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The Voice Over IP Insurrection
Chris Holland writes "Daniel Berninger wrote the most informative article about Voice over IP I've ever read, over at Om Malik's blog. It outlines in great details the history behind the evolution of traditional communication technologies framed within the convergence of various Internet-related technological advances, and the challenges PSTN telcos are facing to hold-on to their shares of this lucrative pie. Beyond mere technological issues, Berninger offers great parallels and insights on past, current, and future governmental regulatory policies. A must read for anyone who's ever talked on the phone."
"A must read for anyone who's ever talked on the phone."
WOAH! Crap, how did they know? *adjusts tinfoil hat*
A must read for anyone who's ever talked on the phone
Whoa, easy there tiger. Let's just say I find this to be the most ridiculous statement I've ever read. A must read for anyone who's ever had to do anything.
Moo.
Informative article?
On a BLOG?
Full of factual errors and void of any actual useful content?
Nothing to see here, please move along.
--
Save the internet, append -inurl:blog to all google searches!
I don't think much else needs to be said about VoIP. It's wonderful technology and saves a lot of money on telephone bills if you're well connected with broadband. I use VoIP quite a bit, so it's worth mentioning a top VoIP reference on the internet, in fact the most comprehensive info directory on the topic I know of. Also of interest is the FCC (keep the boos down please) webpage on it.
From the article: "... For the first two-thirds of the 20th century, AT&T had manned Berlin Wall separating telecommunications and computing, but eventually, these two enormous technology tracks would be unified."
Sadly, this was not AT&T but the U.S. Justice Department which through a series of Consent Decrees required this harsh distinction.
The Consent Decree of 1956 forbid AT&T from engaging in any business other than "common carrier communication services"
Further restrictions appeared in the 1982 agreement.
These restraints were not removed until congress and the FCC asked them to be removed after the passage the 1996 Telecom Act.
at least as reliable as my normal phone.
You must have crappy phone service. I rely on a land line for my home alarm/fire system. Between cell, VoIP (which relies on my ISP), and land lines there is absolutely no contest when it comes to reliabilty. I have been using land lines for 30 years and can't remember an outage on a land line. As for my ISP and cell, I can't count the number of dropped calls or net outages.
The Voice over IP Insurrection
Daniel Berninger, an old friend, a seriously smart guy and VoIP guru of sorts, and more recently senior analyst, for Tier1 Research, has been a great man to bounce ideas off. He and I have chatted about many things, and each time I come away learning something new. So last week he argued, "in the battle between Bellheads and Netheads, we're all Netheads now." Could not agree more. Here is his long missive on the VoIP insurrection, the best and most definitive essay you will ever read on this technology, where it is headed and why it is important. This is the second of my guest columns series where I bring the experts who know a thing or two about their respective areas of expertise.
What just happened?
The $3 billion dollar budget at Bell Laboratories did not include a single project addressing the use of data networks to transport voice when VocalTec Communications released InternetPhone in February 1995. As of 2004, every project at the post-divestiture AT&T Labs and Lucent Technologies Bell Labs reflects the reality of voice over Internet Protocol. Every major incumbent carrier, and the largest cable television providers, in the United States has announced a VoIP program. And even as some upstart carriers have used VoIP to lower telephony prices dramatically, even more radical innovators threaten to lower the cost of a phone call to zero--to make it free.
The VoIP insurrection over the last decade marks a milestone in communication history no less dramatic than the arrival of the telephone in 1876. We know data networks and packetized voice will displace the long standing pre-1995 world rooted in Alexander Graham Bell's invention. It remains uncertain whether telecom's incumbent carriers and equipment makers will continue to dominate or even survive as the information technology industry absorbs voice as a simple application of the Internet.
The roots of the VoIP insurrection trace back to four synchronistic events in 1968. The Federal Communications Commission (FCC) ruled MCI could compete with AT&T using microwave transport on the Chicago to St. Louis route. The same year, the FCC's Carterfone decision forced AT&T to allow customers to attach non-Western Electric equipment, such as new telephones, and modems, to the telephone network. The Department of Defense's Advanced Research Project Agency issued a contract to Bolt Beranek and Newman for a precursor to the Internet. And in July 1968, Andrew Grove and Gordon Moore founded Intel. Innovation in the communication sector remained the proprietary right of AT&T for most the 20th century, but events in 1968 breached the barriers that kept the telecom and information technology industries apart. For the first two-thirds of the 20th century, AT&T had manned Berlin Wall separating telecommunications and computing, but eventually, these two enormous technology tracks would be unified.
Two entrepreneurs barely out of their teens, Lior Haramaty and Alon Cohen, founded VocalTec Communications in 1993 based on the promise of packet voice technology they observed as members of the Israel Defense Force. Most military command and control used the highly survivable TCP/IP distributed data networks since the 1980's. The challenge of transporting voice over the networks arose as an imperative to support certain very sensitive voice commands like "drop the bomb", but the idea of commercializing packet voice did not occur to anyone until the arrival of Lior and Alon. How could slicing voice into 50 millisecond packets improve the telephone business? The tradition bound telephone industry types or "bellheads" spent their time before 1995 improving the Public Switch Telephone Network (PSTN) not replacing it.
Advances in communication from writing and paper to the printing press, telegraph, and telephone shape human progress. Some might have viewed VoIP as an interesting toy in 1995, but no one presently doubts it will dominate the communication future. The economies of scale assoc
Noone writes jokes in base 13!
See, that's a meaningless platitude. Of course, there's always money to be made as a last-mile provider.
The problem is, the ILECs (that's the technical term for the local phone company) aren't always allowed to roll out cable and WiMAX how they would like. Furthermore, if they did try to roll it out, they know very little about it, so it's not a guarantee that they'd end up losing the market anyway. Think of the online book market. Sure, the incumbent bookstores managed to have some web presence, but the real company that ended up as the online bookstore people tend to think about wasn't one of the incumbent providers.
Or think about AOL Time Warner. Time Warner spent a bunch of money to pick up AOL and look where that's gotten them!
The thing you need to remember is that VoIP has very little to do with where the ILECs want to go, and the article points this out. The phone company was dragged kicking-and-screaming into the Internet-DSL market mostly because they wanted to preserve their frame-relay/ISDN/Modem-line market and because the CLECs that they grudingly let into the market were using it. DSL wasn't even invented necessarily to do IP traffic, they wanted to be able to do streaming phone services with it.
So, in the end, the phone companies are generally interested in the data-providers they compete with, not with innovation. If the phone company just provides bandwidth and no value-added services, that just means that the cable/WiMAX/etc. providers have won and they have lost.
See, most people fall into the trap where they expect companies to act logically, as viewed by an external observer. And this is a logical fallicy, because they do act logically, but only when viewed as an insider.
So, yes, it's very clear that the ultimate result *should* be two competing last-mile providers, representing pieces of the phone and cable companies respectively, plus wireless providers, plus companies offering layered phone, data, and video connectivity to your connection. But none of the incumbent providers with wire in the ground are interested at all in this, except to take out their competition.
Gentoo Sucks
After weighing the options, I decided to get rid of my POTS and go with VOIP. My daughter already has a $10 monthly Broadvoice VOIP account which gets us unlimited in-state calling and 3 cents/minute long distance. I am happy with their service. However, neither my wife nor daughter (nor I) were comfortable with the fact that 911 service is significantly different, if it exists at all. That was a deal killer. To quote from an email I received from Broadvoice today: "We are working very diligently to implement BV911. We understand the importance of this feature, and anticipate availability later this autumn." However, their website still says they expect it this summer - so take it with a large grain of salt. In my town, if you dial 911 and say nothing, they'll send a squad car. I would guess that response is nearly universal. Without the 911 connectivity only my local phone company provides, that level of comfort and service disappears.
You're absolutely right, it's about in the same state it was in 1995. But only because the cost of broadband didn't make it feasible.
But now that broadband is cheap, it's starting to make a lot of sense, especially with companies that have large WANS full of bandwidth. The company I work for has 100 megabits of fiber connected between 8 locations through a company called Telco. They're paying $10,000 per month for the fiber and since the satellite offices need to call corporate a lot, VOIP on our own bandwidth saves thousands on phone bills per month.
Cheap broadband for the residential user makes VOIP a possibility too. I ditched my landline last month and ported the number to my wife's cell phone. The phone in the house is Voicepulse and it's been as reliable or better than the Verizon POTS. You can't tell the difference in call quality.
Six years ago, my local telephone bill was $22 per month with caller-id. My last POTS bill was close to $60. Really, all telcom reform has done for me is drive up my bill to outrageous amounts.
The incumbent telephone companies all have their own VOIP service. Problem is, they think that VOIP is reason enough to switch and they offer paltry savings on VOIP as compared to POTS; if there's any savings at ALL. Verizon's VOIP service was $40 per month and I was paying close to $60 with just caller-id. Somehow they think that phone service should guarantee them a fixed amount of revenue. VOIP offers the very real chance at local telephone competition without requiring new players to build their own networks or rent from the incumbents.
In fact, this has been the whole impediment to local phone competition. The incumbents have for years resisted renting out their networks to competitors. They've tried legislation and regulations to make it cost prohibitive and have pretty much succeeded while giving themselves a paltry profit line in interstate and intrastate access fees.
The gig is up; everyone stands to save money if they don't use the traditional telephone network.
This prompted me to recently switch to Cablevision (Optimum) for their $90/month package deal of basic digital cable, cable modem service and VOIP (unlimited local/long distance with all the premium calling features).
When I called Verizon to disconnect my phone service, of course the CSR asked me why and I told her because of VOIP. She then proceeded to ask me if Cablevision explained to me about not getting "911" or "0" service, that I couldn't make a call if the power is out, and that since my calls are "going over the internet" it was "less secure" than a regular line. I mockingly replied "Hell yeah!".
I sure hope she does as good a job FUD'ing her own company's VoiceWing service as she did for Cablevision.
On "installation" day, the Cablevision guy couldn't get the VOIP part working. So he calls local support and after being put on hold for 15mins while the tech "looked into it", the tech returns with the brilliant suggestion of trying a new modem. After trying two different Motorola VOIP cable modems with no success and another 10mins on hold the tech transfers him to the national support center. He waits another 15mins on hold to be connected to a "national" tech just to be told by the tech that "field guys" can't talk directly to the national tech guys and that only the local techs can talk to the national techs then *CLICK*. He then calls local support again, where finally a different tech tells him that VOIP has been down for 1hr and doesn't know when it will be back up.
Total time for cable modem and cable TV setup (including running wires, etc.) = 30min. Total VOIP setup time = 90min. (and it still wasn't working when the cable guy left). Finally about an hour later the service came back up.
Tweedle Dee and Tweedle Dum. Take your pick. Either way you lose and it ain't even election day yet...
Within five years, the telco world will have changed.
... It's a disruptive technology.
We will observe a strong fragmentation of the telecommunications world as many small companies will try to get their share of this multi-bilion dollars market. And just because of the low entry cost (look at asterisk, Convedia, Ubiquity, Appium, and many other players way too numerous to list here), you don't have to be a huge company to deliver services in that emerging market of VoIP services (here, by VoIP services, I don't only mean providers, but also secondary services like voice recognition, IVRs, vertical markets services, unified messaging, value-added access resellers, etc.). Maybe after, the market will reconsolidate though.
VoIP is to telco what PC was to computing, what the Amiga Video Toaster was to TV productions, what Napster was to RIAA, what iPod was to MP3 music, what Internet was to information access, what Word, Excel and Powerpoint was to corporations,
It's a fact; those who can't adapt to their changing environment will disappear. And new dominant players will take their place in a new order...
I wonder what my phone (ok, communication device) will look like and will allow me to do in 5 to 10 years from now.