A couple of days back Erik Lagerway wrote a guest post in Om Malik’s blog lamenting on the fact that most of the VoIP service providers are silos and don’t peer their traffic. He asks a poignant question: “…why is it that we can’t share traffic and generate even more revenue than before?” In a seemingly unrelated comment, Chris Holland extends the discussion to advocate the use of SIP URIs instead of telephone numbers.
First let me take issue with Erik’s claim that VoIP service providers can generate more revenue from peering. Ironically, those service providers who use telephone numbers will, nay need to, peer traffic because they use telephone numbers. First of all accepting traffic generates revenue for them in the telephone number world. Secondly the big stick in the form of FCC will compel them to accept incoming traffic. So the only culprits could be those who use some form of URIs. I claim they can not generate any more revenue from peering because all on-net traffic is revenue-less to begin with.
By posting his comment in this post, I think Chris seems to suggest that use of URIs will make peering inevitable. PhoneGnome uses phone numbers for the user id. But that is only for human factors purpose. It is really URI based. Generally ENUM will convert a phone number to an URI anyways. Blacklists in email world, which is URI based, are a standard technique to block traffic.
So silos are there because there is no incentive for service providers to offer them and they have made a policy decision. It is not a limitation imposed by the technology or the addressing mechanism.
By the way, if we are going to demand peering, we should also include exchange of presence information as well; not just the media traffic.
Posted by aswath at January 14, 2006 05:12 PM
Peering is a bit of a problem - but lots of services do peer, albeit using prefix-codes for dialing, so the caller needs to know they want to peer, and care.
Extra revenue: large services (with their own PSTN gateways, not ones who re-use Level3/etc) pay money to complete calls over PSTN, and get money for completing calls. If they don't have PSTN gateways at the destination exchange, they pay some LD charges when completing outbound calls (depending on the deals they have with PSTN/LD carriers). So, overall net, calls over PSTN are a net money outflow (unless you're charging for LD by the minute), so there's a reason to peer.
Depending on deals, smaller companies that outsource their PSTN gateways (i.e. most VoIP companies) gain nothing or very little for "unlimited" customers, and perhaps gain little for non-unlimited customers. If the company pays by the minute (i.e. the "unlimited" part isn't borne by Level3/etc), then the VoIP provider has a real incentive to peer.
Another (mostly future) incentive to peer is wideband audio codecs and video calls (i.e. Ojo).
Posted by: Randell Jesup at January 17, 2006 10:08 AM