January 09, 2005

Compensation Scheme Peppered

Dr. Robert Pepper, Chief of Policy Development at the FCC is quoted as saying that “the current system of compensation for phone calls was like getting a cab at the San Francisco Airport and getting a different fee based upon what city one arrived from. “You’d pay $10 if you came from DC, $20 if you flew in from LA, and the cab driver would pay you $5 if you came in across the bay from Oakland.” The analogy is incomplete because it does not describe the position of VoIP industry. He is too infatuated with the technology, so let me complete it for him: “You would pay $20 if you flew in on a propeller plane, $10 if you flew in on a jet and the cab driver would pay you $5 if the plane was made by this nascent company. After all, propeller planes are inefficient dinosaurs and Boeing is not protected, it will be wiped out by the giants.”

If you feel that I am too critical, di you read the previous quote in the same article: “Pepper cited the success of CallWave securing over 825,000 paying VoIP customers.” Is CallWave service equivalent to Vonage? If you agree, then shouldn’t CallWave be the poster child for the VoIP industry?

I would like to restate my position: While interconnecting to PSTN, VoIP happens to use a new transmission technology and so requires no special treatment. Previously we didn’t have different tariff structure whether the trunks were microwave, copper digital or fiber. If we don’t do, the only thing we would have created is an arbitrage play.

Posted by aswath at January 9, 2005 06:05 AM
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