The development of private voice over the Internet Protocol (VoIP) networks in Peru has been spearheaded by large private companies, such as banking institutions, industries or firms involved in natural resource extraction with multiple points of presence in the country. Mining and oil companies are good examples of this. The construction of private communication networks has been taking place mainly to reduce costs, the only other alternative being to use public networks. But these were still under a monopoly until 1998.
Today, many companies such as Banco Continental, Banco Latino and Banco Inter-bank use voice over frame relay internally to supply voice and data services between their regional offices. The migration to an IP platform is said to be fairly recent, largely because, at the time voice over frame relay was chosen, IP technology had not yet gained the full confidence of these companies.
IP telephony in Peru is in its infancy. Major providers exist with capacity to supply this service: Telefónica del Perú (TdP), Red Científica Peruana (RCP), BellSouth Perú, SA, First-Com and Net2Phone, among others.
TdP is the dominant telecommunication operator and the top company in terms of revenue. Its licensing agreements gave it exclusive rights over basic services for a five-year period (1994-1999). However, an agree-ment between the State and TdP made it possible to end the exclusivity period one year ahead of the planned expiry date. Hence the telecommunication sector became liberalized in 1998, with regard to the granting of licences for offering long-distance and fixed-telephone services.
TdP has been implementing an IP network in the country since 1996/97. As of January 2000, a total of 28 companies had been licensed to offer long-distance services, while in the case of fixed-local telephony, two licences had been granted in addition to the rights held by TdP.
| * Peru: IP Telephony and the Internet forms part of a series of telecommunication case studies produced under the New Initiatives Programme of the General Secretariat of the International Telecommunication Union. This case study was prepared by Arturo Briceno (abriceno@spri.com) of Strategic Policy Research (www.spri.com) in collaboration with Juan Carlos Bisso (jbisso@osiptel.gob.pe) and Agustina Guerrero (agustina@baedigital.com.ar). It was directed by Ben A. Petrazzini, Policy Adviser, ITU Strategies and Policy Unit (Ben.Petrazzini@itu.int). Full texts of all ITU case studies on IP telephony can be found at www.itu.int/iptel. |
Net2Phone is one of the world leaders in Internet telephony, its market being retail end users. Net2Phone Perú has been operating in the country since September 1999. Gateways have been installed in Peru for connections with the public telephone network, and this will make it possible to originate and terminate telephone calls via the Internet.
RCP plans to continue with the development of public Internet centres by installing an additional 400 public centres in the country. Likewise, it will start a new project for the implementation of a network of several "mono-centres" for access to integrated Internet and VoIP services. A "mono-centre" is a multimedia centre open to drop-in users, giving access to the full range of media: television, radio, Internet and telephony. The project also envisages the development of a major information network supporting urban management in commercial circles, sharing and backing up State administrative management. Covering the 23 departments of the country, the project will be implemented in the next three years and will require investment of USD 12 million.
FirstCom is a company with North American and Latin American (mainly Chilean) capital and began commercial operations in Peru in 1999. It also has operations in other Latin American countries (Chile, Brazil, Colombia). In early 2000, it concluded a strategic merger with AT&T, creating AT&T Latin America. The company has invested some USD 70 million to date in the fibre-optic network and in network support equipment.
BellSouth Perú, SA is the second mobile service operator in the country after TdP. In 1999, it obtained licences for long-distance and local services and now offers dedicated services, the public telephone service and cellular telephony. BellSouth acquired most of the shares of the cable company Tele2000, but withdrew from the latter's cable television service marketed as TeleCable while retaining the coaxial cable network covering the whole of Lima. Through this extended network it should be able to provide Internet access, telephony, data transmission and other services.
IP telephony offers consumers
advanced services, integrating voice and data
Photo: Avaya Inc. (ITU 010015)
The first dispute over the provision of VoIP services in Peru arose in 1999 from legal action brought by TdP against RCP. In March 1999, TdP started proceedings against RCP for alleged "acts of unfair competition". According to TdP, RCP was supplying a long-distance national and international service, for which it did not hold a licence, using so-called APLIO equipment — a small computer designed specifically for voice transmissions via the Internet (see box).
While both the calling and called parties must have a telephone line and active Internet connection, a computer is not necessary. Rather, APLIO allows the caller to use an ordinary telephone. How does this work? The telephone is plugged into the APLIO device, which itself is plugged into a standard telephone jack. In this way, any telephone subscriber who also has Internet access can make long-distance and international calls via IP telephony. At the time of the complaint, RCP was only authorized to provide value-added services, Internet access being one of them. It had no legal authorization to offer long-distance or international telephone service.
TdP argued that offering the national and international long-distance service through the APLIO equipment without having a licence allowed RCP to obtain an illegal competitive edge over companies which were legally authorized to provide that service.
Two things were certain. Firstly, a licence was required to offer the long-distance service. Secondly, at the time of taking legal action, RCP only had a licence to supply value-added services, including the Internet service.
Several months after the complaint was lodged, the Organismo Supervisor de Inversión Privada en Telecomu-nicaciones (OSIPTEL) issued a ruling stating that no licence was required for marketing the APLIO device, and that RCP, like other bodies marketing the same equipment, was not contravening any regulations or the terms of any existing licences. In addition, marketing the equipment could not be deemed to be equivalent to providing the long-distance telephone service. TdP appealed against this ruling. However, at around the same time as the appeal, RCP received its licence for supplying long-distance services. Before the second instance issued its ruling (upholding the first instance ruling or accepting TdP's accusation), TdP dropped the proceedings.
At that time, the subject of IP telephony was the focus of heated discussions in various forms outside telecommunication circles. A pronouncement from a State body, in this case OSIPTEL, was necessary since even limited awareness of this new service was giving rise to all sorts of comments. Some opinions emphasized the tariff advantages for the user, who would now have a much cheaper alternative to traditional long-distance telephony. Others discussed the subject of quality in voice transmission and the possibility of putting switched telephony in its place, while others ventured to discuss the legality or otherwise of offering such a service in Peru. The ruling issued by OSIPTEL in the APLIO case gave an early hint of the direction which State policy might follow on the question of IP telephony in the future.
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APLIO: an innovation in equipment APLIO is a new type of equipment with software and a modem for voice communication via the Internet. It contains a digital signal processor which performs, among other things, voice compression and decompression according to ITU-T Recommendation G.723.1 for 5.3 and 6.3 kbit/s. APLIO began to be sold in Peru for USD 295 each, with discounts available for bulk purchases. As in the case of voice communication using a PC, the user must have a telephone line and an Internet access account, which can be supplied by any ISP. APLIO makes the connection, makes the call to the ISP and sends the IP addresses of the parts which will be communicated to the so-called "global management centre" to establish the Internet link. |
Tariffs for long-distance international calls between Peru and the United States are based on two methods: from PC-to-telephone and from phone-to-phone. In the first case, the tariff per minute for a call from Peru to the United States is USD 0.15 via Net2Phone. The same call via TdP costs USD 0.66. It should be stressed that the settlement rate (which is the equivalent of half the international accounting rate) that TdP has to pay to the United States carriers is currently USD 0.31 per minute. This indicates that the settlement rate that Net2Phone Perú pays to Net2Phone United States must be much less than the rate paid by TdP, probably somewhat less than the peak tariff. A call from the United States to Lima costs USD 0.21 per minute and USD 0.30, if it is to a city outside Lima.
An interesting aspect to note is that with the Net2Phone tariffs, it is cheaper to call the United States from Peru than vice versa, unlike with traditional international telephony tariffs. Traditionally, tariffs from the United States to Peru have always been lower than vice versa.
Net2Phone's phone-to-phone method is only available for calls from the United States to Peru and tariffs are between 50 and 60 per cent higher than those for the computer-to-phone method.
Peruvian legislation on telecommunications does not cover the Internet service specifically. At the time of the study, the Ministry of Transport and Communications regarded this ser-vice as a value-added service. This involves the addition of some feature or facility to the basic service (carrier or final services). The apparent justification for classifying the Internet under this heading is that it uses carrier and final ser-vices (telephone lines and circuits), adding an extra feature (IP connectivity).
As explicitly stated in the Telecommunication Act, all value-added services are covered by a regime of free competition, which means that OSIPTEL cannot, in principle, regulate tariffs for such services.
The specific name used by many of the Internet service providers is "packet-switched data service". A peculiarity of the legislation is that it excludes real-time voice traffic from being classified as a value-added service. Apparently, at the time of this classification, it was already known that value-added companies might be able to carry voice traffic, but to do so in real time, it would be necessary to hold a licence. As a result, discussions on the subject of VoIP have focused on whether VoIP transmission is performed in real time or not. But the legislation does not offer a clear definition of what "real time" means, giving rise to a variety of opinions on the matter.
The ruling on the APLIO dispute was the first and, at the time of the study, the only formal pronouncement from a Peruvian State body on the subject of voice over the Internet. Even though it was limited purely to resolving whether the marketing of APLIO constituted offering long-distance services, it clarified certain doubts on that subject. The fact that it could not be known a priori which would be the competent body to resolve the dispute (the Ministry or OSIPTEL) added to the complexity of the matter. Three different positions emerged from this debate. One was that the fact that Peruvian legislation made no mention of VoIP implied that there was no regulation on the matter. Therefore, these services could be offered freely. The second was that the VoIP service only implied the transmission of data, not voice. As such, it could not be considered to be telephony and so to offer that service, it sufficed to have an authorization for providing value-added services. The third was that the VoIP service was regarded as the equivalent of telephony and therefore regulations covering the field already existed. In this last case, it would be necessary to have a State licence to offer this service. The global trend is to regulate services consistently, irrespective of the technology used to provide them. If this is applied to the case of Peru, it would be necessary to determine whether the VoIP service constitutes a telephone service, a value-added service or another, different service, in order to determine the appropriate extent of regulation.
The development of IP telephony in Peru is likely to continue being closely tied to the market power of the leading telecommunication operator in the country, TdP. Hence, it is the regulatory aspects (in particular anti-trust) more than technological or market ones that will continue to dictate the development agenda of IP telephony in the country. But the situation in Peru is not unique: a number of countries the world over are moving forward slowly and cautiously, trying to avoid any major mistakes in the handling of a technology which raises high hopes but also presents great challenges.
This article appeared in ITU News in March 2001. The full case study is available here.