VOIP and the anti-competitive behaviours that would logically induce in a telco

These are ugly times for telcos, a topic I look forward to exploring a little more on this blog. Today's topic is VOIP and the anti-competitive behaviours that would logically induce in a telco. Let me share with you a recent email from my broadband ISP. First some background. My ISP is a telco, the big dominant telco. They also provide me phone lines. Actually they try to pretend they don’t, by branding the ISP arm as an excitingly named subsidiary, but it is a pointless sham really when it all comes on one convenient monthly bill.

Why would I get my broadband from a big ugly telco? Well I didn’t have much choice really. I live in a village of 700 houses, mostly blue-collar (and yes, it's idyllic, when the wind stops). The cable goes straight through here to more luicrative suburbs without a tap: we get our pay TV by satellite. The nearest broadband wireless base station is miles away. I can get satellite broadband, but I run all these websites. I need to upload the fruits of my development as much as I need to download backups and scantily clad women, and satellite broadband is VERY asymmetric (like some of those women). So that leaves me with ADSL, which comes through the copper, which is provided by the telco. Since I signed up, the government has forced the aforementioned telco to unbundle the local loop letting competitors get at me, but too late for me. (And the telco had the gall to claim they would have done it anyway. LMAO. Couldn’t sit for a week.) Another recent development is that my power company claims they can pipe me broadband down the power lines, thus locking me in with a different ugly corporate giant.

Besides I prefer to deal with one pack of support morons not two. So for good or ill I’m in a contract for broadband with the phone company.

Which brings me to the very exciting email from the very excitingly-named ISP subsidiary:

We're eager to keep you informed of what new developments you can expect in broadband services in the near future.
Right around the world broadband services are constantly developing, and [this country] is no exception.
Back in April, new [exciting name] plans were introduced delivering maximum download speeds of up to 3.5 megabits per second on supported lines. We also announced that we will be introducing new technology in the future that will enable even faster broadband speeds for customers, depending on their location.
Hot off the press is the news that [we] will be providing new unconstrained speed options later this year.
These new plans will include options which will deliver unconstrained speeds for both downloading and uploading. So instead of being provided with individual maximum line speeds, these options will deliver the maximum the network is capable of delivering at any particular location and time. [I live in a technologically primitive country. YES this is considered an exciting development. I know. I know.]
With these plans customers may find it easier to do things online that are "bandwidth-intensive" - eg. downloading / uploading music and files, watching video, sending and receiving large email attachments such as photos, and playing online games.

Now, for a starter for ten, what bandwidth-intensive activity is very pointedly NOT included in that list? Yes, very good. VOIP. As in Skype, Google Talk… Lynch-pins of several of my businesses, the greatest invention since the internet itself.

Why not? Well the telco doesn’t want you to do it do they? In fact they are not going to even mention it because a lot of the people in this country - who still think unconstrained broadband is an exciting development - haven’t actually heard of it, and the telco for one are not going to tell them.

Switch now to a meeting I went to where there was much discussion of this same telco who have been hotly denying rumours that they have been using QoS in routers to recognise and degrade VOIP traffic. This would probably be viewed in most circles and even in a court of law as anti-competitive practice. In fact it is monopolistic, in that I believe the telco in question provides pretty much all the fat-pipe backbone in and out of the country.

One lady in the meeting asked “Why do they do that? Why can’t they accept the world has changed and embrace the new technology as something exciting?” Well, the left-wing, hairy naivety of the question had me gobsmacked (fuzzy thinking always brings out the P J O’Rourke in me). Because they are a giant corporate conglomerate in one of the most fiercely competitive industries, you pixie-dust idiot (…I felt like shouting but didn’t, being a nice chap off-blog). Because they still have billions of sunk investment in copper and exchanges and vans and phones to wring an ROI from. Because they swaggered into the mobile phone market thinking they could bully and gouge there too and had their lunch eaten by real capitalists in a truly competitive market for a change. Because they pissed further billions up against the wall on the 3G nonsense like most other telcos (a topic for another day). Because, hallelujah, they are finally answerable to shareholders (yes I live in one of THOSE counties where that too is an exciting new development). Because they are mad as hell over some long-haired bunch of hippy upstarts giving phone calls away for freekin’ free, across THEIR pipes!! Right under their freekin’ noses!!!!

Whaddya think they say about that in the telco boardroom? “Isn’t new technology exciting”? “We must take a hands-off approach and allow the market to find its own level”? I DON’T THINK SO. They are saying “Screw those muthas down so low in the QoS all they can see is their own toes, and if you tell anyone we’ll sink your pension and come after your children”. That’s what they are saying.

Outside of some over-conscienced techo blowing the whistle on them who would ever know what the QoS settings are? We have a saying here when they cry innocent: “Yeah, right!".

So all this exciting new unconstrained bandwidth that they are so eager to tell me about isn't worth a pinch of drek to me for one of my bandwidth-intensive activities of choice, because this little black skeptic doesn't believe for one moment that they are going to let me get away with it.

What about YOUR country?


VOIP is a fancy Dial Around Service

I worked for a small telco on VOIP in the 1990s. I like the VOIP technology, but I think the current big players in VOIP are the slime buckets of telecom. These companies simply provide a "do-it-self" dial around service.

A dial around service is a service that dials around a metered switch so that people could use the service of a teleco without paying for the service. Dial around services are essentially anti-market products since they deny the people working to build a network the ability to receive the income from that network. Imagine an employee who will open the back door to the local grocery store if you slip him a quick $20. This looks like a good investment to both you and the employee. You get a cart of $100 of groceries for $20, and the employee gets twenty smackers. In the scheme of things, it bad for the grocery industry that makes groceries appear on the shelves.

The reason that VOIP dial arounds exists in the United States is the cozy relationship that the ATT monopoly had with the regulators. The idea in the early days of telecom was that long distance calling was a luxury and local calling a necessity. Regulators built a house of cards that slapped excessive fees and costs on long distance calling to subsidize local and rural service.

As for the internet, it has suffered from its inception from the lack of a means to pay for its development and maintenance. The initial investment in the internet was funded by the Military and Universities. Neither group was all that interested in metering usage. When the internet went global, it initially used the backbone funded by Universities. Universities had no intention of letting the public use their little bit of socialist manna.

It just so happens that as Universities closed access to their backbone, the telephone companies were looking to make major upgrades in capacity with fiber optics. It also happens that they found ways to effectively compress analog meaning they had spare capacity. A prime component of the dot com boom was idiotic telephone executives who were willing to fund major increases in capacity without thoughts on how they would collect revenue from the capacity. These people were under the illusion that they would continue to get a major income stream from long distance.

The exponential increase capacity, however, ended up digging a big hole. The actual cost of delivering one call fell through the floor. The VOIP program I worked on was metered, and it payed taxes like a good little boy. The problem was that the service cost half a cent a minute to deliver a call, the taxes were $.05 a minute plus all of the employee taxes and other existance taxes. Over 90% of the money collected for the calls went to taxes.

VOIP was pioneered by telecos. As regulated entities, they could not capitalize on the technology. There was an opportunity for the first slime buckets to sneak out the door with a copy of a working copy of a VOIP application to make out like a bandit selling dial around technology. That is exactly what has happened.

What is currently happening is that big VOIP firms are making money hand over fist by selling software developed by the telephone companies. This software dials around the metered switches to use the networks funded by the telephone companies to undersell the telephone companies central product.

This is not sustainable. Our communication industry needs a framework that allows each of the different components of the industry to thrive. The idea that we would fund everything from by excessive fees for long distance calling is absurd. What the market desperately needs is to find ways that each of the different components of the market to collect money for the services that they provide.

It really is an ugly question. The media is pretending that VOIP industry is a wonderful Robbin Hood character stealing from evil telecommunication providers, however, it the Robbin Hoods are one of the biggest obstacles to providing quality service since there will always be clever ways to dial around any metered switch.

I agree that the system has to pay for itself.

I agree that the system has to pay for itself. I think we disagree on how.

I feel a new blog entry coming on

Further explanantion of QoS

OK OK. It seems remarkabkle to me that there are people who know less about thsi stuff than me but there are, so here goes. [If you actually understand this stuff jump right in here and help]

Internet (TCP/IP) network devices these days have a Quality of Service (QoS) function that allows them to recognise different kinds of traffic and allocate proportuions of their bandwidth to each. So if your network is drowning in email, they can throttle it back to only use say 20% of the bandwidth. If downloads are swamping it they can throttle those. And so on.

The second and currently accepted approach is "DiffServ" or differentiated services. In the DiffServ model, packets are marked according to the type of service they need. In response to these markings, routers and switches use various queuing strategies to tailor performance to requirements. (At the IP layer, differentiated services code point (DSCP) markings use the 6 bits in the IP packet header. At the MAC layer, VLAN IEEE 802.1q and IEEE 802.1D can be used to carry essentially the same information)

Routers supporting DiffServ use multiple queues for packets awaiting transmission from bandwidth constrained (e.g., wide area) interfaces. Router vendors provide different capabilities for configuring this behavior, to include the number of queues supported, the relative priorities of queues, and bandwidth reserved for each queue.

In practice, when a packet must be forwarded from an interface with queuing, packets requiring low jitter (e.g., VoIP or VTC) are given priority over packets in other queues. Typically, some bandwidth is allocated by default to network control packets (e.g., ICMP and routing protocols), while best effort traffic might simply be given whatever bandwidth is left over.
From Wikipedia

Syndicate content