IP will not kill termination fees any time soon

Telephony termination fees will have no place in an all-IP Europe is one of the key findings in a report commissioned by the European Commission from the  Wissenschaftliches Institut für Kommunikationsdienste (WIK) suggests that.

The report, The Future of IP Interconnection, embraces the Internet model for all communications and even argue that termination fees are inhibiting the progress of telecoms. The row about developing economies exploiting disproportionately high termination charges as a major source of hard currency has been rumbling on for many years.

The US in particular has striven to curb the high charges because of the imbalance of international calls originating, rather than terminating, in the US. In many instances, the income generated by termination charges is not invested in much needed telecoms infrastructure.

Another point against termination fees cited by the report is that they don't exist in the Internet service model, implying this proves they aren't needed anywhere. However, demonstrably VoIP is by no means a comparable service to PSTN telephony - Skype's business model is, very simply, that consumers pay little or nothing for calls, but accept that quality is not guaranteed. The fact that Skype is struggling suggests that people are prepared to pay for quality.

Other issues remain about VoIP, from reliability to emergency calls - if the network goes down, you can't dial 999 or 112 on a VoIP phone. Also the emergency services cannot tell anything about a caller's location from their IP address. The European Commission and the UK regulator Ofcom are exploring ways of obliging VoIP service providers to enable emergency calls, but it is problematic.

One suggestions is that VoIP providers should supply databases that attach a physical address to an IP address, but consumers aren't likely to remember to tell their service provider when they go on holiday, say, and the VoIP industry doesn't want the expense and annoyance of such obligations and is preparing to resist.

On 14th December last year, Google, Intel, Microsoft, Skype and others set up a lobbying group, VON Coalition Europe. It stated that it will work to educate, inform and promote responsible government policies that enable innovation and the many benefits that Internet voice innovations can deliver - and lobby against being subject to the regulation that binds telephony providers.

The report also seems to overlook the fact that the Internet is not free of charge, but rather much of Europe's Internet access is provided by American service providers. which charge handsomely for it.

The report should cause a shudder to ripple through the Europe telecoms establishment, but these and other issues will make sure that termination fees will be with us for many years to come.