Editorial : VoIP: New Myths, Old Realities

When it comes to telecommunications, the general press can’t say enough about bankruptcy, CEO/CFO criminal indictments and voice over the Internet. Last month, the latter got most of the attention.

In July for example, USA Today ran a lead article in the Money section entitled, “Calling via Internet has Suddenly Arrived,” which stated that VoIP is poised to rock the telecommunications industry. Forbes ran “Out, Damned Telco,” which asks readers if they are tired of their local and long-distance phone providers.

Ever since VocalTec introduced its first VoIP product in 1995, which let voice signals traverse the Internet, the press has been trumpeting the demise of circuit switched-based phone networks.

So again, we have new VoIP hype confronting the old realities.

First, let’s address the hype surrounding voice over broadband, either using DSL or a cable modem. You read claims that the quality is great, the convergence of IP voice and data leads to the elimination of the PSTN, and traditional telephone companies aren’t buying circuit-switched technology anymore. These are myths, and here’s why.

Service Quality? A journalist writing on any topic, such as aliens, Big Foot, etc., can always find someone who has claimed to have seen them. So it’s no surprise to find someone who claims voice over the Internet is as good as voice over the PSTN. Voice over DSL or a cable modem is a second or teen line service—at best. Or, if you are trying to do business in a developing country, voice over broadband via the Internet is better than waiting three years for a PSTN-type line.

Who Needs the PSTN? Voice over a broadband connection to the Internet today won’t work without the PSTN! Rarely can you go directly from an IP phone or phone jack to a phone on a corporate LAN unless you have established a path ahead of time. A corporate router with the Network Address Translation function will block calls from the Internet unless that IP address is recognized. So how do you get rid of the PSTN? More on that later.

Spending on Circuit Switching? Time and time again, the press reports that no money is being spent on circuit switching. This is misleading. Billions are being spent on equipment tied to circuit switches, and relatively little is being spent on carrier-grade VoIP switches or so-called softswitches. This year’s Telecommunications Industry Association Market Review and Forecast states that $8.2 billion will be spent on central office equipment and only $550 million on softswitches. Again, the conventional PSTN isn’t going away soon!

Those are the new VoIP myths. Now for the old realities. There are many, but here are two for starters: government regulation and VoIP broadband access suppliers.

1) Government Regulation

First off, these new best-of-breed telephone companies pay nothing into the Universal Service Fund and pay no access charges or any of the other government mandated fees you see on an ordinary phone bill, assuming you have a clue as to what those items mean. Claims of saving money from the voice over Internet broadband companies will quickly evaporate when the government(s) steps in.

Second, when customers have to arrange their own 911 service connection, as is often the case with these new breed of telcos, the Public Safety Answering Point operator knows nothing about you (no geographic based telephone number or street address) when you dial 911. This is a disaster waiting to happen. Let one 911 caller or a family member die because a voice over broadband service provider misdirects a 911 call, and you will see government action. What kind of action? A ruling that a 911 call cannot cross a municipal or state boundary to be processed. Such a ruling killed the operator service provider industry in the 1980s, and it can kill this new breed of telco as well.

Finally, if government fees and 911 don’t do in Internet telephony, CALEA-type mandates surely will. When the new breed of telco advertises that you can change your phone number in seconds, select any number with any area code you wish, place calls from Wi-Fi hot spots and more, you become the phone company of choice for drug dealers and terrorists.

How will this new breed of phone company supply the FBI or other law enforcement agents with incoming and outgoing call records? How do you even distinguish a voice call if the target disguises a voice call as Web traffic? What if the softswitch of the new breed service provider isn’t even located in the United States?

2) VoIP Access Suppliers

If the government doesn’t get on the new of breed telcos, who else will? Try their own broadband access suppliers. To make this type of business work you need broadband access, either DSL from a phone company or cable modems from a cable company. When a consumer plugs a phone into an ILEC DSL connection, the ILEC loses phone revenue. When a consumer plugs a phone into a cable modem connection, the cable company loses an opportunity to sell the customer voice service over its network.

The cable companies and the telcos are at opposite sides of the table on most issues, but not this one. What if both of them got together and decided to charge more if you use your cable or DSL connection for voice? Who’s going to stop them? The FCC, which sees these new breeds of telcos as a bunch of freeloaders? The DOJ whose job it is to catch drug dealers and terrorists and sees this breed of phone service as very problematic?

Bottom line: If your only access suppliers are your competitors, and the government is not enthusiastic about helping you, then you have got a problem.

Old and New Realities

The only way VoIP is going to replace the circuit switch-based PSTN is for the industry to face up to the old and new realities.

First, a VoIP service provider has to have a local presence, be it a telco, cable or wireless company. Second, you need a managed IP network that can be segmented into a voice and data network as is done in corporate LANs supporting VoIP PBXs. Finally, the industry has to migrate to IPv6. That’s the only way to deal with VoIP security and authentication.

If you want to know more about how IPv6 is going to be the foundation of next-generation VoIP networks, watch for upcoming features in Billing World & OSS Today or plan to attend Intelligence Support Systems (ISS) World on November 12-14, 2003 in McLean, Va. Go to www.telestrategies.com for more information.