The growing surge in international VoIP calls has caused the state-owned telecommunications monopoly in Costa Rica to propose legislation that could criminalize the use of Internet telephone calls.

The Instituto Costarricense de Electricidad (ICE) said that it views VoIP as a value-added telecom service and, as such, it should be regulated. At its most Draconian, the proposal would make Internet telephoning a crime.

One Costa Rican official of an agency seeking to promote the Central American country's software industry said last week that ICE's proposal would be "disastrous" to the country's efforts to grow its software development and outsourcing businesses. The official, who asked that his name not be used, noted that Costa Rica has been rapidly growing its outsourcing business and low-cost telephone service is crucial to the growth of that business.

ICE is a telecommunications monopoly. While some have criticized it for stifling competition, it has established efficient telephone service throughout the Costa Rica, which is rapidly-emerging from third world status. Market research studies have noted that some 78 percent of software developers in the Central American and Caribbean region are located in Costa Rica,

The ICE proposal was first reported in "La Nacion," the country's national newspaper, which noted that some 20 percent of the country's international calls are made using VoIP technology. The use of Skype Technologies' peer-to-peer Web calling is widespread and other VoIP services including U.S. VoIP pacesetter Vonage are also used to make and receive calls to and from the Central American nation.

Claudio Bermudez, ICE deputy director, was quoted by La Nacion as follows: "VoIP, which is characterized as a telephone service, is a (telecommunications) carrier and substitute telephone service, and as such uses the public telecommunications infrastructure."

The question of VoIP and whether it should be regulated as a telephone service or left unregulated as a data service has been hotly debated for several months in the U.S. Most governmental agencies and courts have ruled that Internet phoning is a data service that should not be regulated.

Earlier this month, Vonage complained to the U.S. Federal Communications Commission that its service had been blocked by a high-speed ISP.

To date, there is no evidence that the ICE has blocked any VoIP service in Costa Rica.