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Regulatory Challenges of Voice Over Ip Telephony: Analysis for Selected South and Eastern European Countries

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Regulatory Challenges of Voice Over Ip Telephony: Analysis for Selected South and Eastern European Countries INTERNATIONAL TELECOMMUNICATION UNION ITU WORKSHOP ON Document: FoV/08 12 January 2007 THE FUTURE OF VOICE Geneva, 15-16 January 2007 REGULATORY CHALLENGES OF VOICE OVER IP TELEPHONY: ANALYSIS FOR SELECTED SOUTH AND EASTERN EUROPEAN COUNTRIES © ITU 15-16 January 2007 ACKNOWLEDGEMENTS This background paper was prepared by Anna Riedel <[email protected]> under the ITU New Initiatives Programmeme project on The Future of Voice to be presented at the workshop held in Geneva in January 2007. The opinions expressed in this document are those of the authors and do not necessarily reflect the views of the International Telecommunication Union or its membership. The author would like to express her sincere appreciation to the national administrations of Romania, Bulgaria, Turkey and Croatia for supporting this study, and wishes particularly to thank Jaroslaw Ponder, Nathaly Rey and Justus Haucap for their comments and invaluable assistance. The research project on the Future of Voice is managed by Jaroslaw Ponder, Policy Analyst at the ITU Strategy and Policy Unit <[email protected]>, under the direction of Dr. Tim Kelly, Head of the ITU Strategy and Policy Unit <[email protected]>. Other background materials can be found at http://www.itu.int/spu/voice. II TABLE OF CONTENTS page 1 Introduction.................................................................................................................................. 3 2 Voice over Internet Protocol ........................................................................................................ 4 2.1 Definitions ......................................................................................................................... 4 2.2 Development of VoIP ........................................................................................................ 4 2.3 Technological aspects........................................................................................................ 5 2.4 Economical implications.................................................................................................... 6 2.5 Regulatory Aspects............................................................................................................ 7 2.5.1 Market power and interconnection......................................................................... 9 2.5.2 Universal Service Obligations and Quality of Service......................................... 10 2.5.3 Competitive Safeguards........................................................................................ 10 2.5.4 Static and dynamic efficiency............................................................................... 11 3 Country case studies................................................................................................................... 12 3.1 Romania........................................................................................................................... 12 3.1.1 Country overview ................................................................................................. 12 3.1.2 Telecommunications Market ................................................................................ 12 3.1.3 Regulatory Overview............................................................................................ 14 3.1.4 VoIP Regulations.................................................................................................. 15 3.1.5 Recent Developments........................................................................................... 16 3.2 Bulgaria............................................................................................................................ 16 3.2.1 Country Overview ................................................................................................ 16 3.2.2 Telecommunications Market ................................................................................ 17 3.2.3 Regulatory Overview............................................................................................ 19 3.2.4 VoIP Regulations.................................................................................................. 20 3.2.5 Recent Developments........................................................................................... 20 3.3 Croatia.............................................................................................................................. 21 3.3.1 Country Overview ................................................................................................ 21 3.3.2 Telecommunications Market ................................................................................ 21 3.3.3 Regulatory Overview............................................................................................ 23 3.3.4 VoIP regulations................................................................................................... 24 3.3.5 Recent Developments........................................................................................... 24 3.4 Turkey.............................................................................................................................. 25 3.4.1 Country Overview ................................................................................................ 25 3.4.2 Telecommunications Market ................................................................................ 26 3.4.3 Regulatory Overview............................................................................................ 27 3.4.4 VoIP Regulations.................................................................................................. 28 3.4.5 Recent Developments........................................................................................... 29 3.5 Country comparison......................................................................................................... 29 4 Conclusion ................................................................................................................................. 32 References ............................................................................................................................................ 35 Endnotes............................................................................................................................................... 41 1 TABLES Table 3.1: Country Comparison ........................................................................................................... 29 FIGURES Figure 2.1: Operating Mode of VoIP .................................................................................................... 3 Figure 2.2: Three Types of VoIP Call Flows ....................................................................................... 4 Figure 3.1: The Romanian ICT Market ................................................................................................ 11 Figure 3.2: The Bulgarian ICT Market ................................................................................................. 16 Figure 3.3: The Croatian ICT Market ................................................................................................... 20 Figure 3.4: The Turkish ICT Market .................................................................................................... 24 ACCRONYMS ADSL Asymmetric Digital Subscriber Line ANRC National Regulatory Authority for Communications (Romania) ARPU Average revenue per user BTC Bulgarian Telecommunications Company BWA Broadband Wireless Access CaTV Cable Television CRC Communication Regulation Commission (Bulgaria) CTA Croatian Telecommunications Agency ERG European Regulators Group ETSI European Telecommunications Standards Institute EU European Union FDI Foreign Direct Investment IETF Internet Engineering Task Force IP Internet Protocol ISP Internet Service Provider ITSP Internet Telephony Service Provider ITU International Telecommunication Union LAN Local Area Network MCIT Ministry of Communications and Information Technology (Romania) NATO North Atlantic Treaty Organisation NGN Next Generation Network NRA National Regulation Authority PSTN Public Switched Telephone Network QoS Quality of Service RIO Reference Interconnection Offer SEECs South and Eastern European Countries SMP Significant market power TA Telecommunications Authority (Turkey) USO Universal Service Obligation VoIP Voice over Internet Protocol WAN Wide Area Network WTO World Trade Organisation 2 1 INTRODUCTION “There is no doubt about the speed at which the VoIP asteroid is hurtling toward planet telecom. The question is how deep will be the impact of VoIP when it strikes home.” Total Telecom Magazine, 1 March 2006 A wide range of services, including voice, video, and data, can be transmitted via IP-enabled networks. These digital networks are cheaper to build and operate than traditional circuit-switched networks, have lower entry costs and are better suited to provide a range of improved, innovative, and economic service offerings to users of all kinds. One of the services that triggered the overall transition to IP environment is Voice over Internet Protocol (VoIP). The number of VoIP subscribers worldwide is estimated to reach about 125 million in 2008, compared to 25 million in 2005, according to iDATE, while at the same time there is slowing growth in mainlines worldwide. Similar overall market trends are observed mainly in developed western economies, such as the EU 15. But what do these trends mean for economies with a
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