FC: Cisco analysis of Panama's Internet telephony regulations

From: Declan McCullagh (declanat_private)
Date: Wed Nov 06 2002 - 22:42:26 PST

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    Previous Politech messages:
    "Panama requires ISPs to block Internet 
    "Reply to Panama requires ISPs to block Internet 
    See also a note from Steve Langasek below.
    From: "Christian Renaud" <crenaudat_private>
    To: <declanat_private>
    Subject: Detail on Panama Regulatory Environment (RE: Reply to Panama 
    requires ISPs to block Internet telephony)
    Date: Wed, 6 Nov 2002 15:00:26 -0800
    Some time ago, when we (Cisco) were first entering the VoIP business, we had
    a consultant provide us with an analysis of international regulatory
    environments for using VoIP for 'Toll-Bypass' applications (generally, PBX
    to PBX over Private IP networks).  The data below for Panama is particularly
    relevant in this case, albeit dated ('98).  I am certain one of your readers
    has a more current understanding, however the first paragraph is still
    Regards, C
    Overview of Regulatory Framework
    Currently, the Basic Telephone Service Carrier -Cable & Wireless (C&W)- has
    an exclusive concession for the exploitation of the following services until
    January 1, 2003:
    Service No.101 - Local basic telecommunications service.
    Service No.102 - National basic telecommunications service.
    Service No.103 - International basic telecommunications service.
    Service No.104 - Service of public and semi-public terminals.
    Service No.105 - Lease of dedicated voice circuits service.
    Local, national and international voice transmission services may only be
    rendered by C&W until the year 2003, regardless of whether the voice
    transmission takes place via the Internet, satellite link or leased lines.
    The Panamanian telecommunications licensing system is based on services and
    not on infrastructure.   Although perhaps not relevant for purposes of this
    memorandum, you should know that the re-sale of telecommunications services
    is allowed under Panamanian law, but requires a re-sale license and a
    re-sale agreement with the service provider.
    Based on the above, we believe that the transmission of voice through the
    internet would directly violate C&W's exclusive rights.  This is the stated
    criteria of the Regulating Entity and C&W, although they realize that for
    obvious reasons it is difficult to keep track of the violators.
    1.1 	As indicated above, in general, the local, national and international
    transmission of voice is currently a monopoly held by C&W and thus, the
    provision of voice transmission services by an SP through the internet would
    not be allowed.Very few exceptions are applicable, such as the Digital
    Corporate International Service (Service 206), which allows for
    international voice transmission provided that the corporate facility is not
    connected in any of the two ends with a local PSTN.
    When C&W's monopoly expires in the year 2003 it will be possible for other
    companies to render voice transmission services generally, in competition.
    Such companies will have to obtain a Type B concession from the Regulating
    Entity to that effect.
    1.2 	Although not specifically regulated, it can be argued that the
    transmission of voice among the users of a corporate intranet which is not
    connected to a PSTN nor to the internet may be permitted and would not
    require a concession, since it would be similar to the transmission of voice
    within departments of a corporation by way of extension lines (which do not
    require the use of the PSTN).  This scenario, however, would require that
    the intranet is strictly used to communicate the members of the corporation
    (employees, management).  We have confirmed this criteria on a no-name basis
    with Engineer Troitino of the Regulating Entity.  However, given the lack of
    clarity in the law we recommend that a formal request for confirmation that
    this type of system is viable be filed with the Regulating Entity when the
    client decides to sell the equipment or render services in Panama.  This is
    particularly important given the fact that the Regulating Entity is in the
    process of formally regulating the use of certain internet-related
    telecommunications equipment, and it is difficult to ascertain whether in
    the new regulations the sale or use of voice transmission equipment would be
    restricted or not.
    If the intranet is connected to a PSTN or to the internet and the provision
    of voice transmission services would include termination of traffic at any
    network termination point of the PSTN, the service would not be permitted in
    view of C&W's monopoly.
    1.3.	The provision of voice transmission services would not be permitted in
    view of C&W?s monopoly.
    1.4.	As indicated above, in the year 2003, when the monopoly held by C&W
    expires, third parties may apply for Type B concessions to render local,
    national and international telecommunications services.  Currently, the
    applications for Type B concessions must contain at least the following:
    .	Identification of the petitioner and a description of its organization,
    which shall include the identity of shareholders holding more than 10% of
    the shares of the corporation.
    .	List of all other telecommunications services rendered by the petitioner
    or by the shareholders owning more than 10% of the shares of the
    .	Description of the service which is being applied for and the means by
    which the petitioner proposes to render it.
    .	Geographical areas requested for the concession.
    .	Sworn statement as to the imposition of fines for anti-competitive acts
    carried out in the last two years by the petitioner or the shareholders
    owning more than 10% of the shares of the petitioner.
    .	Sworn statement by petitioner as to compliance with all legal and
    technical requirements needed to become a Type B concessionaire.
    Upon review of the documentation submitted with the petition, provided that
    all legal requirements are met, a type B concession should be granted in 30
    business days (except those which require the use of the radioelectric
    spectrum).   When the concession to be granted refers to a service which
    requires the use of frequencies, the RE shall grant the use of such
    frequencies together with the concession.  The authorization for the use of
    frequencies is subject to a different procedure before the RE.
    In addition to the concessions referred above, telecommunications carriers
    or service providers need to obtain a type A commercial (business) license
    before the Ministry of Commerce and Industry.
    1.5.	The by-passing of long-distance fees would constitute a violation of
    C&W's exclusivity rights and may result in the imposition of fines by the
    Regulating Entity which would range between US$1,000.00 and US$1,000,000.00,
    without prejudice to any civil claims that may be brought by C&W against the
    violator.  Also, depending on the case, the Regulating Entity could impose
    daily fines of up to US$10,000.00.
    2.1. 	Currently there are no provisions charging the manufacturer with
    liability arising out of the provision of services by third parties with the
    manufactured equipment.   However, we have learned informally that the
    Regulating Entity is in the process of approving new regulations referring
    particularly to the use of internet in the rendering of  telecommunications
    services.   The Regulating Entity strongly opposes to the sale of equipment
    which would allow for the transmission of voice through the internet, and
    most likely the new regulations will show this position.
    Christian Renaud                            v/ 408-527-1199
    Sr. Manager, Business Development
    New Markets and Technologies
    Cisco Systems                             crenaudat_private
    "Irrationality is the square root of all evil."- Hofstadter
    Date: Wed, 6 Nov 2002 16:19:58 -0600
    From: Steve Langasek <vorlonat_private>
    To: Declan McCullagh <declanat_private>
    Subject: Re: FC: Panama requires ISPs to block Internet telephony
    Hi Declan,
    Please let your readers know that the article posted regarding Panama's
    blocking of UDP ports contains factual inaccuracies.  The article claims:
     > Among the services that employ some of those ports are "nlockmgr," the NFS
     > lock manager responsible for rpc.statd and rpc.lockd, which in turn are
     > responsible for crash recovery functions for locked files and for processing
     > file locking requests, respectively; telnet; and numerous VoIP services.
    The telnet protocol does not require *any* udp ports at all to function;
    if there are telnet variants that use fixed udp ports, they strike me as
    incredibly broken in their own right.  The telnet protocol has used *tcp*
    port 23 for the term of its existence.
    Also, while it's true that some NFS locking daemons use the
    statically-assigned 1024/udp port, to my knowledge this is only true of
    older, partial NFS implementations: the preferred handling of all NFS
    services uses the RPC "portmapper" service to dynamically map other NFS
    services onto whatever ports happen to be available.  I don't know of any
    locking daemons that use 1024/udp which work well enough to continue
    using anyway.
    The new Panamanian law is a tragedy for on-line freedom, and a gross
    misapplication of government power for private gain; it's an icon of all
    that is wrong with global corporatism today.  There's no need to resort
    to half-truths to bolster the argument against this law.  Indeed, the
    reality is that the number of protocols affected here is far GREATER than
    this article would lead us to believe:  because all of the ports blocked
    by the law are in the range of unassigned "high ports" reserved for
    dynamic allocation, *all udp protocols* are subject to interruption of
    service by these holes in the Internet that Panama is attempting to
    legislate.  This includes not just VoIP applications, but also other
    forms of streaming audio and streaming video used for broadcasting of
    content; infrastructure protocols such as ntp (clock synchronization) and
    Kerberos (enterprise security); and even DNS, without which no websites
    at all can be found by name!
    UDP is stateless by design, making it impossible for a router to
    distinguish between a client and a server, and the Panamanian decree does
    not say "block all udp packets whose source and destination port are both
    on this list", it says "block these ports".  This is sufficiently broad
    that creating such holes in the range of allowed udp ports imposes a
    burden on *everyone* exchanging IP traffic with Panama to manually
    exclude these ports from the pool that *all Internet software draws
    from*.  This would almost universally require a vendor update to the
    operating system of every Internet-connected machine, anywhere, that
    would send traffic to or through Panama -- every PC, every server, every
    corporate firewall!
     > Update: A call has been issued for proxies that can be used for VoIP,
     > preferably more important, less-easily blocked ports. Anyone with knowledge
     > of this may contact us here and we'll see that your message gets through.
    In light of the above, I don't think it would be possible for a law to be
    any more disruptive of the smooth exchange of "legitimate" traffic on the
    Internet than this one already promises to be.  I think the Panamanian
    government will soon come to appreciate the true depth of their folly.
    Steve Langasek
    postmodern programmer
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