World Dialogue on Regulation

According to a Reuters report, Telmex is preparing to route voice traffic over the Internet, using technology that could reduce its long-distance revenues. Mexico's government has not yet created regulations for voice over IP (VoIP) telephone service and probably won’t until next year.

"We have to be in the business," Telmex spokesperson Arturo Elias Ayub said. "We're running tests."

VoIP technology uses the Internet to transmit voice calls instead of the PSTN. The technology offers significant long-distance savings for consumers because calls bypass more expensive long-distance telephone networks. Telmex and other fixed-line operators reluctantly acknowledge that VoIP is the way of the future.

"Prices will fall when all telephony passes through IP," said Elias Ayub.

Telmex is by far the dominant Internet service provider in Mexico. Analysts believe that dominance will help offset the lost revenue the company will see on the long-distance side of its business when VoIP becomes more popular.

Chile pioneered voice over IP technology in Latin America, with cable television company VTR offering telephone services since 2000. Cable companies in Mexico, which already offer Internet access, have been experimenting with VoIP technology.

Intelecon Research & Consultancy Ltd. 07/10/2004