I have been noticing increasing indications that VoIP service will have almost same level of economical regulations as PSTN. This story suggests that that will be the case when VoIP peers with PSTN. Many Commissioners have indicated that support for CALEA is critical. Delivery of content information under CALEA may have serious impact on the network architecture.
Against this background, Pulver is calling on us to deliver innovative services. It is disappointing that thus far only “replacement services” are being offered. But I am not hopeful.
A couple of serious points and a couple of chuckles:
1. Can VoIP service providers move offshore?
2. Does Yahoo!Phone offer primary phone service?
3. New analogy
4. PSTN crawls while IP flies.
1. Can VoIP Service Providers Move Offshore? This question (or a threat as I view it) was asked once more. The same question was raised in FCC VoIP forum in December 2003. At that time, none other than Pulver himself said that that fear is unfounded. It is too bad he was not one of the panel members today.
The only monetized service offered by VoIP service providers thus far is interconnecting to PSTN. I do not see how an offshore company can offer a more economical interconnection than a national one. By the way, I am skeptical that VoIP service providers can monetize any other service, just because the users can realize the service themselves. So there is little marginal value.
2. Kevin Werbach mentioned some thing to the effect that 3 million users receive primary phone service using VoIP technology. I suspect that he is referring to Yahoo!Phone service. I am of the opinion that this is misleading. Yahoo!Phone subscribers also subscribe to PSTN phone service from NTT and emergency calls and power failures are handled by the PSTN.
3. If it walks like a duck, …is so passé. The new analogy will be stagecoaches, trains and planes. McCain seems to suggest that just as planes do not pay taxes to the cities it flies over, VoIP traffic should not pay state and local taxes for its traffic. Don’t planes and air travelers pay airport taxes to the local authorities? So why shouldn’t VoIP traffic pay taxes for interconnecting to the PSTN? What is so special about VoIP, when it interconnects to PSTN? I view it as an alternate transmission technology.
4. A nitpick. Some Senators seem to suggest that VoIP is traveling at “light speed” and that is why it is special. I hope somebody corrects them: PSTN traffic also travels at the same speed.
Let me repeat my mantra: IP networking is special not because it allows new service providers to enter the market. The real benefit is because, the users do not require ANY service provider if they so choose. We should recognize this lest we loose it.
A few days back David S. Bennahum talked to three VoIP service providers regarding CALEA. He got three different, not altogether surprising, responses. That column raised more questions than it answered. I wish he had done some more follow-up.
Citron of Vonage says that there are two limitations on LEAs: they “can listen in on phone calls only in real time. They are not permitted to record calls and play them back later to check for incriminating information.” There is no mention of either of the limitations in the web site Bennahum quotes. I wish he had clarified this further with Citron or talked to some CALEA experts. He further quotes Citron that the intercept can be done only in “analog-friendly wires”. It must be a wrong translation. Most of today’s PSTN facilities are digital and tapping seems to be routinely done.
Time Warner is fully willing and capable to allow LEAs to tap calls in their system. Bennahum seems to suggest that it is because CMTS is a convenient tapping point. But he fails to ask TW regarding the limitations identified by Citron. It seems to me that against these two limitations, ability to tap is a moot point.
More than a week back, there was another article discussing the same issue. There Pulver was quoted as saying that "I'm also not sure how some of these providers are going to meet CALEA." Since all service providers can provide call identification information, I suspect the problem is giving access to the content. But, almost all service providers use Session Border Controllers to address NAT traversal problem. So if the media need to go through an SBC, then tap could be placed there (assuming that Citron’s limitations are not valid). Indeed some of the SBC vendors suggest as much.
That brings us to Skype’s response. They say that they do not have access to neither call identification information, nor the content. I agree that this is true, because they are not a carrier. They produce a product. But they also say that their application encodes the content and so difficult to decipher, even if it could be tapped. Then consider the following scenario: Somebody builds Skype like application, running on two computers connected to each other through a dialup connection. The call is now going over PSTN, still it can not be meaningfully tapped. Shouldn’t we be scrapping CALEA altogether? I hope not.
A few days back Kevin Werbach remarked on an analysis by Anna-Maria Kovacs suggesting that application vendors will have huge cost advantage over the carriers. I am not sure I agree with that analysis. I have the diametrically opposite opinion. As an empirical example, consider Yahoo!BB Japan prices for its ADSL service. The monthly fee is around $30 to $40, which includes BBPhone fee. Of course there is per minute charge for calls terminating to PSTN. But the point to note is that basic phone service is included as part of the carrier fee. Independent service providers will find it difficult to penetrate the customer base of the carriers.
On another point, it is not surprising that Yahoo!BB has more than 3 million VoIP subscribers. The data that is missing is what fraction of them use BBPhone service in a significant manner. Given that the basic service is free, those who pay for PSTN call completion is of significance.
A couple of weeks back Duane Freese wrote in Tech Central Station argued why AT&T petition be granted. That petition essentially requests that all communication that uses IP network even partially be exempted from access charges. Mr. Freese suggests that not doing it is “class arbitrage” because only “poor or lower middle class” do not have access to computers and so will be disadvantaged. It turned out that the column was a bit premature. It looks like that he was expecting that FCC will exempt computer originated communication from regulations. But FCC has concluded that (at least for now) only end-to-end VoIP should be exempted from regulation because it is an “information service”. Based on some of the reports on the statements made by the Commissioners during the review, it looks like any call to/from PSTN will encounter the same set of regulations independent of the origin/destination. I hope they hold to this line of thinking. Otherwise, all service providers will use VoIP technology just before handing the traffic to the LECs, just to avoid the charges, and the industry will not put much effort is deploying VoIP in the access. In other words, VoIP will become a regulatory tool and the technology will not advance to benefit the consumers.
About 10 days back, National Cable & Telecommunications Association (NCTA) issued a whitepaper that describes their position on regulating VoIP. This is an interesting read because it gives insight into how they view VoIP. In hindsight, John Billock of Time Warner gave a preview during his comments at FCC Forum in December 2003. He basically said, he does not mind VoIP being regulated because he viewed it as a facilities based service offering. This white paper gives additional details and the rationale for their position.
They offer a definition for VoIP that fits their potential service offering like a glove. Then they say what regulations are appropriate for this definition. I am of the opinion that the set of regulations they stipulate are reasonably fair-minded, especially when this is their initial position. A potential VoIP service offering may not fit this definition in different ways and reasonable people could differ what regulatory regime to impose on these service offerings. Also, I suspect that some VoIP purists will be slightly disappointed that cable operators are viewing VoIP as more of an access technology rather than a radically new application technology.
First they identify a four-part test for a service to be identified as VoIP that needs to be regulated:
If a service offering meets these four criteria, then they feel that the service provider has some rights and responsibilities. They grant VoIP service providers should meet certain public policy responsibilities and requirements such as the principles set forth in the Communications Assistance for Law Enforcement Act (“CALEA”), the offering of 911/E911, access for the disabled, and appropriate contributions to universal service. In return, they should have the right to interconnect and exchange traffic, the right to obtain telephone numbers and have them published in telephone directories, the right to access the facilities and resources necessary to provide VoIP customers with full and efficient 911/E911 services, the right to be compensated fairly for terminating traffic delivered from other entities and the right to non-discriminatory access to universal service support. In addition, facilities-based VoIP providers need access to poles, ducts, conduits and rights-of-way, regardless of the ultimate regulatory classification of VoIP services. Since these service providers are new entrants and not monopolies, they argue that legacy requirements related to billing, payment, credit and collection, and quality of service standards should not be imposed on them. Except for a mild reservation on the last aspect, their points seem to be fair on the whole.
What if a service provider who does not meet all the criteria? Let us take FWD and AT&T as two examples. FWD clearly does not meet the first three criteria and the general sentiment is that they should not have to meet any of the regulatory requirements. AT&T, if it uses VoIP as a transport technology between two segments of PSTN, does not meet at a minimum the fourth criterion. I am of the opinion that they are obligated to pay interconnect charges. At least in my reading, this white paper does not have a position on this point.
Recently, someone posted in a discussion list about a ruling by The Finnish Communications Regulatory Authority (FICORA) regarding a new service called Puhekaista service (‘Sonera Voice Band’) offered by TeliaSonera Finland Oyj’s (Sonera). For me some of the conditions of the service are of more interest than the ruling itself (that this service should be complaint to telcom regulations). The conditions that caught my attention are:
Only recently I became aware that in US, as part of the service agreement, mobile subscribers have consented to list their name in a directory and that lawmakers are planning to make it into an optin program. Notwithstanding this, it is more surprising that Sonera does not allow for CLID restriction and call barring services. What fraction of the market will compromise on these services? If other service providers follow suit, won’t there be a backlash from consumer groups inviting regulations to protect consumer rights?
Recently, FCC Chairman Michael Powell spoke about the roles and responsibilities of both the consumers and the access service providers. I would like to think that my submission to the FCC VoIP forum played a role in this. This is part of what I wrote in there:
Restriction on ISPs and VoIP Service Providers
Not all VoIP architectures and protocols allow for such freedom. Service providers using these constraining architectures and protocols should not receive special treatment. Also it is critical that you ensure that all ISPs allow unfettered exchange of signaling messages and the media. This has two components. The signaling messages and media should not be blocked. More importantly, they should provide public (dynamic or static) IP addresses to their subscribers. Otherwise, even if VoIP service providers are unregulated, it is very easy to eliminate competition in the voice service provider market segment.
Lee Gomes, in February 9, 2004 issue of Wall Street Journal Europe edition writes in his Portals column about TiVo’s patent violation suit against Echostar. I do not know about the validity of the legal claims, but as a potential consumer of such a product/service I have some reservations regarding the business model of these PVR companies.
As Gomes says in the article, PVR “is essentially just a generic computer to which has been added a TV tuner – just like the tuner you can buy for your PC – along with some special software.” Additionally, it needs access to the schedule of TV programming. Companies like TiVo have succeeded in marketing what is essentially a product as a service where consumers pay monthly subscription. Additionally, it looks like these companies collect usage data from the subscribers as Gomes indicates in his article. I suppose, they could mine this data for additional revenue.
With internet access, one could use one of many portals that provide TV schedules. That means basically the subscription is for using their custom software. Even Microsoft does not collect monthly fees for their products. 20 years after the introduction of PC and countless articles expounding the philosophy of “intelligence at the end”, businesses still prefer to operate differently. Conspiracy theorists can not blame the “bell-heads” for this as well.
Same thing is happening in VoIP; even though it is a product, it is being marketed as a service. Even Clay Shirky, who explains VoIP is a product and not a service, identifies Vonage as a successful player and at the same time denigrates Zapmail and telephone companies, evidently not realizing the irony.
Last week, Jeff Pulver described an email which suggested that one of Gandhi’s quote could be equally applicable to Jeff as well. The quote is: “At first they ignore you, then they laugh at you, then they ridicule you, then they fight you, then you win." In that light it might be instructive to further analyze and draw parallels to Gandhi’s movement.
Of course Gandhi is well known for developing the tools of non-cooperation for fighting against injustice. The term he selected for this was sathyagraha, with an emphasis on sathya – truth. One time he explained that being true to one’s beliefs is important; for him “means” is as important as “end”. When some of his fellow freedom fighters used “non” non-violent actions, he was willing to forgo the whole movement. After his death, in independent India, many two-bit politicians misappropriated his technique to achieve their short-term, personal political goals. If had lived to see this surely he would have been sadden, more than how he felt about the partition. Why is this relevant to VoIP?
VON, as in voice over packet network is not as radical as it is being portrayed. As a transport technique packet voice has been used as far back as late 80s in Frame Relay networks. In this application it is only a transmission technology with no scope of changing the business model. But IP communications is different. The revolutionary aspect of VoIP, nay IP, is that it facilitates any-to-any communication. In the ultimate, the end-users do not necessarily require any mediating service providers, but can communicate between themselves directly. (Talk about self-reliance.) Any architecture or protocol that hinders or disables this aspect is to be resisted. Given the regulatory arbitrage benefits, many service providers are jumping on the bandwagon, without allowing for this freedom. So let us not lose sight of the fundamental objective – swaraj.
The hotel I am staying in does not offer wireline connectivity to the Internet, but has a hotspot. The hotspot is serviced by Swisscom and has tiered tariff. Well and good? Not really. The service is tariffed as if the connection they are offering is a circuit-switched service, meaning it is based on connect time and not on bandwidth used either on the radio or on the backhaul. The real accounting mechanism is worse than straight connect time. It is also has a single use restriction. That is if you buy a 30 minute card, you can log on to the hotspot once and use it for a maximum of 30 minutes. This is another example of pricing not matching the basic service offered.
This week I am attending a standards meeting at ITU here in Geneva. The topic of discussion is Next Generation Network (NGN). Last time I attended an ITU meeting (at that time it was known as CCITT) was some 20 years back while working on ISDN. Many things have changed but some remain the same. Technological progress is very much visible; seemingly pedantic hair splitting is still in vogue. Of course, the human dynamics hasn’t changed at all.
All the meeting rooms are equipped with Ethernet and WiFi connectivity. One can download the copies of contributions through the network. This means one does not have to lug paper copies to take back home. Indeed my colleagues who wanted to hear only a handful of contributions could hear them through an ad-hoc voice chat session. The meetings are not streamed, at least not yet. But not surprisingly, the human political dynamics is still evident. During one of the dead times, through Google I tried to locate the heavyweights from the past. I came across a positive reminiscence from Bob Amy that was penned in 1992. That is the topic for today.
In that article, Bob describes the forces that drove the development of ISDN and also postulates many exciting advances. I do not have such a romantic memory, not because the promise never materialized. I fault the prospective service providers and their vendors for not being true to the objectives and capabilities of ISDN. It is my opinion that this is one of the main reasons why ISDN failed as a business. At least in US, BRI ISDN turned out to be an expensive screen based phone and PRI ISDN turned out to be a CTI application. There is a lesson for us, lest we repeat the mistakes in VoIP as well. With that in mind, let me discuss some of the mistakes made by ISDN developers.
Bob says, “The concept of a personal computer was still a dream and the on premises speeds of current local area networks was not yet developed.” It is true that in early eighties, computers were not that widespread. But the fact that ISDN was going to integrate voice and data suggests that the anticipation was that data communication devices will be widespread. Still, ISDN planners were visualizing data devices will be connected to the network through the phone. (Take a look at an ISDN phone – it has an RS-232 connector.) Instead, we should have considered the scenario where the phone is connected to the network through a computer. So, ISDN architects should have believed in their own slogan: ISDN was going to “interconnect the network switches to intelligent customer terminal equipment”. If they had done so, they would have developed a switch which executes only a handful of basic functions and the terminal realizes features at the ends. This would have simplified the switch development and reduced interoperability problems. And there would have been no need to “indefinitely” keep developing standardized procedures for ISDN supplementary services. For example, Busy line and Call waiting does not make sense in ISDN (because it has an independent signaling channel, unlike the tip and ring line). I am to a large extent disappointed that both H.323 and SIP communities are repeating the same mistakes.
So a tap on the shoulders of VoIP architects and H.323/SIP proponents. Be true to the technology. Don’t artificially insert a service provider when the end users can realize the features by themselves.
Even though I agree with some of the points made by Fred Goldstein in a recent column, his analysis is weak in some places. Here are highlights.
In final analysis, VIP provides benefits to the end-users because they can avoid service providers altogether. VoIP provides advantages to new entrant service providers because the barrier to entry is low. This is a double-edged sword, since the market has become very competitive. The incumbents can respond to this threat by offering new and additional features; but it looks like neither they nor their vendors seems to be taking steps in this direction.
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