Two major issues, peering and numbering, threaten to derail VOIP's momentum. But no one is talking about them

January 9, 2004

3 Min Read
Packet Racket: VOIP Buzzkill?

Voice-over-IP might have made it on to just about everyone’s Top 10 list for the most promising technology trend in 2004 (see 2003 Top Ten: Technology Trends). But before we break out the champagne, there are a couple of banging issues to deal with.

Pass the bicarb and read on...

First, there’s the economic problem of how carriers will bill each other when they exchange VOIP traffic.

There’s growing evidence to suggest that the issue of how to get paid for peering – or exchanging traffic – is preventing carriers from moving ahead with VOIP peering deals. In fact, many carriers just hate the idea of VOIP peering. One Light Reading message board poster wrote that it's “no surprise that the established long distance providers are not interested in peering. Established carriers want to recreate the same [old local/long distance] business model on the Internet to protect their existing revenue stream."

On the same note, Andrew Odlyzko, director of the Digital Technology Center at the University of Minnesota, warns in a recent white paper that VOIP, crammed into the old PSTN business model, will turn out to be more expensive than POTS. He argues that, because VOIP does not use compression to provide high quality, it wastes a lot more bandwidth. “The efficiency argument for VOIP is questionable at best," he says. The overall effect could be a terminally unprofitable service.

In the long run, however, Odlyzko reckons VOIP will win because of the possibility of new digital features and the advantages of not having to run a separate network. In the meantime, he says, “The question is whether the telecom industry can survive in the broadband era without another maze of cross-subsidies, discriminatory pricing policies, and taxes.”

And there’s a bigger, if less tangible, problem concerning the issue of numbering.

Get another bromo... Make it a double.

In this converged world where the old telephony network meets Internet telephony, address management is going to be a big problem. Think about it: There are so many different ways to connect to the Internet now – be it via email, mobile phones, video calls, instant messenger, fax, or a Website – that it is becoming impossible to keep track off all the ways to find somebody.

That's not to mention the current Web naming system, which assigns all the URLs, email addresses, and other entry points to the net with unique addresses and ties these to the appropriate Internet resources.

An emerging protocol to tackle this problem is ENUM, which establishes a single point of contact for an individual, regardless of whether he is using an IP telephone, the regular phone line, a mobile device, instant messaging, or email.

It sounds marvelous, in theory, but in practice getting this development off the ground throws up more questions than it answers. For example, who should be in charge of managing the addresses or numbers? Is it the Internet Consortium for Assigned Names and Numbers (ICANN), which manages the Internet naming system? Or is it the International Telecommunication Union (ITU), which managers the traditional telephone network? How do users apply for a number? Is it through a service provider, or the government? Whoever ends up controlling these numbers has the power to reach, and subsequently sell to, a lot of people.

A recent report written for the European Commission concludes that the implementation or not of ENUM could be the defining moment for the next 50 years of communication.

Right now, however, OSS and billing and the looming addressing crunch are the elephants in the room. No one, at least at the business level, appears to want to speak too loudly of them.

— Jo Maitland, Senior Editor, Boardwatch

For a more in-depth look at how networks are converging check out this Heavy Reading report: Setting a Course to Convergence: The Incumbents' Wireline Strategies

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