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Why VoIP Makes Telecom Regulations Irrelevant
An anonymous reader writes "BusinessWeek Online analyzes why state and federal regulators' attempts to label VoIP (Voice over Internet Protocol) a "telecommunications service" is wrong - and threatens to undermine the technology. It quotes Vint Cerf as saying: 'To single out VoIP as a telephone service is a terrible misunderstanding of the Internet industry. I would submit that, someday, the phrase Internet telephony will sound as archaic as 'horseless carriage' sounds today.'" We've also recently discussed Vonage's attempts to fight telecom regulation in Minnesota.
We've seen time and time again, the government is not very good at handling technology. They inevitabley screw it up. They overregulate and kill whatever was good to begin with. After a while they'll find a large corportation that they can back via the DMCA to comandere the technology and prosocute the originators for piracy. This has happened before. And it looks like they're planning to do it again.
KEEP YOUR GRUBBY HANDS OFF.
A free, open internet has done wonders for this country economically and technologically. Yet they continue to turn and backstab the free and open system.
damn... damn damn.
Slashdot Syndrome: the sudden, extreme urge to correct someone in order to validate one's self.
...can someone perhaps explain?
Traditional telephony lets people talk at a great distance and travels over telco lines. And gets taxed.
VoIP lets people talk at a great distance and travels over telco lines. And does not get taxed.
What is the difference? A matter of what the encoder/decoders look like? A matter of historical roots of VoIP emerging from a (presumed) free technology?
I want free phone calls as much as the next guy, but I'm not sure I understand why VoIP is so different from traditional phone calls. (Or for that matter, why email and AIM are not subject to taxation too, since they also travel over the same telco system, but even mentioning this greatly increases my troll-likelihood.)
If data should be taxed, then do that -- tax by the megabyte or whatever. But there's no particularly good reason that some data should be taxed more than other data. Downloading slashdot's mainpage travels over the same infrastructure as making a VoIP call, so why should the latter be subject to special taxes?
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
I've seen all the stuff about Vonage here in Minnesota. Vonage advertises constantly, but given that my broadband provider is Comcast, I wouldn't exaclty WANT to rely on that service staying up, and that's what worries me about how VoIP is marketed by a lot of places.
It's great that for only $39.99 (plus broadband, easily $45/month) I can make calls all across the nation. Sounds nifty. And yes, it's increased competition. But unfortunately, Vonage makes little fuss about the fact that if your broadband provider goes down you're screwed. How about those 911 calls?
For very close to the same prices, I can get MCI's The Neighborhood plan with DSL here. Same thing with Qwest now. Yeah, I'm paying extra taxes, which sucks, but they are required by law to give me service. There's a maximum amount of downtime they're allowed, and I can call 911. I use The Neighborhood without DSL now, and even if the power goes out, I can still make calls.
Given this nation's power grid and the lack of good service contracts and requirements for uptime with broadband providers, I don't think I'd like to trust VoIP anytime soon here.
So, VoIP people, get back to me when you're willing to submit to some regulations for the quality of service.
The power of accurate observation is commonly called cynicism by those who have not got it. - G.B. Shaw
Sprint disputes AT&T's account, saying the dropped calls were a "translation error" due in part to AT&T's desire to hide what it was doing. Either way, Sprint maintains that the calls should be subject to traditional access fees. According to Sprint's FCC filing, access fees make up between one-third and one-half of incumbents' revenue stream. "Rob Malda's failure to gain access to gay men and charges on this traffic places [local-carrier] revenue at extreme risk [and] could exacerbate cost imbalances among [long-distance] competitors," the filing warns.
The parent post needs to be modded down. Read in there carefully. It was un-neccessary, and I highly doubt it was in the origional article. Not that it was any better to quote it, but how else will people see it?
bork bork bork!
Did everyone sleep through the blackout of 3 weeks ago? VOIP didn't work. Cel phones didn't work. Land lines worked. Why? The fundamental reason is regulatory requirements that ensure a certain level of reliability. Those requirements date from a different era - lord knows they'd never pass in today's "pro-business" climate. Imagine if everyone had been using VOIP and there were no self-powered phone network? I hope you have a ham radio license!
The entire purpose of regulatory bodies is to shape the market such that companies act in ways beneficial to the public interest, where absent regulation they would be inclined to cut corners for short term profit, setting up everyone for a disaster in the long run.
Why can vonage sell unlimited phone service for $40/mo? They externalize all the costs of line maintenance. If your broadband service fails, you have no phone, and it's not Vonage's problem to rectify it.
Personally, I can't stand ILECs and in fact don't have a land line myself, but the dogma that telephony shouldn't be subject to regulatory requirements if it uses the internet doesn't sit well with me.
Of course, if internet service was as reliable as electric service, or if either were as reliable as phone service, this wouldn't be an issue. But the reason the land-line phone service is reliable is gov't regulation.
-Isaac
I am not a lawyer, and this is not legal advice. For Entertainment Purposes Only.
naw 10-10 isn't all voip, it just designates to the Call Agent what long distance provider you want to use other that the default (that you selected). You can even use it to use AT&T or Verizon if you wanted
The problem I have is that my landline telephone has been more reliable (way more) than either the electricity or the broadband. I am hesitant to tie my telephone service to the broadband, since if it goes out, I have no telephone and no way to call and say that I have no telephone.
Its like those helpful suggestions while on hold with the broadband folks to visit their website, when you're calling them because you can't visit any website.
Catch-22. Chicken-and-the-egg.
They say the first thing to go is your penis. Well, it's either that or your brain. I forget which...
You've got your history wrong. Modems existed long before ISDN.
Not all ISDN is a price rip off, there are apparently some tarifs for it in the US that undercut regular POTS prices.
ISDN was simply too complicated, too late, and too slow.
This is another example of large businesses desiring regulation. Most people think businesses don't want any government intervention in their industry. This is just wrong. The will desire it if it hurts their competition more than it hurts them.
Large ossified businesses don't want to compete with small agile businesses. The easiest and cheapest way to do this is to tax and regulate the small business out of business [sic]. It's nothing new. The guilds of the medieval and renaissance eras performed only one function, to lobby the king to pass laws keeping competition at bay. Unions today do much the same thing on the other side of the coin.
The current crop of regulations means that a business must employ of lawyers in order to understand and thus stay on the right side of the law. This is not a problem for large businesses. But a small business just can't afford it. Regulations that are mere nuisances to entities as large corporations, but which serve to keep others out of the market, will be supported by the likes of AT&T, IBM, Siemens, GE, Motorola, Philips, etc.
Don't blame me, I didn't vote for either of them!
Is that they do this.
Little startups figure out ways to make money off the new technology, because they're not so entrenched. Massive megacorps trying to adapt to new technology are like covered wagons trying to chase a bee. As much as they'd like to catch that bee, they just can't maneuver fast enough. So rather than let somebody else eat their honey, they pass a law requiring that the entire prairie be filled with bug spray. "Bees can sting!" they say, ignoring the fact that bees make edible products.
Eventually, they get the covered wagon heading in the right direction, they roll on up to the bee carcass now lying in the road, and then "relent", "embracing the new technology". I.e., through legislation they've succeeded in making technology no longer a moving target, and now they want their piece of the action.
I don't think it's surprising that many of these technologies are proving somewhat resistant to legislative bug spray. People are still swapping music and movies, people are still using Internet telephony and listening to Internet radio. Evolution will naturally start to produce tech that can't be hurt by legislative bug spray.
It's rare that you're presented with a knob whose only two positions are Make History and Flee Your Glorious Destiny.
And yes, the Vonage customer's end is VOIP and independent of the existing phone line system(this is only true for cable, if the broadband is DSL then it's part of the phone system).
But the other isn't. In fact, it's that non VOIP other end that allows Vonage to exist at all.
Anyone who says Vonage isn't a telephone service doesn't understand the system.
See, if two people had broadband(a requirement for the Vonage system) they could talk in stereo sound with video added for..... NOTHING.
That $40 a month Vonage charges people is for the phone system/internet interface it offers. Nothing else.
If EVERYONE had a broadband connection tommorrow, Vonage would file chapeter 11 the following day.
Vonage uses the existing phone system for half or more of it's buisiness, it should have to support that system like every other buisiness that profits from it's existence.
Maybe more attractive still, if you tax traffic by the megabyte, then it's in the government's interests to maximise the number of megabytes moving.
:-)
:-)
So first you tax the traffic, then, to protect and grow the revenue stream...
You give per-MB tax breaks to the carriers
You get your tax revenue, the bandwidth providers get an incentive to provide more and more bandwidth, new bandwidth-heavy applications become feasible and start to appear, this year more MB move than last year...
loop...
And I finally get that groovy videophone they promised when I was little in the 1970's*
Next step the Hilton Orbital!
TomV
* with a really long curly cable, of course.
Better yet, anyone else sick of the governments which make it happen?
Big business has money, but only government can turn that money into power. Without the aid of government, big business would have no more or less power than you or me. Let's address the root of the issue, not the symptoms.
For a demonstration take a look at the recent blackout in the NE USA & Ontario. Line phones kept working, exchanges had battery backups, 911 service was in place (unless it failed at the far end as it did disturbingly often.)
Cell phones? Many were deaders. Cable TV? Often the same. So the VOIP providers are getting to skip out an a lot of responsibility that the local monopolies can't.
Further then that the issue isn't local monopolies getting to charge for calls coming over their service, the bigger issue is that soon they won't ever even know about the calls for increasingly many folks.
Vonage works by going over your own high-speed service. That could be some flavor of DSL, or cable, or 802.something, or eventually some sorta ultra wideband decentralized mesh with reverse polarity neutron switching. In any case packets are packets and it'll be part of a flat rate.
Then the monopoly ain't worth a darn but the responsibilities remain the same. The poor, the clueless, the mandated, the emergency services, they'll all continue using the local monopolies while the high value cream (at least as the monopolies see it) abandon them for the alternatives.
They're freaked.
A couple years ago the panacea was going to be getting to handle long distance. Now the economics of that look nearly as bad as local service. Data? Glutted in a market the locals don't have the capitol or freedom to go into. Convergence? Nifty tech keeps getting developed but doing increasingly clever things with twisted pair is expensive.
Most folks see a complete rewrite of the market, from regulations to pricing to the services themselves coming. The upside would probably be cheaper services and investment in new roll outs like fiber to the curb but it'll be an ugly tumultuous process getting there with trillions of bucks riding on all of it.
I don't read ACs: If a post isn't worth so much as a nom de plume to its author then I wont bother either.
They are trying to defend their current capital investments in their local framework. VoIP is doing much what the MCI's and Sprints of the a while back did, by bypassing the Bell Atlantic monopoly. VoIP bypasses the very expensive "last-mile" of phone lines to reach each public house hold that are only being utilized by incoming calls (for now).
When you make a VoIP call it routes the calls online to the proper local server which then dials out in the city that it resides as a local call. MCI did this a while back with microwave towers, that bypassed the long distance lines that Bell lay down between cities nationwide. To solve the problem they "taxed" your local phone bill $4-5 or so each month. So you can see why this is a threat to all of the phone companies, (1) because they are not recieving this tax, (2) they have lay a framework that will soon become absolete.
As a result the big businesses and small local providers that utilize the existing framework are losing alot of money in investments that they once thought they would have control over for times to come. The only way they see revenue coming in is some sort of government regulation.
VoIP is a great technology and I would love to see it developed even further, but we just need to find somewhere in the middle that the phone companies and VoIP technology can both benefit, so we don't destroy our economy.
austintsmith.com
Economics and Politics. the fact is that the government has a duty to address the potential economic impacts that VoIP has on the telecommunications industry. Vonage et. al. have an economic advantage over ILECs because they are providing competing voice services with out paying the same taxes. The same advantage I might add that cable providers enjoy. In the grand scheme of things VoIP is a very small element of telecommunications in terms of widespread end user adoption but is is large part of enterprise planning/deployment for businesses. The government has a history of controlling the growth of technology due to potential economic impact. For instance, why are we still an oil based economy? because the government likes it that way and adoption of alternatives would put in jeopardy the many industries that are based on oil. For similar reasons the government is probably going to regulate VoIP because they don't want the telecommunications industry to be thrown into total chaos. Not to mention the high powered lobbies these industries employ to preserve their business models Another fact to consider is that all ILECs are probably now using VoIP technologies in their network backbone. They aren't deploying it to the end users yet because they make more money by selling facilities to its customers. VOIP is a great technology although there are many issues to consider before deploying it not the least of which is Quality of Service and the ability to dial 911.
two cans and a string, now that's innovation
Umm. Voip doesn't have to travel over the internet. Almost all the big voip carriers carry their traffic over their own fiber lines. Putting voice traffic on the internet is not carrier grade solution, since voip traffic is really finiky about latency. VOIP is voice over IP not voice over internet.
Have you ever been to a turkish prison?
In our insane and archaic world of telephony regulations, a data packet is a data packet is a data packet, unless it carries voice; then it somehow magically transforms itself into a "telephony service" and everyone thinks it should be regulated and taxed in a completely different manner.
:).
IP Telephony uses the same infrastructure and packetized protocols as other "data" carried on the internet. The real danger is not just to the emergence of IP telephony, but to the concept that all data is "equal" on the internet. Internet billing, where it exists, is content neutral until now. Imagine if next someone choose to "tax" other kinds of protocols or content selectivily; imagine what would happen to the prn industry if an image transport tax came into existintance
You really should file a complaint then. Unless, of course, your "landline" phone is cordless, in which case your phone service was up but you didn't have a phone that ran off the power supplied by the phone grid.
The phone companies are required to keep the phone service running in case of emergencies. They may not be able to handle the call volume (c.f. 9/11), but they have to provide dial tone, at least for some "reasonable" amount of time (CO's generally have sufficient backup power onsite for 72 hours, and they're usually on the same priority level as hospitals when it comes to getting diesel fuel during emergencies).
Where there is broadband Internet, there can be VoIP. As last-mile broadband gets more economical via wireless and optical (along with traditional copper and cable), so will VoIP.
None of which is available to the rural communities the grandparant mentioned. In the case of some rural farms the "last mile" is more like the "last 20 miles". Even microwave transmission has issues at that range unless you put up some pretty honking big towers. WiFi sure as hell isn't going to cut it. Powerline may be an option at some point in the future though, but even then it's questionable that it will be affordable.
I can dial 911 from my Vonage home telephone just fine, thank you very much.
As the AC pointed out, no you can't -- although it doesn't look as drastic as he points out. Some "local public safety answering points" may be 911 call centers. But not always and roaming 911 is a complete no go. Equally importantly, quoting from here:
That makes it an unviable solution for E911 services.
BTW, Sprint's services were all up during the blackout. Landline, cell, and internet. Most of the cell towers were overloaded in volume and most of their customers (including ones in the same physical building) lost Internet access due to no backup power, but any hosted customers in the NE region remained powered up and doing business. And the landlines worked exactly how they're supposed to.
While I agree that a lot of the regulations and cost structures in the telephone arena are designed specifically to keep competition out, the need for a reliable emergency service and the need to continue to supply rural customers with service are two points that still need to be adhered to. Vonage isn't capable of solving the second issue, but they need to address the first if they're going to bill themselves as a phone company.
An electric car's usefulness is independant of gas or internal combustion cars. VoIP services like Vonage are useless without the existing phone network. Would you pay 40$ a month to call another person on a broadband link? No, because you can do it for free.
So Vonage is allowed to consume resources in the existing phone network, like phone numbers and use of the last mile lines to normal phones, yet skirt the fees that keep the system, and Vonage's only source of value, running? I think not.
So write to the FCC and your local Congressional Reps saying that any taxation on VoIP should be limited to calls which terminate to a POTS line. Government is for the people, but you have to speak to be heard.
It seems like people are forgetting why telecom regulation exists.
- The ILEC phone company has to provide POTS to everyone at the same price, they're not allowed to simply bypass a small town where they can't make a profit on concentrate only on the profitable cities.
- 911 always gets to the correct local authorites on a POTS line. Cell phones have had their problems with this, but they're being ordered to make it work now. You don't even need to have paid service to reach 911, any network that hears an emergency call request must handle it. They even have to drop a paying customer to make way for a 911 call if that has to happen. By comparision, VoIP sometimes has no clue what to do when you dial 911...
- POTS is required to have golden uptime standards by law. Yeah, when was the last time you picked up your phone and didn't get a dialtone? The ILEC has to build a super-reliable network, because we're so dependant on it. Afterall, when phone service is out the local police have have to do extra patrols to make up for the fact they've lost the 911 reporting system, that costs taxpayer money when that happens.
So, if you want to create a service that's going to replace POTS, you've got to be as good as POTS. We can't have Vonage come in and tell people it's okay to cancel their POTS lines and use them itstead unless Vonage is willing and able to totally replace all of the public-interest services that ILECs provide.
Let's face it, the ILECs don't provide 911 and their high reliablity standards just to be nice, they do that because we require them to by law. The least we can do to pay these companies back is promise that anybody who competes with them also has to jump through the same hoops...
Most cable TV / Broadband networks are powered by the local grid, with only about one hour worth of backup power on board. Besides, the cable network is no good for VoIP in a blackout without an UPS, POTS supplies enough power for a simple analog phone to work as part of the standard.
You might have an UPS for your computer, but would you like your local taxes to go up to make sure everyone in your city has one? Oh, wait, not everyone in your city even has a computer yet.......
People always try to fit legislative issues some kind of logical context. It just doesn't work because the goal of most legislation isn't to do or define something logically. The goals are usually to manage taxation revenues or to try and influence some macroeconomic aspect of the economy. They want to legislate VoIP to raise tax revenues and/or support an industry that has voting clout. It doesn't matter that bits are bits.
If a company's primary business is to provide voice/pots type service, then they are going to have to cough up an pay to play.
Sorry, that's just the way it is. Somebody has to pay the freight to maintain the local loop infrastructure/plant.
Primative, unreliable voip through the computer is probably another story altogether.
The other option is to treat all computer connections the same as POTS, and that will kill the internet goose.
Eventually, one way or the other these issues will have to be hashed out, but I can't see that coming soon, not until we establish a unified national plan that ties in Cell, Cable, Satellite, Internet and traditional.
I can see the fighting/mergers that will make that possible, sure.
Vince doesn't have any monopoly on vision, just a big name from a past event.
tax revenue. The gov't is missing their share. Have you ever looked at your phone bill? Outside of long-distance, it's taxed at about 20%. The gov't would absolutely freak if 50 million American internet users went completely VoIP tomorrow. 50 million. The FCC would have to cut headcount, funding. The local Public Utilities Commissions in each state would have less funding, and less need to be around. The gov't makes this country run. Remember the east coast power outage? After the outage, the gov't reported that the gov't lost billions in tax revenue, and that this needed to be stopped. Remember the Florida "LAN tax" under consideration? Before this is over, we'll have a special tax on LAN switch ports (access charge), use tax (per byte), and "per seat taxes" (members of household or employees). Believe me, some politician looking to "leave their legacy" will propose this stuff. They'll then turn it around and say that the money will be used to promote national broadband deployment. Baloney.
-- No sig for you!
I hate to say it, but Vint never really did understand the Internet.
Yes, VoIP is a distinctive service, and regardless of the fact that it's married to packet media, it should be regulated the same as landline or cellular service.
However, that means that the regulations need to be modified to understand that some "carriers" will be individuals running their own connection service from their own houses and various switching services will be operated without the switch operator having any idea whether the traffic is TCP or VoIP.
Dont tax the phone company, broadband provider or VOIP co.
Tax whoever owns the copper wires (ultimatly you are paying them some kind of line rental fee anyway)
For example, if you have Vonage VoIP over Covad DSL over Verizon lines, you pay Covad for the DSL service. Covad then pays (or mabie you pay directly, I dont know exactly how it works in america since I dont live there) Verizon for the copper wire.
Therefore, you pay Verizon (directly or indirectly) and Verizon pays the tax to the government.
i.e. move away from taxing those who provide phone service and start taxing those who actually carry that phone service.
Ah, the tired old "we want to have our cake and eat it too" rant. What you're really trying to say is "in general I think freedom is good, although there are some things people do voluntarily that I don't agree with and want government to address with force. Instead of admitting my hipocrasy, I'll just state that both extremes are evil, and therefore we'll just conclude that the only solution is a mix of freedom and oppression, however necessarily arbitrary it is".
My point is that it is illegal to initiate force for any individual or group (including corporations) BUT government. This is a constant. This is how government has worked since the beginning of time, and this is how government always will work -- force is the essence and first prerequisite of government. If government didn't hold the monopoly on force, it couldn't be government. Non-government groups or individuals who initiate force are called criminals. Corporations, therefore, cannot possibly initiate force UNLESS they are granted that power by government. Otherwise they are criminals and should be dealt with accordingly.
There are exactly 2 modes of human interaction possible in this world: voluntary and involuntary. Force includes physical harm or threat of harm, theft, fraud, and in general any involuntary mode of interaction. Everything else is voluntary, and therefore, devoid of force.
This is not in your dictionary because it's not a simple generic definition. It's an objective analysis of exactly what government represents, exactly what everybody else represents, and exactly how the two entities interact.