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SBC's VoIP End Run
Chris Holland writes "Right on the heels of a positive FCC regulation preventing individual U.S. States from levying taxes on VoIP communications, SBC, according to Om Malik, appears to have brought to a quick end the 'lets not pay any termination fees' party that had VoIP upstarts drunk. Jeff Pulver is also sharing his take."
Only if its an end-to-end VoiP call. This is related to the VoiP companies such as Vonage, Voicepulse, etc, and calls placed from their customers *to* non-voip lines. And they arent charging *you* the end user, they are charging the voip company for terminating calls on their network (Obviously unless the voipco's want to lose money they will pass the costs on)
So Suppose that I'm calling from long distance to a friend of mine using VOIP, and that friend uses a traditional phone. Then what most VOIP vendors do is provide a sort of central office in each area code, and route the VOIP traffic there, and from the central office make a local phone call to establish connectivity. Traditionally this last hop has been cheap, however (if I understand correctly) SBC wants to charge more for local phone service when it is the last hop of a VOIP call. Since this kind of discriminatory pricing appears to be anticompetitive, I suspect that the govt. may prevent it.
I've heard menbtion of attacks by ISPs that label the packets from their competitors as lower priority, giving their competitors inferior service. I'm uncertain whether the govt. has/will have/will enforce regulations about that.
I don't know how VoIP works now, so may be someone can explain what exactly SBC is planning here, but...
Say, I have an appliance in my house which connects to the net and sends encrypted traffic to some server somewhere out there using one of the standard protocols and ports (https, or one of vpn protocols). Said appliance happens to me by internet phone, and the encrypted traffic carries voice. The server could be that of Vonage, or Vonage could contract with some big VPN provider or some other third party as well. What is SBC going to do? Trottle down all SSL/https, and all VPN? Unlikely. Figure out which ones are Vonage's? Can be pretty hard, they all look the same, that's the idea.
Now, if Vonage currently does not do it and sends voice unencrypted or using some easilly identifiable dedicated ports or protocols, this is bad ofr many reasons, mostly it's bad for us users, but now it's bad for Vonage too, so may be they will change it to a more secure protocol. That would be good for everyone.
Our toothless FCC and SEC will do nothing because they are lead by people who believe that regulation is, in and of itself, a very bad thing. Michael "the Market is my God" Powell is about as likely to stop the Bells from squashing the competition as George Bush is to announce that he's in favor of gay marriage. Naturally there will be people who will claim that this can't stop the bold VOIP companies, but they'll be wrong. If the Bells can charge exhorbinant rates for call termination it'll put Vonage, Packet 8, and the rest out of business in a year.
It is possible that massive public outcry could change things and force even Michael Powell's FCC to stop the Bells. I wouldn't count on it though...
"Mission Accomplished" -- George W. Bush May 1, 2003
I get both phone and Internet over the cable TV
network, but no TV! (they look at me like I have
two heads or something)
It's cheaper this way.
Currently I believe VOIP provides interconnect with the landline telephone network by means of CLECs, at least where they can. Presumably the CLECs charge them less than the BOCs. SBC may be introducing a tariff to compete with the CLECs for the VOIPs interconnect business.
Many overlooked the fact that Cisco bought a company called P-Cube recently. One of the things P-Cube can do is prioritize the traffic flows on an IP network. SBC could use it and lower the priority of the traffic coming from say Vonage or AT&T. Nothing illegal here: SBC's network and it can do pretty much what it wants on its own network. Poor quality, lags, dropped packets and soon Vonage customers could be switching to SBC VoIP: which is more expensive, has better quality and of course is highly profitable.
Actually, it *is* illegal to directly interfere with a competitor's business. SBC would be criminally liable if they tried to prioritize the traffic of their competitors.
#naabhaprzrag, #sverubfr-000, #agi-fcbafberq, negvpyr[pynff*=' negvpyr-ary-'] { qvfcynl: abar !vzcbegnag; }
While companies like Qwest (Old US-West) are embracing the technology. Qwest's CEO has been vocal about their plans to compete head-to-head against the startup VoIP companies. To put their money where their mouth is, Qwest explicitly agreed to let any VoIP service terminate traffic in the Qwest local markets without paying termination charges. Just the exact opposite of SBC...... Why the 180 degree polar opposite decision by two of the largest telephone companies in the country? IMHO, Qwest is embracing VoIP themselves while SBC is late to the game, again. SBC seems to come up dead last in any data or telephone technology. What else to do but try to slow down all the competitors.
I hope you are enjoying this. Back when it was stylish and in vogue to pile on AT&T with the thoughts of AT&T being the "Big, Bad Monopoly" (though highly government regulated), we had one communications structure - well defined and orchestrated for its time. But of course there were the people served by the Great Telephone Experiment (GTE) that never could get it right. Yes, AT&T had their problems but when my phone was out, problems were fixed the first time out. Now, no one knows what to make of this morass called wireline telecommunications. YOU let the genie out of the bottle and now we have to sort through this mess and the "The $ is King" Federal Clueless Commission just rubber stamps proposals without really using their brains to understand what their decisions mean. I will bet a wooden nickle that these decisions by the FCC are being done to featherbed their pockets for when their time is up at the expense of the users. So, now it is time to direct the frustrations toward the Southern Boys Club and it is well deserved!
All the VOIP companies have to do is not tell the phone companies that they're VOIP.
"Hello, this is the phone company, is the business with this phone service a VOIP company?"
"Uhhh, no."
"Because we get a whole lot of calls out of your building, and the people gettinng the calls have had a sharp decrease in their use of long-distance service."
"We ummm...are a cult, and we encourage our members to cut off contact with all their friends and relatives."
Vonage and the likes already have momentum. Asterisk and the likes are in position to take over the PBX market. Connect the two automaticly, along with various other networks, and there is enough mass to solve this. Aunt Mary might not understand it now, but when all her relatives tell her to get off SBC because she is the only one in the world(!) they call where they have to pay fees, and she will be forced to listen. Once Aunt Mary realizes that she can call pretty much everyone for less on her VOIP phone, she drops SBC as an extra bill that she doesn't need.
Soon SBC and the like will file for bankruptcy... Not really, they do have DSL, which is a good way to connect. When the notice that customers are switching to Cable internet just to avoid having to pay for an unused voice line, they will drop that all voice/DSL bundling requirements.
As geeks it is our responsibility to socity to make sure it happens. So start your own VOIP expiriment at home, and use it once in a while. Long distance telephone is obsolete, but nobody has realized it yet.
When the Bells were originally forced to open their networks to competition by the '96 telcom act, they lobbied for and recieved a concession called Recipricol Compensation. When the ILECs (SBC, et. al.) and newly created CLECs interconnected with each other's networks, each party would pay the other to terminate calls on the other party's network. This was done so that CLECs could not go after the high volume, profitable, business customers without sending a significant chunk of the profits back to the ILECs in the form of Recipricol Compensation.
Then along came the internet, and all of a sudden the traffic flow to CLECs was completely reversed! Now, instead of making a lot of calls, the largest customers were *recieving* a *lot* of calls, and they were lasting longer (Recip. Comp. is billed by the minute). All of a sudden, SBC decided the old system wasn't fair and that it needed to be changed. They removed the old system from their new InterConnection Agreements (ICAs) with CLECs to the best of their regulatory abilities, and eventually mostly succeded in stopping these payments to CLECs. SBC decided the regulation was no longer fair because it was no longer in its best interest! Now, when the situation has swung the back other way with VoIP, they're trying to change the rules again. It's no surprise they'd try, but what's sad about our political and regulatory systems is that, at least in the medium term, it's probably they'll get their way.
As someone who's facinated by Economics and a big fan of fair and open markets, the current situation with the former Bells seems intolerable. The '96 act has failed to create a truely competitive market in telecommunications because it relied too hevily on the Government's ability to come up with good, fair regulations, and the ILECs good behavior in obeying them. IMHO, what needs to happen is new federal legislation forcing divestment of the ILECs last mile infrastructure and tandem (interconnection) switches from their retail sides. The new entity would retain the monopoly on the physical infrastructure, but be highly regulated- prohibited from selling directly to consumers, price controlled, and would be forced to treat all carriers equally. The retail side would have to compete on a level playing field with everyone else. This situation wouldn't be perfect, but it would be better than what we have today. Look what happened with long distance once the market became competitive! Compare rates 10-15 years ago with those of today. I remember paying $0.25/min for a long distance call of less than 100 miles, and today I can buy *unlimited* local and long distance anywhere in the country for $25/mo through Vonage- less than the local line alone from SBC.
The situation we have now seems to be headed back to a private entity extracting monopoly rents for a vital infrastructure, which IMHO is even worse than state control. Even with all the barriers SBC is throwing up, some CLECs are making it work- but things seem risky. CLECs need a stable, fair, regulatory environment in order to make the investments that will, in the long run, benefit all of us. SBC has managed to virtually eliminate Recip Comp, change other significant terms of interconnection, and eliminate line sharing. If the regulators continue to let the ILECs have their way, the result will be changing rules that bankrupt existing CLECs and discourage new market entrants.
How is this going to affect Skype? I just now started using it under Mac OS X to call from my Mac in the United States to my sister's landline in Turkey and it ROCKS.
That call should be the same - unless/until the local phone company in Turkey does something similar or your VoIP carrier pays for the local cost jump by raising its overall rates.
As I understand what happened:
1) Several decades back, independent long-distance companies were formed (starting with MCI). They took advantage of court decisions and FCC regulations intended to allow attaching telephones and modems manufactured by other companies, rather than renting phones and modems from the phone company at high rates. But they used the equipment they attached to bypass the phone company's long-distance network, selling long-distance at a lower rate. To use it you had to call their local site, enter your user code, and dial the distant number (much like "phonecards" today).
Of course the tellco didn't like this - and the alternative companies wanted to let you opt to use them as your "dial 1" long-distance provider. This went to court, and ended up with a new "tarrif" (set of standards, fees, and requirement that the tellco provide the service) for connecting long distance service to a local tellco.
2) Then the big Bell tellco was broken into AT&T and the Baby Bell local companies (and a few other splinters) to settle an antitrust suit. At this point the Baby Bells (and a few legacy non-bell local tellcos) could provide their own long distance WITHIN their area, but not with their neighbors. All long distance companies BETWEEN the BBs had to go through long-distance players (AT&T, Sprint, MCI, etc.) on an even footing at the special rate.
3) After a number of years of bulldozing it, the courts decided the playing field was level enough, and let the Baby Bells start merging and get back into the long distance game.
4) The VoIP companies have apparently started up getting their termination to PSTN (Public Switched Telephone Network) phones the same way the early long-distance bypass companies did: Instead of paying the fee for connecting the way long distance companies do, they rented some ordinary phone lines and make their calls on those. This is cheaper. It's also not what was intended by the regulations.
5) The tellcos STILL don't like having their own long-distance service bypassed (and its revenue drained) by an upstart that isn't playing by the rules. The pure long-distance companies couldn't do anything but sue to require the VoIP carriers to connect like other long distance operations and pay that fee. But the local companies didn't like the competition either, and tried to define VoIP companies as phone companies providing local service, thus subjecting them to all the regulations and taxes involved (like the 911 service fee). That finally got settled, just weeks ago. The decisions was "hands off VoIP - the Fed won't regulate 'em and prohibits the states from doing so".
6) Next step would be to try to force them to do their local connect like a long-distance carrier or different local carrier, rather than a local phone customer. (This is actually reasonable. But it might also be slapped down after much expensive fighting.)
So SBC came up with a cute alternaitve: They're making a special new service with a price LOWER than that of connecting as a long-distance carrier but HIGHER than a local phone line. They say it's voluntary, that they're offering the VoIP providers a better deal than they give the traditional long-distance carriers, and that they CAN make this offer because VoIP is an internet service and thus NOT regulated. "We're being good guys!".
But the next step, of course, is to disconnect the local lines, claiming that using them to terminate long-distance service is outside the lines' terms-of-service. Or to tweak the service level actually delivered on those particular lines down to the minimum allowed by the tarrif t
Bantam Dominique roosters crow a four-note song. Once you've heard it as "Happy BIRTHday" you can't NOT hear it that way