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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.
Moreover, according to AT&T, Sprint threatened to disconnect the circuits unless AT&T agreed to move all traffic onto paid-for-access service. When AT&T complained, Sprint resumed service but filed a billing dispute claiming that access fees apply whether the call is delivered over the Net or through copper wires.
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.
As someone on the other side against AT&T in the 80's over a law called "Avoidance of Toll Charges", I find this incredibly ironic. It seems arguable that AT&T is now a phone phreak.
Hey, AT&T... can I have my Commodore SX-64 portable back now?
~ Whence do you come, slayer of men, or where are you going, conqueror of space?
businesses that try to enact legislation which protects not only their interests, but a business model that is no longer relevant due to advances in science?
Get with the times, or get out of the way.
This is just another attempt by the biggies of the industry cartel to control communication and control costs. IMO, it will prove unsuccessful, as VOIP relies on the fundamental technology of the web, which cannot be controlled by state or federal governments.
A blog like any other.
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.)
the phrase Internet telephony will sound as archaic as 'horseless carriage' sounds today.
Well, we used to call it just "net phony", but people kept confusing it with dating services.
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As I understand it all those "10-10-$NUM" services you see advertised on the television all use VoIP. My 5 cent (CA$) long distance (to
Trolling is a art,
The article focuses on why WOIP should not be held to conventional telephone's regulations because the technology involved is vastly different. However, to the end user, they just (or least should be able to) pick up the phone and dial a number. If VOIP is providing a functionally equivalent service, then they should be held to the same standards as conventional phone services. (Note: This is why Paypal gets to screw their customers regularly, since they are not regulated as a bank)
If Vonage et. all. succeed, it should be on the basis of providing a better product for less money, not by finding and exploiting loopholes in the regulations that are desinged to protect consumers.
OK...
I can do this. I am, after all,
a superhero!
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$(205.5+RND(1)); : GOTO 10
The telephone companies had ISDN a *long* time ago and tried to rip-n-gouge money out of their subscribers; hence, the modem was invented as a way to circumvent that ludicrous system.
Of course, the phone companies tried to get modems banned. Or, at the very least, get legislation to charge separate access fees for those users because they knew nobody would pay such high prices for ISDN when they could make local calls ($.05, untimed in my area) and get reasonable (although slower) speed.
Now they're in the same boat. With the advent of technology that allows similar operation as the phone, but over the internet, they're scrambling to find ways to bring it under *their* control. I'm assuming that at this point, you don't need to be told why.
I'd expect this to go the same way I expect the Hydrogen Fuel Cell car to go in America with "Big Oil" resisting it... slow the adoption of the technology until a very large interest in it can be secured by the large corporations affected.
And *we*, the people, allow it to happen... write your congress person and tell them "hell no!"
Diplomacy is the art of saying, "Nice doggie!" until you can find a rock.
Neither MCI or any other carrier is routing their calls via "the Internet". They're carrying them on internal networks over TCP/IP. That they share a common set of protocol and hardware infrastructure doesn't make them "Internet".
Indeed the closest this sort of inane statement could get to being correct is that some carriers might be routing some of their telephony and traditional data services over the same connections using the same hardware; hardly news and not at all what the article implies.
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.
Actually Verizon is already trying to head off competition from VOIP services by offering a "Freedom" package (I don't know what the other Baby Bells are doing) which includes DSL, unlimited local and long distance for a set price (wireless as well.) I expect that this is to stop encroachment of VOIP into the lower end of the market (residential / small business.)
One of the reasons I got the VOIP service was the fact that I'm sick of being scr*w*d with by local phone companies. It's also cheaper, and the sound quality is better. (And hey - I'm a geek.)
I just recently moved. I had a cable modem installed in my new house before I cut off my broadband service at my old house. I unplugged the little Cisco box that my Vonage phone service runs out of and took it to my new house and plugged it in. I ran the phone cable that comes out of it into the nearest wall jack... et voila! My home phone service for my entire house just moved from one house to the next in 20 minutes with no hassles.
The last time I moved I was using Qwest. Instead of transferring my phone number from one home to the next in adjoining towns in the Minneapolis suburbs, they transferred my phone number to a town in Iowa and told me that there was no way that they could move it back in less than three days.
Anything that threatens to impede the growth of regular phone alternatives must be stopped. The traditional phone companies deserve to die a slow death if they can't get their heads around the idea of "customer service" instead of "self serving."
Quoth he
"It's all academic anyway..."
Phone taxes pay for emergency services such as police, fire, and ambulatory response systems and the 911 emergency call service. I think it's perfectly fine for VoIP users to pay those taxes as well, because everyone relies on emergency services.
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!
The US economy is fat-packed with industries kept above water through government protection and subsidies. The telecom industry is not going to give away their revenue stream without a fight.
--
Long-term effects of Bush deficits
The one reason that the government wants to treat VOIP as a telecom service is wiretapping.
CALEA requires access to telecom services, for just that purpose.
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.
Traditional phone service costs me $20/mo for unlimited local calls -- and I can get a line for as low as $13/mo with restrictions on outgoing calls. So the VoIP product is more expensive and less reliable -- features are great, but for myself and many others, reliability and price are probably the two biggest considerations when choosing a phone service.
And this is before states impose phone taxes (yeah I know, it makes no sense from a geek standpoint -- but the fact is phone taxes as currently written don't make any sense anyway, and it's a revenue stream that legislators are going to ensure remains available). The only way I can see this business model making sense is if Vonage is going after the bad-credit crowd -- folks who've already had their phone service shut off and are willing to spend more money on a company in exchange for the benefit of the doubt. There are other companies that do this, too. Maybe you can make money charging high rates to a clientele that's likely to default on their obligations; I don't know. But it doesn't seem like the way to popularize the technology.
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...
Vonage offers residential service cheap. I've had them for about 6 months, and am so far extremely happy with their service.
For $25/month, I get 500 minutes to anywhere in the US or Canada, and unlimited local. Anything over that is 3.9 cents/minute.
Or for $40, you can get unlimited.
Both plans include voicemail, caller id, call forwarding. You can also get a second # for $5 that will forward to your number. It's useful if you have out of state family that calls you frequently, and you want to make it a local call for them.
I don't work for Vonage, or have any stake in them, I'm just an extremely happy customer of theirs.
I pay $46 for my cable tv and cable modem, and $25 for the phone service. The $71 still comes out cheaper than my POTS was, and I get cable TV and cable modem.
last summer when i was in Kuwait i called my girlfriend in GA using ordinary telecom initially and then using VoIP. The telecom service was almost 2 dollars per minute, so the call was brief and not much was said, whereas the VoIP i finally managed to get was 1.7 cents per minute using vocaltech, yes! one point seven cents from kuwait to georgia USA, and was just great; i talked to my girlfriend, whom i'd not seen or had a good convo with for over a month or more, with VoIP for over 3 hours first time i used it, and it was a heavenly feeling, omg it felt like being able to breath again, i had just missed home so much, my girl and my baby, that i just got tearful and then as the hours passed with me lying on my back in the dark wearing a headset i just felt sorta happy. That, i think, is what makes a technology, any technology, so wonderful.
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.
Do you want reliable telephone service? Even if there is a power failure?
Do you want guaranteed availability of telephone service at uniform and reasonable rates, even if you live on a farm or in a slum?
Do you want 911 service that works?
Besides loss of tax revenues and control, there is a good reason for regulatory agencies to be concerned about VOIP. What if VOIP severely damages the market for conventional telephone service? That could result in the loss of universal and reliable, even if somewhat overpriced, telephone service in this country.
Mea navis aericumbens anguillis abundat
Voip in my view is a bad hack to make things cheaper. Here are some reasons I don't like voip and feel it should not be used for telco backbones. (I also have a list of good things)
1. With the recent worm activity, it just showed how much The net is vurnable to attack. I don't know about you But I want to be able to call people when my net connection is down.
2. Voip is traveling over a unsecure network. Meaning that the voip gateways can be spoofed, dos'ed, hacked, etc.
3. Voip is better equiped for use in private networks (meaning your home or small bussiness)
4. Bandwidth isn't set aside for voip session. Blurp's being hungup by a 'dos happy 13 year' (yah yah sure we will have ipv6 but its still on a unsecure network.)
Reasons why voip is cool.
1. Its not set on a single route.
2. Its fun to play with for a quick chat with a friend over the internet.
All and all voip is pretty cool But I don't want to see it intergrated into the public phone system. If the phone company's want to implement a decentrillised system then they need to colaborate together. To make a system which isn't prone to attacks.. what it comes down to is what QOS (quailtiy of service) that a new system can provide.. voip isn't going to provide a high enough qos for me. (there are reasons why the phone system has huge battery banks.)
Quicknet Technologies
OpenH323 Project
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.
Are you willing to give up reliability? Are you willing to give up 911. What?
In both caes, yes. Our phone has only been down twice since we've had it. Once when Charter was working on the line (Down for about an hour), and once when I was rerouting the cables by the computer. Both times, Vonage recognized that the phone was down, and automatically routed any incoming calls to my cell phone.
As far as not having 911, our emergency calls are automatically routed to the local police station, which happens to be right across the street. The one time we had to call 911, the police were at our house before our neighbors had even gotten connected to a 911 operator. They were still on hold.
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.
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.
I think you're underestimating the consumer. I personally have decided *NOT* to choose VOIP over Verizon's $50/Umlimited plan, because I personally value the reliability of the copper network.
Many people, including my brother, feel otherwise which is why they opted to not to invest the local phone network, but rather their alternative broadband network (cable modem, wireless, etc.)
IMO, I think this type of competition is healthy for the Telco's and is forcing them to provide a better product. Even my mother understands that reliability is an important factor when deciding to replace your ILEC with VOIP, and despite the constant sales pitches from my brother, she still opted to stick with Verizon.
Don't underestimate the consumer.
(Not that we ALL haven't dealt with idiot customers)
"Communism is like having one [local] phone company " - Lenny Bruce
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
If I had a copper line, how many times do I pay taxes for this wonderful privelage?
1) Income Tax
2) SSI Tax
3) State Tax (some states)
4) Insurance Deduction (taxed through the Insurance Provider, cost passed on to me)
5) Universal Service Fee
6) Line Access Surcharge (taxed and passed on)
7) Federal Tax
8) Long Distance Access Charge (also taxed and passed on)
9) ???
10) MASSIVE PROFIT!!!
Seems rather excessive that I am taxed at least three times on every dollar I make and spend!
Just my $.02 (after taxes from $1.00)
You can have it fast, accurate, or pretty. Pick any 2.
An electric car's usefulness is independant of gas or internal combustion cars. VoIP services like Vonage are useless without the existing phone network. Would you pay 40$ 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...
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.
For a small business, or as a second line, something like Vonage is great. This needs to be fostered, not taxed, for the time being. Right now, I wouldn't be willing to pay a tax on Vonage because I don't get plain old telephone-style reliability guarantees - that's what you trade off for the bargain. Of course, the real problem is the reliability of the internet infrastructure and last mile broadband connections, which generally are just terrible (especially with DSL, which I finally just dumped in favor of cable). You just can't get reliable service over an unreliable medium.
I'm willing to pay all these taxes, if and only if I get real reliability and uptime guarantees (for less than 200 dollars a month, which is what these fucking thieves want to charge you for business DSL service).
Packet switching in the next few years will begin to phase out 5ESS Switching which is the major standard today along with DMS 1000 by Nortel and other Motorola landline switches. With the full adoption of IPv6 your telephone # will be mapped to your phone's IP adddress to allow voice over packet data which is similar to 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.