April, 2008

October, 2009

I took the first photo. That was in April 2008 in an informal telecenter visit. The second one appeared in a Sinhala blog recently.

Mangedara Nenasala telecenter at Thulhiriya (less than 2 km from MAS Holdings) is one of the hundreds of defunct Nenasala telecenters. During better times it provided services such as utility bill payments and computer training. Now it remains closed since the operator, who was never paid for his services, left for better opportunities.

The findings of the telecenter operator survey done by LIRNEasia at a workshop organised by Sarvodaya in October 2008 will be useful to understand why Nenasalas fail. (Sample was not representative, but large enough to get a general idea about the telecenter operations in Sri Lanka.)

Do telecenters in Sri Lanka make money? Yes. They report an average monthly income of Rs. 22,119. (=USD 201) This is associated with a relatively large standard deviation of Rs. 21,714 (= USD 197) indicating a variation within a wide range. This means a large number of telecenters are running at a loss.

Providing Internet services ranked only third among telecenter income components (16%). The key sources of income are education and training (43%) and providing fax, photocopy and printing series (21%). They also make money from VoIP (4.5%), utility bill payments (2.5%) telephone calls (2.5%) selling other goods (2%) and VCD/DVD rentals (1%).

Do telecenters make a profit? Yes, but perhaps may not in real terms. They record a monthly average profit of Rs. 6,735 (=USD 61) with a large standard deviation of Rs. 9,504 (=USD 86). This indicates the loss incurred by some of them. This is again without considering the cost of the communication link. (The monthly average cost of a 2 Mbps business broadband connection is USD 46 in Colombo. This might be slightly high in rural areas.)

Telecenters operators are rewarded in different ways. Only 33% are salaried. 22% receive a share of profits. 13% receive an allowanced based on performance. 32% receive no personal income.

Last week two Chinese nationals were arrested while the authorities busted a bypass den at Islamabad. They have been allegedly the partner of an “influential Pakistani” in this illegal venture. It claims to have caused an estimated six billion rupees (US$74 million) loss to the exchequer. The news followed by a lively debate is going on.

Meanwhile, the Internet Service Providers Association of Pakistan (ISPAK) has rejected a regulatory decree to deploy necessary countermeasures to block the VoIP traffic. Their argument and a loud debate can be viewed here

Here are the summarised results from the telecenter operator survey done by LIRNEasia at the weCan workshop in October 2008. Sample was not representative, but large enough to get a general idea about the telecenter operations in Sri Lanka.

Out of a total of 147 operators surveyed, the bulk, 101 were from Nenasalas, the 500 odd telecenter network created under the World Bank funded e-Sri Lanka programme. 10 were from Sarvodaya multi-purpose telecenters and 6 from others (eg. public libraries) 30 have not specified the type of the telecenter.

Do telecenters in Sri Lanka make money? Yes. They report an average monthly income of Rs. 22,119. (=USD 201) This is associated with a relatively large standard deviation of Rs. 21,714 (= USD 197) indicating a variation within a wide range. Not a surprise since some telecenters are running at a loss (presumably temporarily) and few reporting a monthly income of over Rs. 100,000 (= USD 900).

However, providing Internet services ranked only third among telecenter income components (16%). The key sources of income are education and training (43%) and providing fax, photocopy and printing series (21%). They also make money from VoIP (4.5%), bill payments (2.5%) telephone calls (2.5%) selling other goods (2%) and VCD/DVD rentals (1%).

Asked for the preferred income profile, the results were not too different. They still want 33% income from training, 21% from fax photocopy and print services and 17% from Internet services. Is this an indication of being more realistic or less ambitious? You decide.

Average monthly expenditure of a telecenter is Rs. 15,837. (USD 144) This may not reflect the real costs as the Internet charges for Nenasalas are borne by ICT Agency from the money comes from e-Sri Lanka programme. Salaries is the highest cost component (39%). Then comes electricity (25%). About 10% each for telephone and rent.

On average basis a telecenter has 5 PCs and employs four staff members – two permanent, two temporary. Correlation between the income and the permanent staff strength was 0.56; the income and the number of PCs, 0.62.

Do telecenters make a profit? Yes, but perhaps may not in real terms. They record a monthly average profit of Rs. 6,735 (=USD 61) with a large standard deviation of Rs. 9,504 (=USD 86). This indicates the loss incurred by some of them. This is again without considering the cost of the communication link. (The monthly average cost of a 2 Mbps business broadband connection is USD 46 in Colombo. This might be slightly high in rural areas.)

Telecenters operators are rewarded in different ways. Only 33% are salaried. 22% receive a share of profits. 13% receive an allowanced based on performance. 32% receive no personal income. How they prefer to be rewarded? 51% wants a monthly salary; 26% a share of profits and 18% a performance based allowance. Doesn’t sound too entrepreneurial but in Sri Lanka culture job security plays an important role.

NEW YORK–In spite of its global popularity, Internet telephony (VoIP), which is almost free for users, has not become a gold mine for its pioneers such as Skype and Vonage.

Popular online auction firm eBay, which bought Skype two years ago for $2.6 billion, affirmed that message in a costly way earlier this week when it devalued the once-darling firm, knocking $1.43 billion off its value.

The accounting move was long anticipated.

“We are glad to see eBay admit that it overpaid for Skype and that much-hyped synergies have not yet materialized to any large extent,” said global financial services firm Cantor Fitzgerald.

“We have struggled with the economics of the Skype transaction relative to the financial expectations for the business.”

 Read full story

In rural Cambodia, a new 3G/UMTS mobile network is being deployed for delivery of high-bandwidth wireless services, including live streaming of mobile TV channels.  

In rural India, farmers can monitor crop prices and place orders for goods electronically by visiting broadband “community centers” that are taking root around the country. 

All are examples of a “rural revolution” enveloping less-developed countries in
Asia and around the world, made possible by advanced telecommunications technologies such as Wi-Fi, WiMAX and 3G.  

This revolution is bringing high-speed Internet access and next-generation telephony to millions of users who previously had little or no access to even the most basic telecoms services. Read more.

The articles describes the problems faced by VoIP operators in the US, where the basic infrastructure is already in place. In countries of the South, we have to keep in mind that the fiber has not been laid; the households have not all been connected; etc.

Internet Phone Company Halts Operations – New York Times

Start-ups like SunRocket and Vonage, the largest and best known of the group, tend to offer only phone service, and they do not have the ability of the larger companies to ensure quality of service because they do not operate their own telecommunications lines, said Richard Greenfield, a media analyst at Pali Research in New York. “They only have one product and they can’t control quality,” Mr. Greenfield said, adding that the business is “extremely challenging.”According to estimates from TeleGeography Research, SunRocket is the second-largest Internet phone start-up, after Vonage, with a 2 percent market share.

In April, SunRocket said its 200,000-subscriber milestone was a testament to customers’ embrace of Internet phone service, which allows calls to be transmitted as data over the Internet.

As a selling point, SunRocket offered potential customers a year of unlimited calling in the United States, Canada and Puerto Rico for $199.

Vonage, which went public last year, was a pioneer in the commercialization of the technology. But its fortunes have floundered, along with its shares, which closed yesterday at $2.95.

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The leading European VoIP adopters over the course of 2006 were France, Germany, and the
Netherlands. According to Instat analyst, Keith Nissen, “The EU market increased by over 14 million subscribers last year largely due to local loop unbundling, the introduction of cable telephony and triple-play service bundles as well as operator consolidation.” 

By contrast the US added a mere four million new VoIP subscribers over the same period. Keith Nissen says US carriers “don’t seem interested in selling anything other than plain-old-telephone-service.” Read more.

Rohan Samarajiva, Course Director

The 11th LIRNE.NET course on “Telecom Reform: Strategies to achieve connectivity and convergence,” was held February 25th – March 3rd, 2007 at the Changi Village Hotel, Singapore. It was attended by 33 persons from 13 countries, ranging from Mongolia to Congo and South Africa to Bhutan.

Among the participants were 13 persons from regulatory agencies, including three members of regulatory collegiums. Eleven persons from the management of telecom operators, and nine from research organizations, universities and civil society made up the balance. Twenty were men; and 13 women.

The course had two components: a conventional lecture and assignment based module of five days and one and a half days of research presentations. In all, the participants had the benefit of listening to 28 speakers from research organizations, universities, regulatory agencies, operators, and international organizations (both ITU and World Bank) over an eight-day period. One speaker, Professor Bill Melody, who was unable to attend due to medical reasons, spoke on two occasions via Skype.

The course included a team assignment involving data and communication skills. Of the five teams, three were recognized as TelePhontastic, TelePerseverance and TeleGenic.

The keynote address at the opening session was delivered by Dr Hans Wijayasuriya, CEO of Dialog Telekom of Sri Lanka on behalf of Telekom Malaysia International. The address at the awards banquet was made by Mr M. H. Au, Director General of Telecommunications, Hong Kong China. Ambassador K, Kesavapany, Director of the Institute of South East Asian Studies, Singapore, co-organizer of the research component, spoke at its inaugural session as did Mr Evan Due from the IDRC, the funder of the research meeting.

The course evaluations were extremely positive, with only three items receiving average scores below 4 on a five-point scale (airport transfer (3.43), hotel facilities (3.86) and hotel location (2.43)). In actual fact, the hotel was ideal for a course of this nature, though the participants were somewhat frustrated by the distance to the city center and the frequency of the hotel’s airport shuttle). Most importantly, none of the lectures and assignments got scores below 4/5, with all topics and speakers being very highly rated.

The presentations made are available for download below:

February 26, 2007

1. Introduction to the course

Rohan Samarajiva | Download Presentation

2. Benefits of reform and regulation

Rohan Samarajiva | Download Presentation

3. What do users at the bottom of the pyramid want? Survey research from five Asian countries

Harsha de Silva | Download Presentation

4. State of the art: Regulatory priorities in 2007

Bill Melody | Download Presentation

5. Market entry and scarce resources 1 (emphasis on licensing issues), including demo of infoDev Toolkit

Rohan Samarajiva | Download Presentation

6. Measuring regulatory and sector performance to meet the challenges of legitimacy

Rohan Samarajiva | Download Presentation

February 27, 2007

1. Market entry and scarce resources 2 (emphasis on spectrum issues)

Rohan Samarajiva | Download Presentation

2. What regulators can do to facilitate universal service: Universal Service Funds and least-cost subsidy auctions

Harsha de Silva | Download Presentation

3. Asymmetric regulation, including new approaches to price regulation

Rohan Samarajiva | Download Presentation

4. Interconnection & inter-operator access

Rohan Samarajiva | Download Presentation

February 28, 2007

1. Periodic recalibration of the regulatory mechanism, including meeting the challenges of convergence

Rohan Samarajiva | Download Presentation

2. Alternative regulatory practices and alternative dispute resolution

Rohan Samarajiva | Download Presentation

3. From service-specific to unified licensing: Problems and prospects

Rajendra Singh | Download Presentation

4. Unbundling the local loop and regulatory measures to encourage broadband

Rajendra Singh | Download Presentation

March 1, 2007

1. The challenges and opportunities of VoIP

Tim Kelly | Download Presentation

2. Pricing, billing and interconnection in the Next Generation Network

Tim Kelly | Download Presentation

Computer-based Voice over IP (VoIP) is nothing new, but Skype is the first such service to break into the mainstream, attracting millions of users worldwide. Skype had 1 million simultaneous users within six months of the release of its first version for Windows in July 2004. By the end of the third quarter of 2006, Skype had 136 million registered users, and the number of users online now regularly exceeds 8 million. These users generated about 6.6 billion minutes of traffic in the third quarter of 2006, and are on track to make over 27 billion minutes of PC-to-PC calls this year. About half of Skype’s traffic is international.

This has prompted worries that Skype–and similar services–could undermine the viability of the international long-distance market. However, while the volume of international traffic routed via Skype is significant, the quantity is still small when compared to a global switched and VoIP traffic base of 264 billion minutes. Computer-to-computer traffic between Skype users in 2005 was equivalent to 2.9 percent of international carrier traffic in 2005 and approximately 4.4 percent of total international traffic in 2006. Furthermore, not all of Skype’s traffic is a net loss for international carriers. Skype also offers a paid “Skype Out” service, which allows Skype users to place calls to traditional telephones. The service relies on wholesale international carriers, including iBasis, Cable & Wireless, and Level 3, to terminate this traffic to the telephone network.

Still, it’s clear that VoIP services will continue to gain in popularity. “Someday, all calls will be routed over the Internet,” commented Stephan Beckert, Research Director at TeleGeography. “But the numbers suggest that traditional international carriers aren’t going to disappear anytime soon.”

Methodology includes a literature review, semi-structured interviews, data collection for supply-side indicators and the TRE perceptions survey.

Limitations encountered: sparse comparable, time-series data and operator data only available from two public quoted companies.

DG: Don’t the companies give subscriber information?
MKJ: No they don’t.
RS: TRC does not disaggregate either, so there is no access to this info.

Description of key reforms/regulatory events from 1980-2006

Supply-side indicators
RS: Rolling CAGR – What does it show?
MKJ: Shows a smoother picture, trendlines.

Slide 14 and 15 – Looking at mobile trends, you see how competition has grown the sector.

Prepaid and postpaid subscriber comparisons show they were almost equal around 1997-1998, because Dialog was non-existant at the time.

With regard to operator strategy, Hutch is completely prepaid while Mobitel is pushing for postpaid.

ARPUs are increasing for postpaid. This would mean that postpaid numbers are reducing?

Slide 18 shows clearly how CDMA has reduced the communication gap across Sri Lanka. Although SLT had CDMA licenses back in 1998, they did not have the frequencies to roll-out.

Technology that by-passes regulation – VOIP and Unified Licensing
In interviews with 7 PSTN operators, they see VOIP as a way to grow their business.
DG: Are the operators advertising for VOIP services?
MKJ: No.
MH: In fact, SLT has two tiers – MaxTalk and the Passport cards – of which MaxTalk uses VOIP technology and is cheaper.
RS: Net2Phone services are freely sold at communication bureaus and it does not bother anyone.

DG: Do you see fixed prices and mobile prices converging?
MKJ: Cannot comment on this until the baskets come out.
RS: There is value in looking at cost per call charges alone, because rental and connection charges etc are sunk costs and when making a decision to call people consider the call per minute charge at the time.
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.
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RS: In India, fixed and mobile are not seen as substitutes.
MKJ: Same story even in SL, where there is some sort of status involved with owning a fixed phone.

TRE Assessment
The TRE sample was made up of operators, investment analysts, private bar, media, academia, corporates, consumers, donors, etc.

Mobile sector comes out with higher scores in all 6 aspects.

Scores of “average effectiveness” across all 6 dimensions for both fixed and mobile sectors.

Market entry scores are highest for both fixed and mobile. Low scores on interconnection.

(Note: Price data is not yet included; will be done as the tariff data is collected)
The Indonesian telecom sector has seen three waves of liberalization.

• 1st Wave: 1991-1996 (Private investment in sector-financial
  crisis)
  Creation of Satelindo, 2nd International service provider in 1993.
  Partial privatization of PT Indosat (65% Govt retains control) in
  1994
  Exclusivity granted to PT Telkom for fixed local 2010 and long distance 2005 before it was partially privatized in 1995 (66% but government retains control).
  GSM licenses provided to Satelindo & Telkomsel subsidiaries of two incumbents in 1994.
  GSM license issued to PT Excelcomindo in 1996, competitive provider with no financial links to government.
  ISP licenses issued
• 2nd Wave of Reforms
  1999-2004 (Post crisis-Change of guard)
  Telecom Act of 1999 separating policy & regulatory functions, allowing increased private participation
  Ending of cross-ownership between government owned telcos
  Premature ending of PT Telkom’s exclusivity
  Creation of duopoly for fixed sector
  Ministerial decree (KM 31/2003) creating BRTIRegulatory Body
  Merger of Satelindo with PT Indosat, Telkomsel with
  PT Telkom
• 3rd Wave of reforms
  2005- present (New government of Yudhoyono)
  Unlicensing of 2.4 GHz
  Licensing of three Fixed Wireless Access (FWA) providers, two incumbent and Esia (Bakrie Group).
  Auction of 5 3G licenses to Telkomsel, Excelcom, Indosat, Hutchinson, Lippo-Maxxis
  Licenses granted to 15 VoIP operators including major operators
  USO fund established (Regulation No. 15) in 2005 where all operators contribute 0.75% of gross revenue.
  Government regulation (GR2/2006) on mandated cost-based interconnection
  Reference Interconnect Offer to be submitted by all operators to
  BRTI, dominant operators’ RIO will be published.
  Tariff regulation for leased lines

What were the drivers of growth?
Initially the government allowed domestic investment. Then the government decided to attract foreign investment via concessions with the promise of reform.
Lorraine Carlos Salazar says: who exactly are these stakeholders who supported entry of FDI in the sector? 
DG: Mastel, the Ministry
Before the Asian Crisis, there was a lot of interest in Eastern Asia, however after the Crisis, much of the Investment dried up. Government was then forced to undergo reform (driving the 2nd wave of reform).
Lorraine Carlos Salazar says: Did the incumbent wanted FDI?
Payal Malik says:  lack of domestic resources were the drivers for the incumbent being open to FDIs, as in the case of Thailand.  They were not averse to FDIs because it went into their own networks and it wasn;t competition
Divakar: Incumbent benefited from the FDI b/c it allowed them profit from the other companies, without risk. Lack of domestic resources were the drivers for FDI
Third wave of reforms driven by the promise by the current government to end corruption. Unlicensing of the 2.4Ghz band was driven by a civil society campaign. Recognition of merits of competition due to the success of the mobile sector) also added to the motivation.
2006 has seen a lot of growth, and investment in infrastructure. E.g no. of base stations has doubled since the start of the year.
absence of interconnection regime led to pvt companies choosing to invest in mobile rather than fixed.
fixed wire-line growth has not changed since 2005; given falling population, fixed teledensity is likely to fall.
PT Telekom’s fixed wireless subscriber has actually dropped – because many signed up for the ‘Flexi’ package for free minutes; once the free minutes were all used up, many discontinued use (and moved to Easia which have very low rates).
Fixed wireless operators are only allowed to operate within certain area codes. To circumvent restricted mobility for the fixed wireless subscriber, operators allow call forwarding and temporary roaming.
While many argue that Java has ‘all the phones’, its teledensity is actually fairly low; the issue is Java has a high population.
The graph on Slide 19 shows Easia’s ARPU increasing (unlike what is normally seen), however the data is being checked.
Easia’s spends a lot on advertising; they are a highly recognized brand.
Payal Malik says: Just for reference, Fixed wireless is not important in India so no separate data on ARPUs
Lorraine Carlos Salazar says: yes, same with Philippines and Thailand I think
In the mobile sector, Telkomsel, Indosat and Excelcomindo are the main players. the other companies are starting up.

Although mobile service is cheaper in Indonesia in absolute terms, it is relatively expensive (relative to monthly GNI).
When mobile market share is calculated as % of sector revenues (as opposed to subscribers), there is a change in the shares. The incumbent has a 68% share, as opposed to 55%. Directionally, the market share doesn’t change, but exact shares do.
Vasana – how practical is it to calculate in this way?
Divakar  – it’s a controversial issue.
Distribution of telecom access (Slide # 27) shows that there are a multiple mobiles within households.
When Indonesia is compared to the other ASEAN countries, its performance is quite poor.
Harsha de Silva: Singapore – Internet penetration is higher than fixed line penetration; why?
Divakar: access is through WiFi (ubiquitous WiFi coverage in Singapore) as well as mobile Internet.
ADSL is almost invisible (Slide 29) b/c the incumbent owns all the infrastructure.
Household PC ownership is low; Internet access via those PCs is EVEN lower.
Telecom regulatory performance:
Lorraine Carlos Salazar says: please clarify– the regulator is separate from the Dept of Telecoms? What does the latter do? still own the former fixed line monopoly is it?
Divakar: Not really separate, b/c of Chairman BRTI is also the Director of Dept of Telecoms.
Most of regulatory activity is done by BRTI.
Not telecom policy to guide the decisions and direction that the ministry is taking. Although the ministry is quite active in making decisions, there is a lack of coherence in the actions / decisions that are being taken.
Lorraine Carlos Salazar says: with regards issuances– are they hiring external consultants? who are writing these issuances?
Divakar: consultants are being hired to do various things; but in terms of writings and decrees, they are competent enough to do these on their own.

Lorraine: Is there really a plan or policy on telecoms lib, which provides guidance on the issuance of licenses? or is to ad hoc and open to  or lobbying, rent-seeking, etc.?
It is actually an opportunity if licenses are given in an ad hoc manner, b/c there is opportunity to illustrate to the Minister where a license will be useful, and there will be a hope that the Minister will give that license.
Rohan: Yes, but there is also another side of ‘ad hoc’ behavior (eg giving a license to your brother)
Divakar: the process is much more transparent now than before, and public consultations are mandatory by law.
TRE assessment:
Mobile sector has scored well on Mkt entry – this is b/c entry has been open; auctions were held as recently as last year. 3G operators are also allowed to provide 2G services
Bottlenecks in the fixed sector cause problems in other sectors, such as banks not being able to have points of presence (via credit card sales points).

While this constitutes significant progress and is indicative of the progressive approach of the current leadership at the TRC, the fact remains that a license fee of LKR 0 with a postcard notification, or complete unlicensing is the right solution. A user will have to spend hours if not days especially if he/she lives outside Colombo) fullfilling the requirements of a s. 22 license; transaction costs will exceed the LKR 100 that is to be charged

Nepal, a country that has been wracked by political uncertainty and definitely behind Sri Lanka in regulatory and sector performance is about to leapfrog the TRC according to the report below:

Parliamentary Committee directs Nepal Government to let people freely use the WiFi (2.4 Ghz and 5.8 Ghz) Bands.

August 17, 2006

After a two hours discussion at the Development Committee of the parliament today, the committee gave directives to Ministry of Information & Communications (MOIC) and Nepal Telecommunication Authority to de-license the Industrial, Scientific, and Medical (ISM) bands using 2.4 Ghz and 5.8 Ghz frequencies. Moreover, the committee gave instruction to clarify policies in order to make computer to computer VoIP legal. At the start of the meeting, Mahabir Pun, team leader, Nepal Wireless Networking Project, gave detailed presentation about the accomplishments of the project to the members of parliamentary committee, and government officials present in the meeting. He made clear that restrictions on the use of equipment using those frequencies was the major obstacle for the advancement of Information and Communication Technology in Nepal. Minister of State, MOIC, Dilendra Badu, informed the meeting about his recent knowledge on the topic and it was he who wanted the committee to deliberate on it and make a recommendation.

Suresh Kumar Pudasaini, Chairman, Nepal Telecommunications Authority, the Telecoms regulator, said “NTA has already sent it’s opinion on the opening of ISM band frequency for general use to the ministry, but the ministry has not made any decision”. He further added that he has been constrained by his own boards inaction and in-decisiveness on the issues related to VOIP. He had already taken the issue to the board thrice in a row, and blamed his board members for not enacting a decision on it. He had his own grievances towards the Ministry. While he had the rights to issue any form of license and set tariff, on even simple issues related to communications with different ministry of Nepal Government, he had to route it via a junior officer at the MOIC. He later commented that if such situation persists, government should just practice what it does and make NTA just a department under the ministry.

In the same meeting, Mr Satish Kharel, a lawyer, challenged the joint secretary of the MOIC, Mr. Shohan Bahadur Nyachon, when Mr Nyachon tried to mis-direct the group by saying there were prohibitory regulations. Mr. Kharel asked which regulations, and displayed a copy of regulations, only to be meet with silence. MP Raghuji Pant, shared his experience how bureaucrats always tried to mis-lead ministers most often by giving false interpretation of legal and technical issues. It was revealed that the decision on Frequency was under the domain of a committee formed under the chairmanship of the Minister of Communication with the secretaries of Home, Communications, Defense, Tourism along with the Chairman of Nepal Telecoms Authority. On this point, Chairman of the Parliamentary Committee, MP Tanka Rai, said that since all members of the frequency committee were present at the meeting, if there were any objections from them. All the concerned secretaries said they had no objections, on which Chairman Rai gave direct instructions to the Minister to publish the necessary directive on the Gazzatte and bring and end to the matter.

Further, Mr. Pun from Nepal Wireless Networking project warned the group that if only NTA and service providers were involved in policy formation, the general users may be left high and dry again, so appropriate caution should be exercised so that the general public also has the rights to buy and use equipments in the ISM bands.

In the end, Chairman MP Tanka Rai, said that there should not be any hindrances in the development of ICT sector and everyone should work towards rapid development of such technologies in the country.

The linked BBC article examines some new VOIP companies which are providing last mile access (for PC/PHone to phone communication) for free.

Source: www.telecoms.com/itmgcontent/tcoms/news/articles/20017362396.html
Taipei’s City Government has launched a voice over wifi trial it believes could lead to 200,000 using the technology by year end.

Dubbed ‘Taipei Easy Call’ the service is based on Taipei’s city-wide “WiFly” WLAN network and is backed by ten companies, including the Taipei Computer Association (TCA).

The idea is to saturate Taipei with wifi hot spots enabling those taking part in the trial to switch from regular cellular networks to wifi when a signal is available.

“This is the world’s first internet phone system using the whole city, rather than a spot, as a wireless operation environment,” Mr Wongg of the TCA told AFP news agency.

According to reports the initiative will also involve switching schools and government offices to VoIP.

Taipei’s mayor, Ma Ying-jeou, said that money saved from using the internet telephony system in schools will help provide better lunches for students.