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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."
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.
If I call another VOIP phone the problem doesn't exist, but the vast majority of phones I call are traditional telephones, not VOIP. That means the VOIP companies would either have to a) charge extra for every call I make to a non-VOIP phone, or b) charge extra across the board. Either approach would price them out of the market.
"Mission Accomplished" -- George W. Bush May 1, 2003
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.
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.
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