By Kim Dong-soo Anew era of two-way Internet telephony, which is also dubbed "the third telephone" after wired and mobile phones, has dawned on us in earnest. In August this year, Samsung Networks and Anyuser.Net, the leased-line telecom operators, launched the 070 Internet telephone service. In addition, some incumbent network providers like KT and Hanaro Telecom began their Internet phone service last month while other telecom operators are expected to commence their full-fledged service before the year's end. As a result, the total number of Internet phone operators, including small and midsized leased-line operators, is forecasted to exceed 140. Having been chosen as one of the eight new services being promoted t by the government under the IT839 strategy, Internet telephony - a future growth engine - has kicked off full of vitality Since the time when Internet telephony was first introduced to consumers as a free PC-to-PC phone service in January 2000 by Solborn (formerly Serome), it has grown as a niche market to the fixed-line service. However, there have been limits to its growth due to such problems as low voice quality, service interruptions, the granting of phone numbers to Internet telephone operators and the unavailability of call receiving service due to its imperfect connectivity with the wired and wireless networks. Reshaping the Institutional Framework for VoIP To tackle these problems, to enhance consumer convenience and offer new business opportunities, and prepare for the evolutionary development towards the ALL-IP network, the government embarked on a full-fledged task in 2002 to institutionalize Internet telephone services by gathering the opinions of relevant operators and researchers from academic circles. In September 2004, the government defined Internet telephony to be a mainstay telecom operation that allows the transmission and reception of Voice over Internet Protocol (VoIP) without calling zones. The government has also overhauled the telecom operators' entry into the business by authorizing them to register either as a mainstay network operator or a leased-line telecom operator. In consideration of the fact that VoIP is a nationwide telecom service without calling zones, the government grants the 070 numbers only to those operators that meet sound quality standards. To those seven network operators like KT, 070 numbers in million digits are bestowed while leased-line telecom operators such as Samsung Networks are granted with 070 numbers in hundreds of thousands. Also, the government has established a reasonable payment principle for the interconnection with and use of incumbent telecom networks such as the PSTN and the mobile network for securing the right of Internet phone service providers to be interconnected and provide uninterrupted service. VoIP operators without their own Internet network can provide Internet phone service to broadband Internet users subscribed to other companies. When they use the Internet networks of other companies, however, they should pay the network provider a monthly rental fee of 1,500 won per subscriber according to the "user-pays" principle. In view of the fact that it is difficult to make a proper assessment of the cost price and traffic of the Internet, and that it is a new service necessary to bolster the telecom market, the government has made it possible for VoIP operators to fix the Internet phone tariffs autonomously. Accordingly, VoIP operators are expected to bring forward a wide range of products according to their financial resources and marketing plans. Such a competition in phone charges is forecasted to enhance consumer convenience in the form of lowered operating costs. Benefits Anticipated from Institutionalizing Internet Telephony The adoption of the new 070 VoIP that can replace PSTN is expected to not only expand the consumer's rights to choose a product through the advent of various telecom operators but also can lower their burden of paying phone bills as the VoIP service can be cheaper than PSTNs. I addition, the advent of VoIP will invigorate the telecom industry by granting telecom operators new business opportunities while it induces incumbent phone operators to introduce new services such as video telephony based on the Internet. Furthermore, it is expected to stimulate the search for new business models of telecom operators along with the formation of new rivalries in the fixed-line telephone market. Also, it is forecast to generate a momentum for telecom operators to make a transition in their profit structures from structures based mostly on audio communications to those centered around a wide variety of data and contents. In view of the fact that Korea's advancement in mobile technologies is based on upgraded mobile services, the revival of VoIP service will accelerate the development of Internet phones and related technologies, and be of assistance to the manufacturers of telecom products, as it will raise their competitive strength in the world market. On the other hand, however, there remain quite a number of issues to be resolved for the Internet service to be reborn as a complete service since it is anticipated to replace the fixed-line telephone service in terms of performance, quality and user fees. First of all, and even though much progress has been made with VoIP technologies, it is true that the quality of Internet telephony lags behind that of wired phone services. Therefore, it is necessary to usher in telecom operators to enhance their service qualities by publicly announcing their qualities on a regular basis. Internet phones are convenient means of communication with mobility. Even so, it is difficult to locate Internet phone users on the move and provide 119 emergency services. This, too, is an issue to be resolved through many technological and institutional improvements.