA said.

"The objective of the consultation is to solicit views and comments of the telecommunications industry and interested parties on various issues, particularly on whether the existing regulatory requirements for traditional voice telephony service should be applied to the new services. We would also like to seek views on whether the service providers such as the Internet Service Providers (ISPs) should be allowed to operate the IP Telephony services and if so, the type of licence to be used," the spokesperson added.

In this consultation, OFTA is of the preliminary view that the minimum and proportionate level of regulation should be applied to IP Telephony subject to preserving the achievement of certain social objectives. The "technology neutrality" principle should be upheld. Regulation should not obstruct the adoption of new technologies. The choice of, and pace of migration to, the services based on the IP technology, should be left to the consumers and the market.

While OFTA advocates the minimum level of regulation on IP Telephony, it may be necessary for IP Telephony services that are intended to be used as substitutes to the conventional public telephone services to meet certain minimum conditions (such as number portability) in order to protect public interest and avoid consumer confusion.

"As it is expected that there will be a wide range of IP Telephony services with different functionalities and quality of service, we consider that the consumers should be given adequate information on any limitations on the capabilities of the IP Telephony services offered in the market so that consumers can make an informed choice," the spokesperson explained.

IP Telephony enables the separation of network operation from service provision. IP Telephony services provided by one service provider may be accessed over the broadband connections provided by other operators. Such separation raises the issues of payment of the broadband connection providers by the IP Telephony service providers. The consultation paper discusses the different modes of operation of IP Telephony over the broadband connections and the possible interconnection charges payable with respect to each mode.

"The regulation of IP Telephony is a complex issue and will affect the telecommunications industry and users. We raise a broad range of key topics for discussion, including policy and licensing, numbering issues, interconnection and charge settlement and consumer issues. We hope that the consultation will encourage the industry and the public to discuss the subject. Views collected will be studied thoroughly before the Telecommunications Authority determines the appropriate regulations for IP Telephony," the spokesperson concluded.

The consultation paper can be downloaded from OFTA's web site: www.ofta.gov.hk. Any views or comments on this consultation should reach the OFTA on or before 4 December 2004. Electronic submission to iptelephony@ofta.gov.hk is welcome.

Office of the Telecommunications Authority
4 October 2004