April 25, 2005 3:19 PM PDT

Mexico telephone operator under VoIP fire

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Broadband customers of Mexico's dominant telephone operator say the quality of their voice over Internet Protocol calls has tanked, with some alleging that Telmex is engaging in unfair business practices to block VoIP competition.

VoIP, freely available software that lets broadband connections become inexpensive home phone lines, is seen as a major threat to entrenched phone operators such as Telmex because VoIP users no longer need a local phone service; they can use their VoIP service with any broadband connection anywhere in the world.

International operators and habitues of the less urbane world of Web forums are venting about the government-owned operator's alleged practices, which they say include blocking Web sites that VoIP operators use to register new customers and perform a bulk of their customer service.

"We're definitely interested in this situation," said a White House trade official, who asked not to be named. "Telmex has had a long pattern of engaging in anti-competitive behavior."

In a March report, the White House's Office of the U.S. Trade Representative wrote: "Uncertainty regarding the treatment of voice over Internet Protocol services in Mexico is cause for concern. Irrespective of the merits of Telmex's ambitions, restrictions on the ability of any entity, foreign or domestic, to supply VoIP appears inappropriate."

Telmex did not respond to a phone call and an e-mail seeking comment on the situation.

Caller complaints escalate
The Telmex VoIP situation has grown since mid-March, when the company's broadband customers say the quality of their third-party voice over Internet Protocol calls began eroding to what are now unbearable levels, according to e-mail interviews with VoIP customers who routinely call in and out of Mexico.

VoIP operators are running into an alleged problem typical in countries where there's one phone company owned by the government--such as Qatar, Costa Rica and Panama--or privately owned and with enormous sway over regulators. In Mexico, the former government-owned Telmex remains dominant because the Federal Telecommunications Commission lets complaints from foreign competitors linger without resolution for years; and its recommended enforcement is rarely meted by the nation's Secretariat of Communications and Transportation, according to the USTR.

Skype spokeswoman Kelly Larabee said the company has confirmed its Web site is being blocked in areas served by Telmex, but said the cause was unclear.

"We encourage all Telmex broadband subscribers to contact their ISP and demand the open access they pay for," Larabee said. She stressed that Skype does not know whether the Web site access issue is deliberate, or a temporary glitch Telmex is unaware of.

This may be happening because Telmex allegedly identifies VoIP users based on the kind of traffic they send, then chokes their bandwidth to disrupt the calls, said Brooke Schulz, a spokeswoman for U.S. Net phone provider Vonage. Telmex is also allegedly blocking access to Net phone Web sites, including that of Skype, the world's most popular VoIP service, Skype says it has confirmed. By blocking the site, Telmex could prevent potential Skype users from signing up, and existing Skype users wouldn't be able to replenish minutes on their prepaid calling cards or order other premium services.

"We're working on exercising our options with the U.S. trade representative," Schulz said. "However, because we're not a Mexican company, we have little leverage with the Mexican regulator. But we're doing everything we can."

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VoIP, Mexico, Skype, operator, VoIP service

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