What is Internet telephony

The Internet is a global network of close to 100 million people. It provides a vast range of telecommunication services, including electronic mail, the World Wide Web, and more recently, telephony. With appropriate software that can be downloaded free, users who are logged onto the Internet can talk to each other anywhere in the world at no additional cost. Recently, some companies have started services that allow such users to even talk to people who do not have an Internet connection, but only a regular phone, at a cost far below regular long-distance charges. How is this possible?

Telecommunications multinationals (telcos), which so far have often monopolized services in their own countries, have been charging their customers very high rates for international telephony. Internet telephony is a lot cheaper, because it does not incur many costs that the telcos do. These include marketing, metering, billing and collecting from their customers, which add a huge overhead. Also, they use expensive switches, which have been programmed independently at great cost by each supplier. As against this, the Internet runs on software that is largely free - many universities, research institutions, companies and individuals have incurred the costs of developing it on their own. Until recently, most telcos have enjoyed the benefits of monopoly pricing. In India, they still do.

The Situation with Internet telephony in India

In a note dated 5 Jan 1998, VSNL asked its Internet customers "not to use the Internet connection for Telephony or Fax applications," and that those who violated this "would be permanently debarred from using Internet services" (see Annexure 1). Not content with this, VSNL has also been preventing access through the Internet to some companies that write Internet telephony software. As a consequence, VSNL's customers are being prevented from sending electronic mail to these companies, and from accessing their Web sites for information. The title pages of 3 such blocked Web sites are reproduced in Annexure 2, to show that the contents in no way violate Indian law.

A complaint to the VSNL Help Desk, elicited the following one-line response: "sir, this site is not accessible from vsnl." When asked why, and under which power and authority access to the Vocaltec site had been blocked, VSNL's manager in charge of Internet services, Neeraj Sonker, also provided a one-line reply, "As part of contract terms and conditions, we don't encourage voice over ip." IP stands for Internet Protocol. In other words, Mr. Sonker seems to suggest that VSNL have a problem with voice in any form carried over the Internet. No response has been received from VSNL to the following request, which seeks to determine the scope of VSNL's ban:

"With respect to the ban on Internet telephony cited below, could you please clarify exactly what is banned:

1) Is it permissible to access a web page that automatically plays an audio file on my computer?

2) Is it permissible to attach a voice message to an e-mail message and send it via VSNL?

3) Is it permissible to access voice mail from a US voice mail box through the Internet?

4) Since you mention fax as well in your ban, is it permissible to attach the scanned image of a page, and send that as an attachment to an e-mail message?

5) The same scanned image of a page may also have been put up on a web page. Is it illegal to access such a page?"

In an article in the May 11 issue of Business Week, "Sorry, Your Web Site has been disconnected," Mr. B.K. Syngal is quoted as having called those who complain of blocked Web sites "unscrupulous elements" (Annexure 3).

The Potential of Internet telephony in the Indian context

Internet telephony is the cheapest and fastest way to provide affordable basic telecom services, which is why this technology enjoys phenomenal growth rates world-wide. According to InfoWorld Electric dated 29 Aug 97, analysts have predicted that shortly after the turn of the century, 50% of the world's communications will be carried over the Internet. Currently, a significant proportion of electronic communications consists of voice and fax, which are affected by VSNL's ban.

Voice applications are becoming increasingly important on the Internet. This is now making it possible, for instance, for people without access to a personal computer to send and receive voice mail, where sender and recipient only need to have access to a telephone. This has tremendous implications for India, where currently the Internet is effectively usable only by the very small subset of people who are rich enough to own a computer, and are fluent in English. These new developments can open up some parts of the Internet to the large majority of Indians who are poor, illiterate, or don't know English. Computers easily convert text to spoken speech. Using such technologies, even people who cannot read could benefit to a limited extent from the wealth of information available on the Internet.

Clearly, there is immense potential for software development in this new area, which bridges the large networks of conventional telephony and the Internet. India has a thriving software industry, which could take advantage of this. The VSNL ban is preventing this industry from keeping up with international developments, since it effectively prevents such software development from taking place in India.

Indian companies engaged in exports suffer a serious handicap on account of high long-distance call rates. For instance, it is more than twice as expensive to call the US from India, than vice versa. Cheaper international telephony through the Internet would make it much easier for Indian companies to become internationally competitive.

Lastly, Internet telephony is reducing the importance of multinational telcos by eating into their oligopolistic profits. India has always been somewhat suspicious of multinationals, so it is curious that India should ban a technology that reduces their control, and promises a far cheaper alternative. Even small companies can offer Internet telephony services to their local communities, so encouraging this technology would be consistent with the Indian policy of encouraging the small-scale sector.


Date: Mon, 5 Jan 1998 13:08:16 +0500 (GMT+0500)


Subject: Unauthorised use of Internet Telephony

Apparently-To: amehta

Dear Internet Customer,

As you are aware, the usage of Telephony on the Internet is not permitted as per the terms and conditions of your Internet subscription and the Indian rules and regulations.

It has come to our notice that some agents are actively selling Internet Telephony by offering low tariffs. We would like to inform our customers that this type of usage of Internet is illegal and violative of the terms and conditions of the Internet subscription.

You are advised not to use the Internet connection for Telephony or Fax applications. VSNL would be monitoring the use of Internet and those subscribers who are found to be violating the conditons of subscription, would be permanantly debarred from using Internet services.

Internet customer are also advised not to send unsolicited mail to other customers. Many of the Internet customers have requested that VSNL block unsolicited mail to their mail boxes. We would therefore be constrained to block the account of those customers which continue to violate the above conditions of Internet subscription by sending unsolicited mail messages.



Vocaltec (

WebPhone (

Net2Phone (


Business Week Article on VSNL Ban