India is perhaps the only big telecommunications market in the world that does not have any policy on IP telephony at all. This lack of policy has resulted in confusion with regard to what is allowed and what is not in the country when it comes to IP telephony applications. Moreover, it appears from various pronouncements that the government itself is not clear as to what exactly IP telephony means. This inference can be drawn from the fact that the government’s periodic statements talk only about Internet telephony. A case in point is a recent government document that calls for lifting of the ban on Internet telephony.

As such, the governmental brief confines itself to a blanket ban on Internet telephony. This essentially means that no voice call that bypasses the PSTN networks and uses the public Internet is allowed. As such all PC to PC, PC to phone and phone to phone calls over the Internet are deemed illegal and liable for punishment. Besides, ISPs or for that matter any other service provider who have not been licensed to offer voice services are not allowed to offer voice services and compete with basic service providers outside a closed user group. Period. The ban stops here.

There is no ban on IP telephony per se. There is no ban on a licensed basic or long distance service provider deploying an IP backbone and carrying voice traffic over a network that has IP capabilities. The service provider is free to offer any type of application that is possible on a VoIP network, that is, a managed Internet network. A service provider is also allowed to add IP capabilities to its existing circuit switched networks. This is already being done by BSNL and Bharti Telenet Limited in Madhya Pradesh.

The government does not also prohibit closed user group Internet telephony or Voice over IP. This means that if an organization wants to set up an IP-based intra-organization voice network, it is free to do so. It can freely use the services of ISPs or any other service provider for this. Contact centers/call centers are also permitted incoming voice calls, with special approval from the regulator.

In a nutshell, anybody with an intention to set up an IP telephony operation in India would have to seek a license for a basic telephony service. However, as of today, they can only be allowed to offer phone to phone voice besides other value-added services over their managed network. They cannot offer PC to PC or PC to Phone voice services except to close user groups.

However, getting a license in India based on a pure IP-centric business model will not be an easy task. Prospective entrants could face attitudinal and perceptional hurdles from the regulatory establishment, major sections of which remain largely insensitive to the emergence of IP telephony as a more cost-effective and efficient alternative to circuit-switched telephony. However, this roadblock could go if the government has its way with the proposed Communications Convergence Bill that provides for a composite license for all or a combination of services. If the government’s current honeymoon with liberalization and its recent pronouncements are to be given credence, then there are good chances that India would see complete deregulation in the IP telephony space.

The government could be just one of the problems that a pure IP voice and data player could face in India. Bandwidth scarcity could be their biggest obstacle. India still needs more bandwidth capacity to support trouble-free delivery of voice over packet networks.

IP telephony service providers will also have to address issues related to and arising out of IP-PSTN inter-connectivity. This is important in context of the fact that most telephones in India are likely to remain connected to circuit-switched telephone networks for a long time to come.