Signal Quality

In a not very surprising move, Skype has signed a deal with Warner Music to allow Skype customers to download any Warner Music tune as a custom Skype ringtone. The ringtones will be priced at $1.50 each, and I’m pretty sure they’ll sell like hotcakes. The ringtone market is a big one, and I’d just been discussing this the other day with some friends about who was going to be the first to do big-name custom ringtones with their VoIP software.

Of course, the biggest problem is that a ringtone tends to be a display of personality and a matter of pride, which is why they’ve done so well in the cell phone market. People are thrilled to be able to show their originality and tastes by showing off their ringtones when they get a call. On the Skype end, though, it makes less sense, as it just becomes a very personal thing on one’s own computer, where few others, if any, can hear it.

We’ll see, though. It could become huge, or it could fizzle out as an offering.

It does, however, show a weakness in Skype’s armour, however unintentionally. Their primary business model is clearly not sustaining them to the point they’d like, as they’re busily looking for dozens of additional features that they can sell people on. The new picture-sharing deal with Kodak, the ringtones, the hardware marketing deals — all of these add up to little real substance but a tremendous grab at a diverse market. They’re looking for some way of taking in funds from everyone, and I imagine that it’s because their main staples, SkypeOut minutes and SkypeIn numbers have a limited applicability. Not that many people will buy SkypeIn numbers, and an even smaller number will buy more than one.  The more people they sign up, the fewer people will be buying SkypeOut minutes, as they’ll be able to talk for free to other users. Skype is showing us, with the wave of new gimmicks lately, that it has also come to the realisation that their business model is unsustainable in its current state.

At the second VoIP Internet Telephony conference in Florida yesterday, Tom Ridge, the former head of the US Department of Homeland Security, championed VoIP as something critical for the government to implement in order to deal with possible terror attacks or natural distasters. Part of this is because of the overwhelming help that VoIP was in the recent hurricane Katrina disaster in New Orleans, Louisiana. When the phone lines were down, people were able to run wireless connections into the relief centers and use VoIP for telephone access to help coordinate the relief effort.

Another thing he mentioned, however, which has been a spectre in the back of everyone’s mind, is that VoIP in the US has to conform to the current regulations for wiretapping that other phone services do. This has been a bit of a hot-button issue that no one wants to bring too much into the open right now because there’s a good chance that pushing back on this will simply make life more difficult for VoIP providers in the form of new and poorly-written regulations.

The two biggest issues are that currently, the technology for many VoIP providers simply can’t handle tapping communications without drastically increasing their bandwidth requirements, and that there’s a feeling that VoIP should be given the same exception that services like Instant Messaging and email are given, as the nature of the Internet makes it somewhat unreasonable to assume that any communications that wind up on US lines should be within the jurisdiction of the US authorities.

In 2003, there were 4.1 million inercepted conversations in the US (federal, state, and local) plus however many wiretaps were authorised by FISA. Most of these were concerning drug-related crimes.

In order to allow the US Government to intercept a conversation via VoIP, the entire VoIP call would have to go unencrypted through a central server. Routing so many calls through a central server would create severe bandwidth problems and bottlenecks and completely go against the distributed nature of the VoIP, one of its many strengths. It would also mean that small VoIP providers simply could not afford to run a business. Right now, the fact that conversations don’t go through a provider’s server is a positive boon for providers, as it means they can route calls without having to pay for the massive amounts of bandwidth required to handle the data from all of their users. If the government mandated access to call interception, the costs would be such that it would effectively put dozens if not hundreds of small, regional VoIP providers out of business overnight.

There’s also a concern that, since VoIP is an Internet-based communications protocol, a regulation requiring access to be allowed to tap it might open up a path to allow the government access to tap any other Internet communications, such as Instant Messaging or email.

It’s a huge issue, really, both on the privacy side of things and on the technology side of things, and one that shouldn’t be taken lightly or decided quickly.

Far too often, we’re bombarded with stories about how the Internet is dangerous and how many children are being abused by people they meet on the Internet or how many women are being stalked online. The media loves sensation (it sells!), and they tend to run headlong into whatever angle they can to create it.

It was, therefore, rather refreshing to see an article reprinted from the Dallas Morning News about how the Internet strengthens and solidifies friendships. A study by the Pew Internet and American Life Project, which was two years in the analysis, took a survey of 2200 adults and asked them questions such as whether or not they used a cell phone or IM in the last month, how active they were in organisations, and how many of their friends they talked to online.
The study found that, instead of the Internet hampering relationships, those that use the Internet to communicate tend to be closer, and actually spend just as much time in face to face relationships as those who don’t use the Internet to communicate. Advantages such as the unobtrusive nature of Email and the creation of global communities help to foster considerably more dialogue between people online.

Internet users spend just as much time on the phone and visiting with friends, but seem to have sacrificed other aspects of life to get that extra time. The two biggest areas sacrificed were sleep and television time (something with which I have first-hand experience).

I was reading a CNET article this morning about a recent GAO study in which the GAO rather broadly interpreted the ban on Internet taxes to mean that anything NOT specified exactly in the bill could be taxed by the states. This, of course, was not the original intent of the bill’s drafters, and they’ve made it quite plain that the items they listed were merely example items and not meant to be a wholly-inclusive list.

One of the items not listed was VoIP services — perhaps because it wasn’t as big a buzzword back when the bill was drafted. However, in the GAO’s interpretation, VoIP services could be taxed by states, even though the Internet they flow across could not, creating quite a disparity in the way services would be taxed.

As yet, no state has attempted to tax VoIP, but I imagine that, were the Internet tax moratorium NOT to be updated, there would almost certainly be states who would attempt down the road to do this, especially as VoIP eats into the revenues of the traditional telecoms. In Georgia, for instance, one of the most powerful lobbying forces in the state is Bellsouth, the nation’s third-largest telecommunications company. With Atlanta as its home, it’s quite a reasonable assumption that Bellsouth would press for VoIP taxation in Georgia to ensure it remained competitive in its home state.

I suppose we’ll watch and see how this plays out, but the original drafters of the bill may opt to reword it when it comes up for renewal in 2007.