October 24, 2008

Why did I Decline to Join Freedom2Connect Facebook Group?

Earlier in the afternoon I received an invitation from a good friend of mine, Carl Ford, to join a Facebook group called “Freedom2Connect”. In his invitation, Carl asked to “Come help protect VoIP from retroactive regulatory models”. I declined to join the group. Facebook did not give me an opportunity to explain why I declined. (Irony, isn’t it? No freedom to connect.) This note is a public explanation.

First let me declare that I am a believer of using Internet connectivity for communications, what Jeff Pulver has at various times called IP Communications. Some of you may know that I have heavily invested both financially and personally in developing this technology. (Indeed my family members continuously have indicated that these investments are beyond my means.) So my rejection of the invitation is not because I favor PSTN or that I benefit from the continuing dominance of PSTN.

If you take a look at the petition by Embarq that FCC is poised to consider, it is clear that Embarq is focused only on those instances when a call is offered at an PSTN interconnection point. According to the petition, the current practice seems to be for some interconnect carriers to declare that a call originated as VoIP and so claim exemption from settlement charges. I am not trained in legal matters. So it could be perfectly valid to make such a claim. But as a layman, it doesn’t seem to be fair. As a cynic I wonder how does one prove or disprove the validity of the claim of origin. With my bias, I conclude that such claims are purely for arbitrage purposes.

As a society we may conclude to give an advantage to new technologies in the hope that we all could benefit from new services, features or capabilities. But alas. Most of the VoIP providers are content in replicating the services and features available in PSTN. Most of them provide an ATA to their subscribers which basically functions as a Class 5 switch in PSTN and users connect an ordinary phone to this box. In other words, even though the providers have a sophisticated signaling link to the subscriber, they do not make that available to the end user. We were told that with VoIP users can know the “presence” information of each other; we were told that with VoIP I can inform you the subject of my call even before you decide to answer the call; we were dazzled with many such features. Where are they? Why do we need to extend our support when there is no evidence that promised items are being even worked on.

Long time back it was claimed that VoIP is a product and not a service. I firmly believe in that. Given that belief, why would I support service providers? This is not my fight. I do not wish them ill. I just do not care. As far as I am concerned it is an intramural tussle. The product I am developing will be able to interconnect to PSTN. But the primary value of the product is the better user experience and feature set. If these are the reasons users decide to use my product then they will not mind if the interconnect charges are the same as if they used PSTN altogether. In other words, my focus is at the End and the issue FCC is considering is in the Middle. Anybody focused on IP Communications should not be distracted with non-relevant Middle.

Posted by aswath at October 24, 2008 05:32 PM
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Thank you for looking at what I sent you. I must apologize for not making things clear. I will ask you to revisit the Freedom2speak website (http://www.freedom2speak.org)
The FCC has several petitions and actions going on simultaneously and it’s easy to lump them all together, but they deal with different aspects of what it means to provide service.
The Embarq petition has nothing to do with VoIP per se, but everything to do with Intercarrier compensation.
As you know the history of telecom was that long distance subsidized the cost of the local loop with termination charges to local terminating carriers.
Before VoIP came along the rates for these settlements were put in place. They had much more to do with regulatory objectives than real costs, both on the local loop side and on the interoffice, interLATA, International side.
The FCC had done excellent work, at one point, harmonizing the International settlements rates and many local rate plans benefitted as well. It is one of the key reasons bucket of minute pricing is available on all phones services.
The issue is that traffic rates for local and state termination have stayed stagnant since before the VoIP revolution. The termination charges with these local tariff rates are out of sync with the market realities today.
Whenever there is an anomaly like this the opportunity exists for arbitrage. The traffic that is terminating into these local carriers represent more than the volume that VoIP traffic represents and includes traffic from wireless and wireline services. However, often the traffic origination is not known since it is coming based on clearinghouse and competitive carrier relations and may be deliberately masked for competitive reasons.
The Embarq petition would want all traffic to be terminated at the rates that were set before the advantages of fiber, VoIP and competition came into being. And the rate has no relevance to cost. In fact, the cost of per minute billing systems is often considered not worth the hassle especially if bucket of minute pricing is applied.
The hope would be that a cohesive nationwide rate would apply based on real costs. Major carriers are advocating bill and keep and or a nationwide rate that is in keeping with the overall market and their experience of cost recovery.
If the Embarq petition is allowed to stand the implication is that competition may again be reduced by the cost prohibitive nature of compliance with per minute billing being applied to all carriers.
Of course the legacy carriers, have these systems so the status quo will get to stay that way. The more things change the more you get the same old POTS.
And that is the issue that Freedom2speak is all about. Like you, Regulators see the services that “quack like a duck” and want to apply the standard rules. The issue is that the revocation of the enhanced service provider exemption lumps everything that is displayed http://www.freedom2speak.org as telecom. And given how many jurisdictions are looking for someone to tax, it is going to become burdensome. This is the point of reaching out.
Please reconsider and add your voice to show that VoIP is more than another duck.

Posted by: Carl Ford at October 25, 2008 08:42 PM

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