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stephencooke
stephencooke
12/5/2012 | 3:10:30 AM
re: VOIP Peering: Incumbent Killer?
"The local phone company may not get a check from the consumer to it's voice group when a customer choses VoIP, but it gets a check from the VoIP service provider to the leased line/statistical multiplexed services group, and it is sufficiently large to cover the difference;
"


If this is true why doesn't the local phone company just give all their customers a Vonage phone?
stephencooke
stephencooke
12/5/2012 | 3:10:30 AM
re: VOIP Peering: Incumbent Killer?
"The local phone company may not get a check from the consumer to it's voice group when a customer choses VoIP, but it gets a check from the VoIP service provider to the leased line/statistical multiplexed services group, and it is sufficiently large to cover the difference; all the LEC's products are really high margin."

I'm obviously missing something here... The local phone company sells me phone service & broadband for say $80 ($50 for phone service, $30 for broadband). I go VoIP using Skype (which is free between other Skype users, the servers are in Estonia, etc.) and pay the phone company $30 for the DSL connection. You seem to be trying to tell me that the $50 is still coming to the phone company from Skype...? or that the margin in the broadband service is sufficient to make up for the lost margin on the $50 phone service...? or that the leased line charges of the ISP (the broadband portion of the local phone company) go up by the lost margin on the $50...? or that, because there is a slight increase in the number of bits over a leased line that the cost to whomever owns that line increases by at least the margin on the $50...?

"and it is sufficiently large to cover the difference"

It seems like you are saying that the "leased line/statistical multiplexed services group"-side of the RBOC house can become the single source of income for the RBOC and all will be well; with revenues even better than they are now...

Please clarify. Thanks.
HeavyDuty
HeavyDuty
12/5/2012 | 3:10:29 AM
re: VOIP Peering: Incumbent Killer?
"If this is true why doesn't the local phone company just give all their customers a Vonage phone?"

They're trying to outlast, not encourage, VoIP use.
HeavyDuty
HeavyDuty
12/5/2012 | 3:10:29 AM
re: VOIP Peering: Incumbent Killer?
What I'm saying is that the revenue stream may be redirected, but overall the LEC lose is minimal, and in some cases (for instance, when the VoIP provider is the LEC) it's possible that there won't be any lose in revenue.

The LEC isn't taking the big hit in the pocketbook that folks are assuming they do. VoIP service providers are competing with other VoIP service providers (and all the VoIP providers are likely getting end-to-end connectivity via the LEC/IXC backbone), so that they aren't making much, if any, money. A major difference between the non-LEC VoIP providers and the LECs is the depths of their pockets.

When the majority of the VoIP service providers have gone the way of most of the CLECs, belly up, there will still be the same old LECs.

Much as it may not seem that way, I really hope that VoIP can pressure the LECs enough to change their business practices. But I was a witness to the CLECs' self-inflicted debacle, and see no reason to belive that VoIP will be different.
HeavyDuty
HeavyDuty
12/5/2012 | 3:10:29 AM
re: VOIP Peering: Incumbent Killer?
"There are actually more HFC endpoints providing high-speed IP to subscriber homes from CableTV MSOs, than all PSTN leased line & DSL services combined."

I'd be real interested in where you found your statistical data.
rjmcmahon
rjmcmahon
12/5/2012 | 3:10:27 AM
re: VOIP Peering: Incumbent Killer?
There's this interesting little battle going, call it, "If you can deliver phone via cable, then I'm going to deliver tv over the phone line and let's see who cries, "uncle," first."

That is the party line.

A cynic might suggest something different. Maybe the phone execs and the cable execs got together on a boat one evening and negotiated a way to get rid of the government regulators and those controls over prices. This requires the telcos and cablecos feigning competiton and claiming market forces are generating the price signals when, in reality, the markets have been carved up. The end result will be both having a position of private and *unregulated* monopoly over their respective markets.
HeavyDuty
HeavyDuty
12/5/2012 | 3:10:27 AM
re: VOIP Peering: Incumbent Killer?
"So why the sudden interest in IPTV (telcos have tried video for years with no success, so why the renewed, urgent interest?), FTTN (SBC Project Lightspeed), FTTP (Verizon Fios), etc. if there is minimal revenue exposure and a long history of failure in video?"

Interesting change of subject: VoIP to IPTV... But, hey, let's go there.

There's this interesting little battle going, call it, "If you can deliver phone via cable, then I'm going to deliver tv over the phone line and let's see who cries, "uncle," first."

"...FTTN (SBC Project Lightspeed), FTTP (Verizon Fios), etc. if there is minimal revenue exposure and a long history of failure in video?"

SBC and Verizon's charge into end-to-end fiber for video (including IPTV) delivery has been the epitomy of, "when all is said and done, all lot more is said than done." Verizon has only started in some very exclusive neighborhoods, and SBC is still selecting vendors.

SBC and Verizon recently were set back in their quest for tv delivery, here in Texas, by the unexpected failure of the legislature to pass the favorable bill (that the LECs lobbyist had had hand delivered to the legislature) to ease restrictions on tv signal delivery for the RBOCs. Oops!

"Why did AT&T go VoIP if they are trying to 'outlast' it?"

AT&T is currently lobbying federal regulators to let SBC buy it. In the meantime, a corporations gotta make money.

"Why is BT investing $19B in converting their network to an IP structure if they are trying to 'outlast' VoIP?"

Why is SBC, Verizon, etc... investing in same? Because if some folks insist on getting the latest thang, wouldn't it be best if they could get it without changing vendor; best for the vendor!

"Wouldn't the phone company make more money by encouraging VoIP use? It is also easier to collect from a single service provider than a bunch of customers."

The LECs are in Washington right now trying to convince regulators that they need less regulation now that there's sooo many service alternatives to THE phone company; similar to the song and dance they did for CLECs (you can still find a list of CLECs in the front of your RBOC provided phone book; they publish that info 'cause they're feeling real threatened by CLECs).

A few keystrokes by a data entry clerk, making one dollar an hour in Banglore, and the rest of the billing process is automated; really no bother at all.

"Best of luck with this."

Gee, Thanks!
stephencooke
stephencooke
12/5/2012 | 3:10:27 AM
re: VOIP Peering: Incumbent Killer?
"They're trying to outlast, not encourage, VoIP use."

So why the sudden interest in IPTV (telcos have tried video for years with no success, so why the renewed, urgent interest?), FTTN (SBC Project Lightspeed), FTTP (Verizon Fios), etc. if there is minimal revenue exposure and a long history of failure in video? These are incredibly expensive programs (many $billions) that RBOC management wouldn't consider if there wasn't a gun to their heads.

Why did AT&T go VoIP if they are trying to 'outlast' it? Why is BT investing $19B in converting their network to an IP structure if they are trying to 'outlast' VoIP?

If your previous statement is true:

"The local phone company may not get a check from the consumer to it's voice group when a customer choses VoIP, but it gets a check from the VoIP service provider to the leased line/statistical multiplexed services group, and it is sufficiently large to cover the difference"

Wouldn't the phone company make more money by encouraging VoIP use? It is also easier to collect from a single service provider than a bunch of customers.

"As long as you youngsters keep forgetting that applications that touch remote devices and software use a backbone (OSI layer 1& 2), us old timers will always have a job."

Best of luck with this.
OldPOTS
OldPOTS
12/5/2012 | 3:10:26 AM
re: VOIP Peering: Incumbent Killer?
rj - you should get the post of the day award.

All of us with years of experience (scars) in dealing with the RBOCS can usually understand and spot the RBOCs SOP when dealing with diruptive technologies (e.g. HeavyDuty #27). We can usually spot the RBOCs next shrewd business move to stifle the competition. But this one eluded me until you mentioned it. Now the Texas legislative moves all make great sense. They will get their way in Congress/FCC in a few months dividing up the landscape and let the eye pee'ers generate so much more additional revenue for them. Both as service providers and service haulers.

Thanks!

OldPOTS
OldPOTS
OldPOTS
12/5/2012 | 3:10:25 AM
re: VOIP Peering: Incumbent Killer?
HeavyDuty it sounds as though you will have a long employment as no one seems to get that there is major money in hauling those services.

It is clear that only steven gets that any nation wide (end to end) service must be transported over a very very large nationwide mesh network between all those service aggregation points. If you transport a large share (near monopoly) of these VoIP services, especially your own, wireless and the MOS's, there is plenty of traffic for a huge profitable business. And then IPTV raises this by at least an order of magnitude.

And as rj pointed out MOS and RBOCs will divide up providing service and then will allow those other "competitive services" a very small share of the revenue. And RBOCs and MOS will let those "competitive SPs" exist so they can get all the "competetive" legislation they need to significantly raise their revenues.

I costed hundreds of very large enterprise, tier 1 and tier 2 networks before I retired. Steven the margin on hauling services is so great that RBOCs have to use all kinds of methods to distribute/hide the margins and profits among their various organizations/services. That is why I referenced WilTel contract initially.

I haven't checked lately, but I believe WilTel has let their customer leased line business atrophy as they make much more money (margin and profit) hauling only portions of (adjunct) RBOC's services. The cost of entry into this business is as big as entry into providing those services keeping entry low. And then the other guys (service providers including wireless) sell your hauling services for you. Thus providing furthering higher profits from that already high margin.

In my costing experience the cost of ports is rather insignificant, especially IP/Eth switches. They already own the existing expensive class 5/4 switches, so if traffic increases they won't miss the small margin they loose to other haulers. But they can provide VoIP peering points in their hauling network with those cheap switches (MPLS/IP/Eth) they already own if needed.

Between RBOCs and WilTel and the old Metro Fiber, they own most (~95%) of the fiber that will haul all those services. Listen to HeavyDuty. Steven pointed out that most of the VoIP services are local. So are POTS phone calls. But there are still more than plenty of VoIP CCSs/erlangs that must be hauled over a true nationwide mesh network. (Very much more than a few 10GigE/OC128 lines - think DWDM) Note that I don't call this a core network as most cable and eye pee'ers only think of a core net in local or maybee regional terms and not the scale of large RBOC mesh networks. Even a WilTel list of large circuits is so huge that the spread sheet must be split up.

Also steven I have worked with the RBOCs testing eye pee BW requirements and it is about ((72-64)/64) = 12.5% more. But that does not included those additional very large IP/Eth headers that they know how to avoid. With the headers a minimal increase in traffic can be up more than ~50%. And if anyone does come up with the "killer app", the RBOCs get an even more significant amount of traffic to haul, even when they don't offer any new services.

And the money just keeps rolling in. Don't kill that cow, hauling network.

OldPOTS
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