Voice over IP

Rollin', rollin', rollin', keep those new phones rollin'

Submitted by acohill on Thu, 11/11/2004 - 10:54

The FCC has ruled that VoIP is an interstate service, in response to a petition from Vonage, one of the best known national VoIP providers.

This is very significant, because it snatches VoIP out of the clutches of state by state regulation (we've got 50) that could have easily sunk the service before it got started. State regulation would have been a nightmare, and at the least, would have increased the cost of service. At the worst, some VoIP companies would have just quit the business and potentially sunk the industry. There is no way VoIP could be competitive if each VoIP provider had to deal with 50 different sets of taxes and regulation.

Videophones are ready for business

Submitted by acohill on Mon, 11/01/2004 - 08:58

CNet has an article on the "plunging" prices of videophone systems, heralding a drop to under $500.

These are hybrid phone systems that wed old phone system technology with video, in an attempt to create a bridge between conventional phone systems and Internet-based protocols.

I would not spend any time or money on these systems. There are already much less expensive all-IP based systems. I routinely use an inexpensive but high quality iSight camera with the very good videophone software that Apple provides free on every Macintosh.

For the cost of one station using these hybrid systems, you could buy four iSight cameras and give them to three friends, family, or business colleagues--if you and your associates use Macs.

Right about now, some of you are about to click to some other site, having little patience with Mac users. The larger point is this: what's available now on the Mac will be available on the Wintel platform in a year or so. I'm not trying to argue Macs are better, I'm trying to illustrate that these relatively expensive hybrid videophone systems won't last long in the face of less expensive and easier to use alternatives.

We've found the killer app

Submitted by acohill on Mon, 10/25/2004 - 07:58

All through the nineties, and especially during the dot-com silliness, hundreds if not thousands of companies talked about the "killer app." Usually those who claimed they had it were making some thinly veiled sales pitch for some proprietary piece of software that they believed would make them kings of the world.

I argued, at the time, that the killer app was email, and I still think I was right. Email is one of two things that virtually everyone does online. The other is search, and of course, the founders of Google, if not kings of the world, are now insanely rich.

But Google was never designed to be the killer app; no one was sure where search tools were going to go; they just happened. Alta Vista, the first search tool that tried to index the Web, was really started in large part to show off the power of DEC's processors, which weren't doing well in the marketplace. Alta Vista's early lead was squandered and DEC was bought out by Compaq, which killed the once powerful company, and Compaq was bought by HP. Ho hum.

Broadband connectivity has largely escaped the killer app disease, but in an odd kind of way. The broadband giants (i.e. telcos and cable companies) have pretty much failed to recognize that broadband is not that interesting unless you can do something with it. The big connectivity companies of the dot-com era (e.g. Global Crossing, UUNet, etc.) all collapsed because they utterly ignored the very sensible question, "What will people do with the bandwidth?" Consolidation in the cable business has been driven in large part by the enormous debt wracked up by cable companies trying to get broadband marketshare in advance of having even the slightest idea what people would do with it.

The killer app for broadband is going to be Voice over IP, or in simpler terms, telephone calls. We're already at a point where you can pretty much buy WORLDWIDE flat rate calling for under $40/month. Free point to point telephony software drives that cost down to zero.

We ought to stop calling the phone companies, well, phone companies. They aren't anymore, whether they like it or not. They have no choice but to become broadband companies, and just one of numerous services they offer happens to be dialtone.

In his remarks to the Voice on the Net conference in Boston on October 19th, FCC Chairman Michael Powell has called VoIP a "revolution." Powell went on to call for "bare DSL" access, meaning you can buy DSL service without being forced to buy bundled telephone service.

He went on to say something even more remarkable by outlining what he calls the Internet Consumer Freedoms:

  1. Freedom to Access Content: Consumers should have access to their choice of legal content;
  2. Freedom to Use Applications: Consumers should be able to run applications of their choice;
  3. Freedom to Attach Personal Devices: Consumers should be permitted to attach any devices they choose to the connection in their homes; and
  4. Freedom to Obtain Service Plan Information: Consumers should receive meaningful information regarding their service plans.

The Consumer Freedoms that Powell outlines are breathtakingly simple yet incredibly important. They underscore the need for communities and organizations to have a competitive marketplace for broadband services--monopoly providers have no incentive to meet Powell's requirements.

It is exciting that Powell has laid this out so plainly. What's going on? Well, another part of his remarks calls for exclusive Federal regulation of Voice over IP. If the alternative is a mish mash of fifty different sets of state rules that are likely heavily influenced by corporate contributions, that may be the right direction, as long as Federal regulation is as light as possible. It appears Powell understands this.

download Michael Powell VoIP remarks).
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FCC may regulate VoIP

Submitted by acohill on Wed, 10/20/2004 - 06:22

This story says the FCC is interested in regulating VoIP [link no longer available].

FCC Chairman Powell has a point--if the Feds do nothing, some states will certainly step in and try to control the new service and/or try to tax it, leading to only one possible outcome--a mess. The states can't possibly regulate VoIP, because it's not a place-based service. Companies like Vonage and AT&T don't have to any equipment located anywhere in a state to sell VoIP service to residents, and so the notion that a state should be trying to control an out of state company is silly. Nonetheless, some states will try.

According the article, Powell is a big fan of VoIP, and wants to see it succeed. Good. If the FCC uses a light hand here and keeps the states out of it, that's entirely appropriate.

Earthlink adds VoIP services

Submitted by acohill on Tue, 10/05/2004 - 08:23

Earthlink faces the same problem AOL is already struggling with--a shrinking market for dial access to the Internet. Earthlink has been staying in the black by slashing customer support and by providing barebones access, as opposed to AOL's tedious, ad-laden interface.

Earthlink has a lot of customers like me, who need occasional dial access from the road, and don't want the dreck AOL ladles out along with it. But I find I need to dial through Earthlink less and less as hotspots, especially in hotels, become more common. As I've written previously, I and many other travelers now pick hotels based on the availability of broadband, not on the kind of shampoo you find in the bathroom.

AOL has tried to keep its customers by extortion--for example, you can't forward your AOL email to another account, which makes it much more difficult to quit AOL if you have used your AOL email address for a long time. AOL is basically saying to customers, "Leave us and your life will be miserable while all your email goes missing for a while." Most other email account providers let you forward your mail.

But back to Earthlink, which is now providing limited VoIP services if you have an Earthlink broadband account. It's a clever move, because the appeal of free calling (at least to some of your friends and family) will help sell the access part.

We're going to see more bundling of services--the phone companies are trying to win back some broadband customers by bundling local, long distance, and broadband, and the appeal, aside from saving a little money, is that you potentially go to one bill from three. In theory, you should also be able to get better service and customer support (in theory).

AT&T slashes residential VoIP prices

Submitted by acohill on Fri, 10/01/2004 - 08:46

In an indication that the company intends to provide still competition to the regional telephone companies, AT&T has cut their CallVantage VoIP service price by 25%, from $40/month to $30/month.

CallVantage, which works only if you have broadband service, provides local and long distance service nationwide for a flat $30 a month--the lowest call plan we've ever seen, including those offered by some of the cellphone providers.

When you add up how much money the residents and businesses of a community are stuffing in envelopes every month for phone service, it turns out it is a lot of money. Broadband, despite the cost, can produce savings in other areas, like phone service. Anything that helps keep a community more of its money (i.e. broadband) is a very good thing.

VoIP getting even easier

Submitted by acohill on Tue, 08/24/2004 - 11:17

Daily Wireless discusses a new NetGear home router product that has voice phone ports built in. NetGear is one of the biggest manufacturers of those cheap WiFi router/hubs that have been selling like hotcakes.

What's important about this is that it reduces the box count (and thereby the complexity) of the network in our homes and small offices. Stuff this like must strike fear into the hearts of the telcos; expect that two years from now, virtually every home router/hub will have phone jacks built in. Homeowners will be able to switch their entire set of home phones by simply unplugging the jack in the NIU (Network Interface Unit--the grey box on the side of your house) and simply plugging that wire into this NetGear box.

So we now have a sub-$100 box that provides broadband data and voice telephony. What's next? In a couple of years, we'll have the same kind of box with a coax connector on it to distribute television programming throughout the home.

AT&T still in the consumer market

Submitted by acohill on Mon, 08/23/2004 - 08:54

This article [link no longer available] suggests I was write a couple of months ago when I said that AT&T still planned to offer consumer dialtone, despite their announcement that they were getting out of the consumer local and long distance market.

I suggested that this masked a push by AT&T to become a major VoIP player. AT&T is helping consumers who don't yet have a broadband connection to get one, using CableLabs' Web-based tool. This is a shrewd move, and VoIP may yet save AT&T, which over the past twenty years has made a whole series of poor business moves.

VoIP saves small businesses money

Submitted by acohill on Mon, 08/23/2004 - 08:47

Om Malik points to a story in the Tri-City Herald about the benefits reaped by a local small business that is using VoIP. A local florist with stores in both Washington and Oregon estimates that he is saving $100/month by using VoIP instead of traditional long distance services.

Economic developers can help small businesses grow and add jobs by helping them understand the benefits of VoIP and how to pick a VoIP provider. With existing small businesses creating most jobs, one of the best job creation activities ED folks can engage in is saving existing businesses money on overhead like telephone service. The savings can be ploughed into business expansion. How does your region rate on helping existing businesses expand? What programs are in place to educate and train busy small businesspeople in new technologies?

VoIP spam--the next horror?

Submitted by acohill on Tue, 08/10/2004 - 10:13

CNet writes about the next potential spam horror--voice mail spam sent to your Voice over IP telephone. VoIP phones have an IP address, just like your computer, and spammers will probably figure out a way to send spam right to your phone.

It's not something worth worrying about yet....as we get better at tightening up anti-spam laws and regulations, we may stop it before it gets started. As the CNet articles notes, it may be that it can be forestalled by adding language to the Do Not Call law.

The emerging telecom wars

Submitted by acohill on Mon, 08/09/2004 - 07:07

USA Today (Monday) has a front page article (Business section) on AT&T and its decision to get out of the consumer market for local and long distance services. Opinions are mixed on the wisdom of this approach, but the company does not really have much choice. With the FCC decision to allow the regional Bells to charge whatever they like for wholesale access to their infrastructure, AT&T could no longer profitably offer local dial tone service.

As I've said before, I think that the FCC made the right decision. If the Bells are expected to compete with unregulated companies (e.g. the cable and WiFI firms), it does not make sense to hobble them by requiring them to sell their own network to competitors below market rates. It is no coincidence that since that ruling a few months ago that the regional Bells have begun to announce FTTP (Fiber To The Premises) projects--they finally know they can make money doing so.

Buried in the article is a one line reference to the "Cable-Phone Wars." One reason the phone companies have finally jumped on the fiber bandwagon is that the cable companies have captured a large part of the broadband customer base by investing early. DSL is now selling in most of the country for about $15 less than cable service because the phone companies have to do something to get customers back--like actually compete on price and service. Horror stories abound, but generally, the cable companies, which tend to have more local offices and real service people working for them, seem to be winning the service battle.

The phone companies, in a better late than never strategy, are winning the price war right now. This is all good for consumers, up to a point. Quality of Service (QoS) is still shaky for both cable and DSL. Both are copper-based legacy systems that were never designed to deliver high speed data to homes and small businesses. Fiber and wireless can deliver data much better, but can't always provide the content (e.g. cable TV) and/or some services (like dialtone)--yet.

Area codes and VoIP

Submitted by acohill on Thu, 07/08/2004 - 11:04

An article in today's Wall Street Journal (B1) discusses the growing trend, mostly among businesses, to take advantage of ability of VoIP to offer a choice of area codes. Area codes like 212 and 415 (New York and San Francisco) are very popular.

Some businesses are doing it to take advantage of the having a prestige area code. That's of limited value over the long term; as more businesses do it, your area code will have less and less meaning. But another reason some businesses are doing it is to give their customers a local phone number. If you had significant business in the San Francisco area, it is just good business to give customers a local phone number to call for service and sales.

Over the long term, area codes will become less and less meaningful as VoIP spreads and phone numbers become truly portable. What's even more likely is that phone numbers will disappear completely; VoIP actually maps phone numbers to an IP address, meaning that the phone number is just an extra and unnecessary step. Over time, IP addresses will be used instead of phone numbers.

AT&T gets out of local dial tone--sort of

Submitted by acohill on Thu, 06/24/2004 - 09:16

In a widely carried AP report, AT&T has announced it is getting out of local dial tone and long distance in several states, and may abandon most other states shortly. There are two things going on here, and only one of them was discussed in the article.

The article correctly notes that the proximate cause for the AT&T pullback is the FCC ruling that allows the local phone companies to charge higher wholesale rates for their antique copper telephone lines. AT&T has been leasing these in bulk to provide local dialtone. The higher rates make it unprofitable for AT&T to do so.

On the face of it, this looks bad for local communities, as there seems to be less competition, and puts the local phone companies back near their previous monopoly status for dialtone.

What was not covered well in the AP article is the fact that AT&T is making a major push for Voice over IP local and long distance services. The company has wisely decided to abandon the antique phone service market and concentrate on selling what is going to count in the future. It's a smart move.

Some of the phone companies are not standing still, however. SBC has announced it will spend billions on fiber to the neighborhood and fiber to the premises, although the latter will be done only in new neighborhoods for now. The new system will have the capacity for a single channel of HD TV--much higher capacity than existing DSL lines, but still not what will be needed in the future. But the fiber has the carrying capacity--SBC is reluctant to put in the electronics, probably because of cost and because they are trying to control access.

Communities getting these new systems may breathe a sigh of relief that they don't need to do that telecom planning after all, but their headaches are simply being deferred to the future. A monopoly is a monopoly, and it does not matter much if it is a legal monopoly (the old, pre-1996 approach) or a de facto marketplace monopoly.

WiFi phone

Submitted by acohill on Thu, 06/17/2004 - 13:51

Here is just one of several new phones that are WiFi only. These wireless Internet phones allow you to make voice phone calls anytime you are in a WiFi hotspot--yet another reason to sprinkle WiFi hotspots around your community.

I found this particular phone on the BroadVoice site, yet another Voice over IP startup that has inexpensive phone rates. Like Vonage, you get a little adapter box that you plug into your Ethernet hub/switch, and you plug a normal telephone into the adapter box--instant Voice over IP phone. You can take the box with you when you travel and make phone calls from your own phone number anywhere you can connect to the Internet.

One of the key drivers of VoIP technology will be this last feature, which is true number portability. In the future, we won't need to keep track of cellphone numbers and home phone numbers, or cell numbers and business numbers. We'll have a true portable phone number that we carry with us in our pocket, literally.

Lucent buys VoIP manufacturer

Submitted by acohill on Mon, 05/24/2004 - 09:02

Lucent, the manufacturing arm of AT&T, just bought Telica, a manufacturer of VoIP equipment. As I've written recently, AT&T seems to understand the potential of VoIP to revive the companies fortunes. AT&T has floundered ever since the breakup in the mid-eighties.

The most recent mess was at AT&T Wireless, which was apparently run by a hapless and arrogant group of what former AT&T folks call "Bellheads," which are company people that can't step outside the traditional boundaries of the the "old" telephone business.

But AT&T is making all the right moves--they recently announced $20 unlimited local AND long distance VoIP service, firing a shot across the bows of the regional phone companies (e.g. Verizon, SBC, Qwest, etc).

The purchase of Telica gives them the ability to sell their own equipment to their VoIP customers--a nice double play.

The most interesting part of the article was that Telica says they have sold three million VoIP handsets. Yes, that means three million VoIP users from just this one company. That matches up pretty well with estimates of 4-5 million VoIP users in the United States.

Number portability reaches rural areas

Submitted by acohill on Thu, 05/20/2004 - 08:52

CNN reports that cellphone number portability is about to reach rural and less populous areas of the country. The introduction of the service has been phased in, with the 100 most populous parts of the country getting it first. Customers will be able to move their cellphone number from one company to another, and will also be able to move a landline number to a cellphone, with certain restrictions on area codes.

All in all, this is a small but important step to making the telephone network more like the Internet. Domain names belong to you, not your Web hosting company, and you can move your domain name from one provider to another, based on price and quality of service, etc. We want the same kind of flexibility with phone numbers. The current situation is particularly difficult for businesses, who can't easily change phone numbers without disrupting customer service.

In the old days (pre-Internet), phone number truly did have to be tied to infrastructure. But not anymore. We will all benefit in the coming years from increased competition for dial tone services, which is already bringing lower priceas and more/better services.

VoIP gets cheaper

Submitted by acohill on Tue, 05/18/2004 - 07:51

Forbes reports that Vonage, the start-up Voice over IP company, has dropped prices while adding new customers at a furious rate.

Forbes speculates that pressure from AT&T's VoIP offering (six months of unlimited local and long distance service for $20) has forced Vonage to adjust their prices. Competition is a wonderful thing. Vonage now has 155,000 customers and is adding new ones at a rate of 666 per day.

AT&T saves $250 million by using VoIP

Submitted by acohill on Wed, 05/12/2004 - 12:13

Om Malik reports that AT&T has saved more than $250 million dollars in the past four years by routing phone calls over the Internet instead of the switched telephone network. In a classic counter-attack, the phone companies that did not get to switch AT&T's calls are suing the company for lost revenue--apparently they think they have a "right" to make other companies use their antiquated systems.

Motorola to offer WiFi phones

Submitted by acohill on Wed, 05/12/2004 - 07:55

Following Nokia's initial foray into dual mode cellular/WiFi phones, phone giant Motorola is entering the marketplace. Motorola's phone automatically switches to WiFi mode if you enter a WiFi hotspot, meaning that you save your cellular minutes and your cost of calling will be lower overall.

WiFi "communicators" are entering the marketplace, and are being used in large institutions like hospitals and city libraries, where staff have to be in constant communications. Traditional walkie-talkies and radios don't work well in those situations, but WiFi provides crisp, clear voice messaging. One hospital has saved time and money by giving staff WiFi communicators they wear around their neck.

Does it sound like something out of Star Trek? Well, it is. But this is not science fiction, it's a reliable commercial product that is saving time and money. Does your community have a WiFi hotspot plan? Without ubiquitous WiFi, these new devices won't work reliably.

FCC Chairman says VoIP "biggest breakthrough...ever"

Submitted by acohill on Mon, 05/10/2004 - 08:45

FCC Chairman Michael Powell has it exactly right in an article in the Business section of the Rocky Mountain News. At a speech in New Orleans to the National Cable & Telecommunications Association, Powell said, "I think it's going to be the very, very best and biggest breakthrough in our ambitions and dreams about competition ever."

Exaggeration? I don't think so.

VoIP is the killer app for broadband. It's what all those enormous dot-com investments in infrastructure were hoping for back in 1999 and 2000. It is the trifecta--it will lower prices for current voice services, it will introduce valuable new voice services at little or no additional cost, and the use of VoIP will spur competition and attract new and other kinds of services.

What's the catch? You have to have reliable, high capacity, affordable broadband. DSL and cable modems will only carry us part of the way. This is a core economic development issue, and rural communities, suburbs, and any part of the country that does not have a community-based telecommunications master plan is going to be in trouble from a jobs perspective in the next decade.

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