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Optical/IP

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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Scott Raynovich 12/5/2012 | 2:43:28 AM
re: Packet Racket: VOIP Buzzkill? Wondering if any readers have any more insight into the peering issues ...
technonerd 12/5/2012 | 2:43:26 AM
re: Packet Racket: VOIP Buzzkill? First, thereGÇÖs the economic problem of how carriers will bill each other when they exchange VOIP traffic.
Simple: Bill & keep. But since VoIP isn't going to happen on a significant scale, there's no need to worry about this.


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. GÇ£The efficiency argument for VOIP is questionable at best," he says. The overall effect could be a terminally unprofitable service.
The bandwidth efficiency argument was complete stupidity from the get-go. Voice bandwidth is free. Transport costs are zilch.


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.
Could someone actually tell us what some of these features will be? And forget about unified messaging, o.k.? That one's been around forever and people flatly don't care. The idea of a "separate network" is a bunch of horsepuckey. Data and voice ride on the same core together. If you get rid of tandems and Class 5s, the compensating new spending for softswitches and router upgrades will even it all out.


In the meantime, he says, GÇ£The question is whether the telecom industry can survive in the broadband era without another maze of cross-subsidies, discriminatory pricing policies, and taxes.GÇ¥
The real question is whether anyone gives a rat's about VoIP, other than a few large enterprises (maybe), some geeks and international toll bypasers, plus the carriers that want to say it's VoIP so they can call it an information service and drive a silver stake through the heart of the Telecom Act.


There are so many different ways to connect to the Internet now GÇô be it via email, mobile phones, video calls, instant messenger, fax, or a Website GÇô that it is becoming impossible to keep track off all the ways to find somebody.
Oh what crap. E-mail and Instant messenger and websites all fo through an ISP. Fox, mobile phones and desktop voice fo through the PSTN. Video phones are so rare that no one cares, but when they do arrive they will go through an ISP.


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.
Geeks, get something through your 12-inch thick skulls: No want wants a single point of contact any more than they want to buy everything in one place. Wal-Mart notwithstanding, we live in a specialty store world. People want the control and privacy that multiple addresses give them.


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.
Nope, the elephant in the living room is that VoIP is a solution in search of a problem. Other than for a couple of small niches, it simply doesn't deliver any value. The dirty little secret is the coming cannibalization of residential wireline voice by the cellular network. Lots of eggs will be broken when that particular omelette is cooked.
vrparente 12/5/2012 | 2:43:21 AM
re: Packet Racket: VOIP Buzzkill? With respect to peering -- there was some work at least 3 years ago in the area of IP bandwidth trading that included discussions of VoIP. And VoIP minutes/BW are already traded (albeit somewhat transparently) on bandwidth exchanges.

In between my two comments I will also mention that VoIP is basically being used for voice transport even in applications where customers think that its PSTN. In other words it can be and is made transparent. This is a case of service providers very reasonably wanting to use cheaper technology to lower costs but avoid discussing what's in the black box (how their network works) -- which it seems is within their right and privilege to do so. However, it would be nice if at least some savings were passed on to consumers.

As to numbering and addressing -- I thought it was obvious that something like an abstract name space was the real solution. Such a solution would allow a coupling of names to numbers with perhaps the ability for users to float or rotate their own coupling based on their whereabouts or moves. This is basically what is done on instant message services that tie im/chat functions to cell phones and other portable devices. The end product is a distributed directory service with various service mappings (like home phone, work phone, cell/personal phone, car phone, etc.) -- not unlike the service mappings for mail (MX) and hosts (A) in DNS.

OK -- while I'm here. Security - is a concern as well. But there are solutions our there and of course more in the pipeline.

And BTWY, compression is available in used in VoIP.
mr zippy 12/5/2012 | 2:43:12 AM
re: Packet Racket: VOIP Buzzkill? The peering issue disappears (or rather, has already been solved - ISPs already have worked out how to perform peering at the IP traffic level), once the carriers conceptually separate the VoIP application from the underlying IP network. This principle of separating, or rather placing the applications above or on top of the network is known as the "end-to-end" argument.

The following RFC is an interesting read, and provides insight into why the Internet and its protcols have been designed the way they have. It also provides an overview of the end-to-end argument, and why it is considered important.

"RFC 1958 - Architectural Principles of the Internet"

http://www.faqs.org/rfcs/rfc19...


alchemy 12/5/2012 | 2:43:07 AM
re: Packet Racket: VOIP Buzzkill? technonerd writes on ENUM:
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.
Geeks, get something through your 12-inch thick skulls: No want wants a single point of contact any more than they want to buy everything in one place. Wal-Mart notwithstanding, we live in a specialty store world. People want the control and privacy that multiple addresses give them.


I have a wireline telephone connection in my house that I never use. The only reason I have it is so I can be listed in the phone book. I have Caller ID on the line so I can decide whether I want to answer an incoming call or not. ENUM is just another phone book that happens to use DNS technology. Just like I can tell the Telco that I want my phone number unlisted, I don't necessarily need to be in the ENUM database.

The gripe I have about ENUM is that it really needs to be context-sensitive. If John Doe makes a query, I want to have the capability to provision the directory server to return a null record. If a service provider makes a query and I have a service agreement with the service provider, I want the DNS to return the information appropriate to that query.

technonerd also writes:
The bandwidth efficiency argument was complete stupidity from the get-go. Voice bandwidth is free. Transport costs are zilch.

That's what Cisco has been telling the world for years. It's self-serving since it means Cisco keeps upgrading core routers as bandwidth demands explode. If you look at the MSO as an example, a 30% take rate on VoIP voice service more than doubles the demands on the access network. That's assuming 30% of homes passed take voice and 15% of homes passed take cable modem. You have to traffic engineer the network for peak busy hour and, with 6:1 blocking and 100kbit/sec voice streams, that's a lot of IP traffic; particularly on the upstream where bandwidth is scarce. You're talking about doubling the number of fiber nodes. Doubling the fiber runs. Doubling the number of CMTSs. Doubling the IP backbone. It ain't free by a long shot.
aswath 12/5/2012 | 2:43:06 AM
re: Packet Racket: VOIP Buzzkill? And forget about unified messaging, o.k.? That one's been around forever and people flatly don't care.

Just for the record: Unified messaging by itself does not require VoIP or converged network. It is enough that the UM server has multiple interface. For example, I have a software in my computer that serves fax and voice mail through a single interface. I would imagine that adding email to that application shouldn't be difficult. The point is that my computer has both PSTN connection(through V.92 modem) and internet connection.
technonerd 12/5/2012 | 2:43:05 AM
re: Packet Racket: VOIP Buzzkill? If you look at the MSO as an example, a 30% take rate on VoIP voice service more than doubles the demands on the access network. That's assuming 30% of homes passed take voice and 15% of homes passed take cable modem. You have to traffic engineer the network for peak busy hour and, with 6:1 blocking and 100kbit/sec voice streams, that's a lot of IP traffic; particularly on the upstream where bandwidth is scarce. You're talking about doubling the number of fiber nodes. Doubling the fiber runs. Doubling the number of CMTSs. Doubling the IP backbone. It ain't free by a long shot.
Let's be clear: I don't for one single second regard VoIP as "free." My point is that the argument that VoIP "saves bandwidth" is trivial and irrelevant. Transport bandwidth is free.
lighten up!! 12/5/2012 | 2:42:57 AM
re: Packet Racket: VOIP Buzzkill? In the current market environment. It's simply amazing to see the same mistakes being repeated again and again when it comes to technology driving the market rather than the market driving technology. Come on folks haven't you learnt anything from Optical. The market has to drive a need for a technology. You can't come up with an innovation and forcefit into the market because it sounds hip or is really cool. Once again I see the creation of a new bubble which is doomed for failure even before it starts...
PO 12/5/2012 | 2:42:57 AM
re: Packet Racket: VOIP Buzzkill? "You have to traffic engineer the network for peak busy hour and, with 6:1 blocking and 100kbit/sec voice streams, that's a lot of IP traffic; particularly on the upstream where bandwidth is scarce."

True, true. But at least the carrier should see the community of interest redevelop for their traffic. That is, many of the VoIP calls should be geographically localized. The added revenue for voice services should help cover the added infrastructure costs and support the business case.

Oddly enough, when VoIP peering is "solved", a local call may send packets out-of-region to an IP peering point of choice--the VoIP equivalent to today's internet sending packets from San Francisco to Oakland by way of a peering point in Chicago.
rjmcmahon 12/5/2012 | 2:42:55 AM
re: Packet Racket: VOIP Buzzkill? It's simply amazing to see the same mistakes being repeated again and again when it comes to technology driving the market rather than the market driving technology.

In this case it may be that neither market forces or technological forces are the driving factors. Regulatory arbitrage and regulatory control could be what drives this offering :-(

As far as timing goes, when is a good time to establish a market for VoIP services and gadgets? It seems like now is as good a time as any.
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