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May 16, 2005
Oy, Canada
Posted by Dana Blankenhorn
You probably don't know this but Canada is in a world of hurt right now. And it's about to get worse.
The hurt is of self-inflicted. The governing Liberal Party is caught up in scandal , and the opposition is very regional - a Bush-like party based in the middle provinces, seperatists in Quebec and socialists in British Columbia.
But the big problem isn't political. It's regulatory.
As Michael Geist writes, Canada has launched a ridiculous, and counter-productive effort to rein-in VOIP . They're going to regulate operators like Vonage just like phone companies, but they're not going to regulate pure peer-to-peer systems like Skype.
All that means is Skype takes the market. Vonage gets dumped right alongside Bell Canada. And all hope of future regulation is lost.
Regulatory reform is needed worldwide, of course. Everyone needs to realize that phone networks are obsolete, that we're all Internet now, and that everything -- even a voice call -- is nothing but an application on a pipe. What we should be doing is guaranteeing competition for Internet service, and eliminating roadblocks for technology's evolution.
Canada will figure this out, but now, not without considerable pain. They've made a decision that smells a lot like the developing world's efforts to stop the Internet in the 1990s, and they will pay the same developmental price.
Maybe the Bushies will reverse it.
Comments (4)
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Dana Blankenhorn has been a business journalist for over 25 years and has covered the online world professionally since 1985. He founded the "Interactive Age Daily" for CMP Media, and has written for the Chicago Tribune, Advertising Age, and dozens of other publications over the years.
1. Brian Thomas on May 16, 2005 01:58 PM writes...
Not sure what you're trying to say, Dana. At one point it seems you think it's a bad thing; at another it's a good thing.
My opinion: doesn't matter whether you think it's good or bad; it's happening, and nothing's going to stop it. I have long felt that the IP-to-PSTN bridge represented by Vonage et al - a stopgap measure from the start - will only suffer a faster downfall with all of the wrangling over government control.
It's a good thing that they have admitted that they won't regulate Skype and its ilk, since they can't (if they could, we wouldn't have spam, would we?).
Permalink to Comment2. Ted G Sopher Jr on May 16, 2005 06:45 PM writes...
Folks,
What Canada is doing all other countries will follow suit-whether or not Canada seems to be doing a bad job. The fact is revenue lost (taxes) from PSTN users defecting to VOIP will have to be recouped--like it or not. Thus, VOIP vendors will have to pay the price and at minimum this will scuttle some retail VOIP offerings.
The larger question is, is VOIP a done deal to ultimately replace our current telephony systems? Perhaps in targeted markets VOIP will survive, however, it by no means is guaranteed to be ubiquitously deployed. Those who believe so simply don't understand all the facts.
All the best,
Ted G. Sopher Jr
Permalink to Comment3. Brian Thomas on May 16, 2005 10:07 PM writes...
I hear what you're saying, Ted, but I wonder why. Why is it a foregone conclusion that tax revenues "have to" be replaced? Wasn't there, in some dim, distant past, the notion that taxes were levied on things for which the government was expected to provide some irreplaceable service? That the size of those levies were in some way proportional to the government's cost to provide those services?
Also, which facts that we don't understand (since I am in the set you delineate) is going to force people to use outmoded services that cost more and don't work as well?
I agree, of course, that governments will see it as you do, but all they will be able to do is to raise taxes on the PSTN, or on the clunky hybrids that people today call VoIP but are mostly only bridges to the PSTN. As I have said - and your note backs me up - the more they do, the less value it has, and the less value the PSTN has as well. Pure cost is the driver here; however it falls out, nothing controverts the bottom line here. Circuit switching is absolutely an obsolete technology; it costs tens if not hundreds of times more than packet switching to provision and operate, and once the Internet fabric is laid, there will be no money to keep it operating.
Again, pure VoIP is not a service; it's a protocol, and if you think it can be regulated or taxed, please tell us how, because you'll be universally worshipped as the person who finally killed spam.
Permalink to Comment4. Larry Borsato on May 16, 2005 11:41 PM writes...
Actually the CRTC said that they were going to treat VoIP meaning that the companies they regulate - ILECs Bell and Telus - cannot sell VoIP at below cost to crush competition. The CRTC does not regulate Vonage, or the ISP services of cable companies like Rogers or Shaw. This is actually a good thing for CLECs and competition.
And don't worry about taxes, Canada will certainly find a way to make that up, given that the average Canadian pays about half their income in various taxes.
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