Convergence in technology and regulation-the IP telephony case

The article examines access charge policy for IP (Internet Protocol) telephony. This is achieved by calculating and comparing the “true” costs of carrying voice over IP (VoIP) and public switched telephone network (PSTN) infrastructures with the economic principle of compensation for resource consumption. The authors see that VoIP achieves substantial cost savings by using trunk line bandwidth more efficiently. However, such savings are diluted by other costs such as local network cost. If IP operators offer phone-to-phone service like traditional telcos, their cost savings will be further overwhelmed by high business support costs. For PC-to-phone service, however, IP operators can leverage their cost advantage by adopting new e-business models and only paying parts of the operation costs. Policy analysis shows that applying access charge to VoIP at present is not helpful, and a hands-off policy should be retained before a “fair” general principle can replace the existing media specific regulation system