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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."
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."
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