Print 

A double issue on VoIP in the context of new developments in Spectrum Policy Reform and P2P

The Enterprise Prepares to Leave the PSTN:

Find out how to order single copy ($270) or group license ($540) for just the January - February 2003 issue.

Contents:

VoIP, Wireless, and P2P Erode Local Loop

Enterprises Begin Migration from PSTN as VoIP Both Matures Outside of Enterprise and Collides with International Tariffs

We Review Wide Range of VoIP Economic & Technical Issues as FCC Chairman Powell Embraces Spectrum Reform pp. 1 - 14

The Three Roads to Fail Fast

The First Road: A Wireless Revolution at the FCC? p. 4

The Spectrum Policy Task Force -- an End Run? p. 5

Watch for the Political Manuevers - From Fail Fast to Congressional Counter Pressure p. 7

Excerpts from Powell's October 30 Speech p. 8

The Significance of Regulating the Device and not the Spectrum by Dave Hughes p. 10

The Second Road -- P2P or the "Bandwidth Hogs" Versus the Wireline Trolls p. 11

Preventing "Bandwidth Abuse" -- Irrelevant Networks Versus the Internet p. 12

Is American Broadband Infrastructure a Useless White Elephant? p. 13

New Cuts that Will Further Drain the Life Blood of the PSTN p. 14

The Third Road -- Foundation Is Being Laid for Enterprise Departure from PSTN --Richard Shockey Describes VoIP Progress Enterprises Adopt SIP and Move Voice to Data Nets While ENUM Advances pp. 16 - 24

Economics of Enterprise Voice p. 16

SIP's Power Resides in its Simplicity p. 17

ENUM for Voice Extranets p. 18

ENUM in US - Minimalist versus Maximalist with Government as Arbiter p. 21

Why the LECs Loose, p. 22

Symposium Discussion

IP PBX and Centrex Business Models . . . VoIP Impact on Telco Economic Problems. . . A Nethead Analysis from Inside Telekom Austria of VoIP. . . ENUM and Related Economic Issues. . . VISION NG and UPT. . . Global IP Sound pp. 25-54

ENUM and VISION NG Issues p. 26

So Where is the Phone Company Future? Richard Stastny Replies p. 28

VISION NG and UPT p. 31

UPT and ENUM p. 34

Infrastructure for ENUM p. 35

Carrier Adoption of VoIP p. 35

Global IP Sound p. 37

Further ENUM Progress p. 38

Internet NOC Dial by AS Number Project p. 39

Further Detail on INOC p. 40

Panama and VoIP Restrictions p. 41

VoIP-Based ByPass Carriers p. 42

Global Growth of Carrier PSTN Switched Minutes Slowest in 20 Years While VoIP Minutes Sky Rocket p. 43

How Long Will it Take to Change . . . ? p. 44

Two Camps Within SIP - End-to-end Versus Service Provider Walled Garden p. 44

ITU Activities with SIP and ISUP Interworking p. 45

A VoIP Walled Garden from Pulver p. 46

Sonus Product and Services p. 46

Get Free VoIP Calls with Internet Service - in Japan p. 47

Voice Quality p. 47

VoIP Threat to the ILECs - From Cable or from Vonage? p. 48

Carrier Driven VoIP Peering Issues p. 49

Verisign, Illuminet and ENUM p. 49

LECs Complain About Consumption of Phone Numbers by VoIP Use p. 49

Gatekeeper or Proxy? New Ways to Number p. 50

ENUM Encore p. 51

Opt-in for ENUM p. 52

URLs for ENUM Trials p. 53

VoIP moves by IBM p. 54

Broadband Is the "Killer Application" -- Open the Broadband Gates and What Users Send Exceeds What They Receive -- Participants from Our Asset Based FTTH Symposium Discuss Current State of Broadband Application and Business Models pp. 55 - 66

Preserving Neutrality of Internet Attachment and Transport Rises to Level of National Policy Issue -- To What Extent Can the Network Provider Restrict the Customers' use of the Network? pp. 67 - 71

Building Asset Based Telecom in the Shadow of Mt Everest -- Vision of Economic Development and Preserving Sherpa Culture Becoming Reality in the Teeth of Maoist Insurgency on the Eve of 50th Anniversary of First Ascent of Everest -- Classic Example of the Benefits of Edge Controlled IP Technology With Users Building Infrastructure that the Government and Telco Cannot Provide pp. 72 - 89

ICANN Designed to Serve Narrow Special Interests and Established to Exploit Dissatisfaction with Government -- Result Was to Remove Recourse to Administrative Law and Open Door to Four Years of Abuse by the Clique Manipulating the Process -- 1998 Lessig Speech a Prophecy of What Would Happen pp. 90 - 92

Highlights pp. 93 - 104

Executive Summary pp. 3, 105 -107

EXECUTIVE SUMMARY Voice over IP

We publish a combined issue on the take off of Voice over IP (VoIP). This technology is now reaching maturity and being applied widely throughout the enterprise and globally as it can be gatewayed into the GSTN in any country reached by the Internet. The result will be to increase the traffic hemorrhaging from circuit switched networks onto IP nets. And the same time it will only increase the amount of cash being bled from the telco's bottom line.

A month ago when we published the first half of this issue Michael Powell looked as though he had undergone a sudden epiphany that by means of the FCC spectrum reform process might enable the American telecommunications industry to revive by permitting changes in spectrum regulation that would throw the door open to wireless replacement of much of the wireline local loop. For the first time the FCC admitted that digital radios had capabilities that earlier analog radios did not. The significance of all this is discussed in detail in the first dozen pages of this issue.

Since our publication of these pages in early December the FCC has come out with two forward looking Notices of Inquiry as follow through to the recommendations of the spectrum task force. The apparent about face was so stunning we wondered whether Powell might not be a bumbling fool but rather a states man. Suddenly however on January 6, 2003 as we go to press what Powell gave with one hand he is now ready to take away.

According to Converge! Network Digest Vol 10, No 2 "FCC Chairman Michael Powell is drafting a plan that would gradually eliminate requirements that incumbent carriers provide their competitors with wholesale access to their local networks, according to a front-page story from The Wall Street Journal. The new rules would be "the most drastic changes since the Telecommunications Act of 1996" and would be a major victory for the four regional Bell companies. The biggest losers would be AT&T and WorldCom. According to the article, Powell's current draft plan calls for a two-year transition period before competitors would lose their discounted access to the ILEC switches." One could cast this latest action designed to make the LEC monopolies complete as a witless move to breathe new life into dying companies and in so doing to make sure the industry does not recover. If one were charitable one might see it as an ultimatum to the wireless industry that it had two years to complete a wireless alternative to the LEC local loop. Unfortunately there is some doubt that the regulatory process would be streamlined in sufficient time for new radios to compete with the Powell-blessed local copper "fortress" of the dying LECs.

The Republican administration it would appear remains incapable of conceptualizing in any way shape or form that a telecommunications commons as described by Lessig is a desirable policy goal. If property is good, more property is better. To hell with using public resources to build a national infrastructure. We are much better served it would seem by using those same resources to shore up decrepit technology as long as there is money and political clout behind it.

Canada and Now Korea Lead the US

For years Canada has been building telecom infrastructure vastly more advanced than we can coble together out of our free market carnage. Sources in Canada tell us that the Canadian CRTC is prepared to go even further in the very direction of open access to its networks that the American FCC is now abandoning. Now according to a January 1 article in Wired, http://www.wired.com/news/infostructure/0,1377,56525,00.html Korea has succeeded more than any other nation on earth in building a national broadband infrastructure. "With a population of 48 million, South Korea has a formidable position as the world's broadband Internet leader, far outstripping the United States and Europe. As of last month, 10 million Koreans -- which equates to 70 percent of households -- had home broadband connections supplying high-speed Internet access, said Jin-wook Son, managing director of Korea Telecom UK. Most pay about $33 monthly for an 8 megabit-per-second connection. Wireless access, which allows subscribers to access numerous public Wi-Fi networks, costs an extra $8.50 a month."

Koreans spend an average of 16 hours a week on the Internet -- compared to 10 hours for Americans and four hours for the British -- with housewives who shop, trade shares, take classes and get information online generating some 45 percent of all Internet traffic, Son said. [snip] "Initially Internet traffic went overseas, 98 percent of it," Son said. "There was no Korean content. But this has changed completely. Domestic traffic is now about 85 percent, and overseas, 15 percent. However, this does not mean that overseas traffic has decreased. Instead, domestic traffic has increased." [snip] Telecommunications analyst Susan Richardson said Korea's broadband success story is partly due to elements specific to the Korean market: high-density living, state-controlled local exchanges and "competition that was quite hearty to begin with." In particular, "the government really decided to seed broadband rollout as an economic and social benefit for Korea," she said. [snip] "So many people are trying to see first what the killer application will be for broadband. In our experience, broadband itself is the killer application," Son said.

This issue contains a revival of some of the broadband discussion in our Aug- Oct Asset Based Telecom issue. In addition to the hypothesis that broadband itself could be the killer application that enables broadband, it contains evidence from Grant County Washington that in communities where bandwidth is largely unlimited users develop voracious appetites and that upstream bandwidth is often greater than downstream due likely to the use of P2P applications. We may soon find out that our legacy networks have the wrong architectures.

VoIP Matures and Enterprises prepare to Leave the PSTN

An interview with Richard Shockey emphasizes 2002 as the year in which SIP based products reached the market in a large way enabling corporate information managers to begin to move voice traffic onto their data networks. With devices like ether phones and Cisco VoIP gateways and SIP based proxy servers traffic that stays within a large corporation is now much cheaper to route over its data networks than over the PSTN. With ENUM maturing the way is open to ENUM registries designed to facilitate industry based "extranets". At some point that is not too far off. Our experts say that SIP and ENUM can combine to replace SS7 signaling that enables the PSTN.

In the meantime the time has come for readers to pay close attention to SIP. They should repeat the following until they know its essentials by heart. "The really important idea that David talks about, after the notion of a dumb network that can be the foundation of any IP-based networked application, is the Session Initiation Protocol. It will allow any device to find another device and begin to communicate." Isenberg : "'What HTTP did for documents, SIP (Session Initiation Protocol) will do for communications." Smart Letter #81 December 31, 2002

VoIP Has Come of Age

VoIP is being adopted everywhere. Services like Vonage are making it possible for homes with broadband connections to plug in with the use of Cisco AT186 gateways. Carriers are adopting SIP based products of Sylantro and Sonus. With a carrier you may no longer know whether you voice calls are circuit switched of packetized. While some like Vonage are open to everyone many like those of Cisco and Sylantro are oriented to enterprises. Enterprises may install the infrastructure and operate it themselves or connect to outsourced infrastructure where they pay a fee for service and don't even need to worry about purchasing the equipment.

SIP enables IP overlays of other countries carrier infrastructure. Richard Strastny of telecom Austria talks in detail about how the VISIONng project has been used with ENUM to build trials for UPT or the use of Universal Personal Telecommunications numbers. A large part of the economics of VoIP will revolve around new services that are enabled with the mating of projects like VISIONng and ENUM. These services can only happen when voice is carried on a packet switched end user controlled network.

ENUM

ENUM is nearing global commercial deployment with some interesting new capabilities. We list most of the national trials that are underway. In his interview with us Richard Shockey described minimalist ENUM. "All you want ENUM to be able to do is to deliver the minimal amount of information in the DNS necessary for SIP to establish a connection between two end points." However, by the beginning of January, ENUM was being seen in broader terms. Again according to Shockey who pointed out that a rapidly growing number of ENUM trials are testing variations on three views.

(1) Minimalist ENUM as a service control point that performs a linkage from the Internet to the PSTN.

(2) Calling party control where through use service records in a field in the NAPTR record someone may choose how much of their personal contact information to expose to the global DNS. The control here is along the lines of whether or not a person wishes to make it easy for the world to reach them on whatever communications devices and at whatever addresses they chose.

(3) Called party control. Where through different use of fields within the NAPTR record someone may control the kinds of devices on which segments of the outside world (as they are defined by the called party) will be able to get through. A user could presumably control whether or not a calling party could reach him on his land line or cell phone or who could or could not send him a fax.

These choices are described by Shockey in his recent Internet Draft. They are not necessarily mutually exclusive. Those readers wishing more detail should very definitely read the draft.

Meanwhile Telecom Austria has a windows-operable plug-in that will allow VoIP users to make calls that poll most of the currently operating ENUM trials around the world, linking after a fashion the databases of the various trials. It looks to Richard Shockey that ENUM will finally roll out in 2003. The biggest unknown in the US emerged in December with the issuance by the FCC of a NOI on E911 services in the VoIP arena. The backers of this are generally the ILECs who would like to slow ENUM down.

VoIP and International Tariffs

VoIP is hammering international tariffs long set artificially high. The ability to do VoIP and gateway it to the PSTN for a fraction of the normal cost has set up an global industry based on the potential for arbitrage in the price differences. If the official rate to various countries runs between 75 cents and a $1.50 a minute and VoIP calls can be gatewayed both incoming and out going for a few cents a minute, retail prices can be cut tremendously and still leave room for middle men here and abroad to establish very profitable businesses in delivering services at a fraction of the local monopoly telco price.

As long as matters don't get too far out of hand, regulators tend to turn a blind eye to a practice that tends to permit them to leave official tariffs in place because they can be "gotten" around. But it is in these areas especially that traffic leaving the globally switched telephone network has become a gushing torrent. How bad is it? It is so bad that while the practice sprouted in the third world it has spread to Europe and other western countries where Data arms of major national carriers are so hungry for business that they are taking it away from the switched side of their same company. Thus grey and black market VoIP arbitrage can be found almost everywhere, while surviving Greenfield fiber players are racking up vast growth in VoIP minutes.

An article in the December 16, 2002 New York Times is worth reading. http://www.nytimes.com/2002/12/16/technology/16TELE.html The author asks: "Will the price of international telephone calls continue to decline? And will more people choose wireless technology over land lines? The answers lie in whether new technologies continue to rival existing ones in the coming year. A glance across the humbled telecommunications industry might suggest that its largest companies are worried about other pressing issues in 2003, chief among them stabilizing the market for the tried-and-true service of placing calls from a phone tightly tethered to a jack.

After all, telecommunications and technology companies lost $7.6 billion in global market value from March 2000 to September 2002, as the industry was gripped by stunning collapses, financial scandals and an effort to absorb excess capacity on globe-spanning communications systems.But alongside the industry's search for its direction after such turmoil are trends that threaten to destabilize global telecommunications further in 2003. These trends could be described as the start of a cannibalization of established services by disruptive new technologies.. . ." [Snip]

Namche Chatauri

An inspiring look at asset based telecom on the slopes of Mount Everest.

May a Provider Restrict Customer use of an IP Network?

Finally we look at an important struggle seeking the preservation of neutrality of Internet attachment. We follow Larry Lessig's discussion of how "a strange coalition of companies and consumer activists, including Disney, Microsoft, and the Media Access Project, sent a letter to the chairman and members of the FCC, asking the government to ensure the "ability of consumers and business to communicate with one another ... without obstruction from network service providers." Both steps signal, LeggMason reported, a "key policy issue" that will increasingly frame the telecommunications debate: "the extent to which the network provider can restrict the customers' use of the network." What is going on hearkens back in part to the question of the Cable co's complaints about bandwidth hogs covered in the early pages of this issue. We note that when these folks make arguments about maintaining quality of service what they are saying essentially is they want to restrict customer's use of the network in order to maintain their central control.

ICANN

We discuss Lessig's Oct 15, 1998 prophecy of ICANN's fate in the light of the most current events.