Signal Quality

I was recently asked to give some comments on what I thought of the above proposed regulation (which is essentially ‘USF for VoIP’). I thought I’d share my comments here publicly.

1. What burdens does the proposed rule place on small businesses?

The burden on a small business is tremendous. Small businesses are currently offering low-cost solutions for consumers by maintaining a low overhead. Many (if not most) don’t even handle the actual voice data that travels to and from the end-users in an attempt to minimize overhead costs and maximize business solvency with very low pricing to the consumer. Adding a 64.9% theorized interstate revenue adjustment to small VoIP companies based on sheer guesswork and estimation, knowing full well that smaller companies can scarcely afford to pay salaries, much less commission FCC-approved studies for traffic flow, is going to put smaller VoIP companies in a position of being unable to compete.

With the global nature of the Internet, many small VoIP companies are taking advantage of the increased userbase that the world offers, allowing origination and termination in any number of countries. This regulation, however, would purport to offer that most voice traffic is US-centric and interstate and therefore subject to paying into the USF — a situation which is highly unlikely, and tantamount to taxation of non-US citizens, as any additional costs will have to be passed on to the userbase as a whole.

2. What significant alternatives should the FCC consider?

The FCC seems wholly unwilling to consider any alternatives until they can work out any issues they have with actual distribution of the collected funds — something that seems beyond the purvey of the FCC. If they have, until now, had problems with distribution, it is unlikely that in future they will be able to better regulate themselves. Such a decision will be external.

A solution the FCC could consider would be using less guesswork and more data in their arrival of a safe harbour number for VoIP providers. Alternatively, and more appropriately, the FCC could simply charge a fee based on every DID in the US local area to pay into the USF — bypassing the need to create traffic studies of any kind or to assume that all voice traffic is US-based.

3. Can wireless providers determine actual interstate and international end-user revenues.

This seems reasonable, considering they know which tower a phone is connected to (needed for authorisation on the network), as well as to which tower the call connects. There should be an easy one to one mapping for the purpose of creating absolute data.

4. Should originating and terminating cell sites be used to determine the jurisdictional nature of a call.

If the attempt is truly to determine which calls are interstate in nature, then yes. If the attempt is simply to collect a phone tax, then it’s somewhat irrelevant.

5. Is 37.1% for a wireless carrier appropriate or should it be raised or eliminated?

I’m of the opinion that, because of the nature of what the USF is used for, the rate should be eliminated.

Think, for a moment, back to what the USF is for. The USF is given to rural areas and areas with poor communications infrastructure in order to pay for communications infrastructure. VoIP companies and Wireless providers usually don’t have penetration into the rural areas, leaving the only ones out there to be the Wireline providers. What’s happening is that the wireline providers are paying the least into the USF, but getting a portion of that money back simply because they refuse to enhance the quality of the network infrastructure in rural areas. Meanwhile, VoIP companies and Wireless providers are, in essence, subsidising the wireline infrastructure in rural areas, thereby subsidising their competitors. The USF is clearly NOT suited for a non-homogeneous wireline telecommunications infrastructure. When you add VoIP and Wireless into the mix, it becomes severely anticompetitive.

6. How should the FCC set safe harbour percentages to better reflect market conditions?

Relying on a more accurate study than the TMS Telecoms study would be a good start. The FCC claims that, because of long-distance service bundling, wireless and VoIP companies are more likely to be doing interstate traffic than wireline providers. It is quite rare, however, to find a wireline provider who doesn’t also offer bundling. If it’s good for the goose, it should be good for the gander. The only way to fairly apply a USF tax is to make it a flat number across the board.

7. How can requirements on interconnected VoIP providers be improved?

Requiring a VoIP provider to pay into the USF for data that clearly never touches the PSTN until it hits an endpoint is a mess. That’s much akin to asking people to pay postage for email. While some would like it (most notably the USPS), it destroys the concept of a data stream for which one already pays. End users pay for bandwidth. VoIP companies pay for bandwidth. These payments may be flat rate or per megabyte charges, but the payments are still made, and somewhere along the line, those payments go into the pockets of companies that provide infrastructure for either telecom or data networks.

Where does it end? Is everyone along the line guilty of somehow subverting the USF system? Should everyone pay into the USF from the provider on down to the end user? How does one say that the provider of what amounts to being an automated phonebook for VoIP users is the one who should be paying into the USF to subsidise the wireline companies in rural areas? It seems to be a rather less based on how the technology works and more simply a line drawn in the sand at random.

8. Should the FCC change or eliminate the safe harbour for VoIP providers?

I believe there are other methods by which a more appropriate USF tax could be collected, but I still disagree that VoIP providers should be responsible for paying into a fund that goes to their direct competitors (wireline providers). If, however, the USF must be collected, and the competitors of VoIP must be governmentally subsidised, then the USF should be a flat safe harbour for all involved. No one method of communication is more or less guilty of providing interstate communication, and to assume otherwise is to penalise providers based on outdated and unproven assumptions.

9. Can VoIP providers identify actual interstate revenue?

Until VoIP providers are able to collect accurate and untampered-with IP data from all customers (difficult in the age of IP spoofing and redirection proxies), and until that data can be accurately mapped to an area (while the Geo-IP database is a handy tool, it is in no way perfect or 100% accurate), then no. There’s simply no way to accurately identify actual interstate revenue, and to create numbers — 23%, 31.7%, 64.9% — is to simply create an arbitrary system based on guesswork.

Infineon Technologies AG, your friendly-neighborhood German technology company, has decided to patent a method by which VoIP technology could be secretly degraded over a network. This would allow phone companies to intentionally make VoIP calls for their competitors not work very well, but wouldn’t cut off the ability completely, thereby making it seem as though the competitor simply has poor quality or service.

The patents, here and here cover traditional broadband and also wireless networks.

The technology works by inserting artificial data into a call that looks and behaves like VoIP data, but only serves to make a connection congested with false data. The data could then be removed to cover one’s tracks so as to avoid detection by the VoIP provider.

It’s nice to know someone is hard at work coming up ways to ensure that new, useful technology fails in spectacularly anticompetitive ways.

The FCC announced yesterday that it will require all VoIP services that interconnect with the PSTN (traditional phone network) to pay into the Universal Service Fund that phone companies currently pay into. This decision came after considerable lobbying by the telecom industry complaining that the fees, which help to bring phone service and Internet access to rural customers, schools, and libraries, were only being paid by phone companies and not all VoIP providers. In response, the FCC has decided that all phone-like companies will pay into the USF, but at varying rates. The rates are based on rather wild speculations of how much long distance is used by the different kinds of providers. According to the FCC, cell phones are used the least for long distance (an estimation that is far from likely), followed by land lines, and then VoIP providers. VoIP providers are estimated as having double the amount of long distance as land line providers, meaning they would pay double the amount in Universal Service fees for each customer. The FCC has taken a ‘prove us wrong’ approach saying that VoIP providers may gradually lower their contributions if they can provide exhaustive research to show that the FCC’s speculation is incorrect.

The real smoke and mirrors is about who gets the money. The telecom companies have been very slow to roll out broadband access in rural markets, and many government regulations forbid the use of VoIP services in schools. What this means is that, the Universal Service Fund, which goes to schools and rural areas to help fund Internet access and phone access, goes back to the telecom companies, who by current regulations, have to pay the least into the fund. Essentially, this is a system by which the telecom companies’ competitors help boost the telecom companies’ revenues.

With a drastic disparity in USF pay-in, and the low availability of VoIP for the USF’s primary beneficiaries, VoIP companies will have to pay more for little benefit to themselves, and telecom companies will pay less and get a good portion of that money back from the people to whom it is actually given as a subsidy.

It’s a good scam if you’re a telecom company.

Microsoft pushed an automatic update yesterday (they say only to randomly-targetted machines, but in a network of 60 machines, all 60 got the update) that pops up warning messages and places a permanent banner across your machine if you’re running a copy of Windows that hasn’t been validated as genuine by Microsoft. This is their latest attempt at getting pirate users of Windows to upgrade, but tactics like these — installing software that in no way secures the system as a hidden ’security’ update are going to make many people think twice about leaving automatic updates running on their Windows machines. This will result in more Windows machines that go unpatched, leaving far more spam bots and virus passers around on the Internet.

Microsoft’s original claim was that their Genuine Validation program would be to help reduce the number of computers out there that were a security risk (no one believe that claim back then, either). Now, they’re clearly showing a propensity toward increasing the number of vulnerable machines that fall under the control of hackers and spammers.

With Vista around the corner, even those without valid copies of Windows may be hesitant to spend an obscene amount on an operating system that will be phased out in less than a year’s time, so the incentive for people to move to non-pirate copies will descrease. This latest attempt by Microsoft is simply to keep the money rolling in at the expense of what they claim are millions of people who are unwittingly running illegitimate copies of Windows.

The government has, for a long time now, been trying to force Internet Service Providers to keep track of the online habits of their customers and provide access to this information for the FBI and other government agencies. It has never flown so well, as it’s an obvious breach of fourth amendment improper search procedures.

Yet again, however, they’re trying to do the same thing, but this time, it has the spin of ‘Protecting the Children’ on it. Alberto Gonzales has attached an amendment to the Children’s Safety and Violent Crime Reduction Act that’s sitting in the US Senate right now that would require Internet Service Providers to allow the government access to their users’ online usage data, as well as having hefty fines for any ISPs who failed to report a user suspected of trafficking in child pornography.

The problem with this, is that not only does it violate privacy, but it’s a clear ploy to just use the safety of children as an excuse to pass legislation that’s failed to pass before. If it gets attached as an amendment to the bill, what senator in his right mind would vote against this bill with election time right around the corner?

Jeff Pulver, founder of Pulver Communications and Free World Dialup, has posted a rather novel Petition to the FCC. It asks for a temporary easing of restrictions covering VoIP in times of emergencies. The background of this goes to the Hurricane Katrina disaster and what happened to communications during and after.  Wireline phones ceased to be a viable method of communication, as many of the homes were underwater, lines were cut, and even cell towers were knocked out of commission by the hundreds.

The saviour for the relief organisations, the government workers, and the refugees was VoIP. Companies came in and created a wireless VoIP network for people to use in order to maintain communications, allowing refugees to maintain contact with their loved ones and even gave them free voicemail to get urgent messages.  The wireline providers, however, did no such thing, and were proven to be a disasterous single point of failure.

The FCC, however, has severley hamstringed VoIP providers with regulations disallowing numerous things such as porting a phone number to an area outside its original geographical location, easily interconnecting with the PSTN (traditional phone network), and has even cited safety concerns as their reason for limiting to whom VoIP can even market. Many of these regulations have been politically mandated, with the big telecom lobbyists pushing hard to get them in place.
The petition asks for these regulations to be relaxed during times of emergency to ensure that we’re no longer left in a situation where politics dictates that we must all be without  communications for the sake of not hurting the business of the telecoms who aren’t actually physically able to provide service.

It’s a good first step, really. It’s hard to deny the role that VoIP played in helping with Katrina, and it’s shameful to think that the FCC would deny an emergency provision to allow an easing of restrictrions when it’s absolutely necessary. And, of course, if they recognise that VoIP is truly essential in times of emergency, it helps negate their argument that VoIP is inherently dangerous for people to use and requires strict regulations to keep people safe.

The Telecommunications and Internet Subcommittee, a subcommmittee formed from the House Energy and Commerce Committee, rejected a net neutrality admendment in a bill that was designed to create a national Internet video franchise. Large telecommunications companies have been strongly lobbying against Congress creating any provisions for net neutrality, as the telecommunications companies feel they should have the right to have a multi-tiered network of services, offering their own services at maximum speed, and charging others service providers to travel over their networks.

With the way the Internet works, a company pays to be connected to the Internet, much the way a consumer does. The telecom proposals, however, would then charge additional money every time a consumer wanted to access the company’s servers — the servers they’re already paying to have connected to the Internet. This is a rather veiled attempt at punishing competitors who have no alternative for Internet connectivity to the consumer. It allows the already deregulated telecom and cable companies to create a wall from which the consumer has no real recourse but to use only the telecom or cable companies’ services, as any competitors would suffer from substandard service or be priced out of business.

What will happen is that more and more service providers such as Google, Microsoft, AOL, Vonage, and anyone with a new and innovative service, will move to another country where the ability to access consumers is not hampered by such stringently anticompetitive regulations. The US consumer will suffer, but as most US consumers don’t fully understand how the Internet works, and how the telecom and cable companies’ service offerings differ from their competitors’, there’s not liable to be a public outcry.

On the bright side, there are other net neutrality bills and amendments up in Congress this session, and there’s still the chance that one will survive, but with the massive lobbying power of the telecom companies and the cable companies, the chances are very slim.

CNN Money reported today that Streamcast Networks, the people who make the Morpheus peer-to-peer file-sharing application, is suing Skype, claiming that Skype uses their technology illegally. I was expecting this, to be honest, when Skype added file-sharing to their ever-so-popular VoIP application.

Skype’s software v2.0 took their sort of walkie-talkie-style IM/VoIP application and added other things like file-sharing, still using the Skype peer-to-peer communications protocol. I expected backlash from that, but I honestly expected it to come in the form of a lawsuit from the RIAA or the MPAA before Streamcast.

I’m eager to see how it plays out. This really underscores the way Skype works by utilising a peer-to-peer framework to pass voice calls, unlike a lot of other VoIP technology, which is direct client to client. This could be a reaction to Skype entering the file-sharing arena or it could be a prelude to Streamcast entering the VoIP arena.

Yahoo, trying to increase the appeal of their PC to PC phone service (which also does PC to regular PSTN phone calls) has added dialin numbers for $2.99 a month in 3 countries (US, UK, and France). Looking over their number selection, it’s pretty limited, with numbers in Paris being the only French numbers available if you’re not a resident of France. There are four or five UK area codes available, and a slew of US area codes (as there always are).

Of course, unlike many services, you’d need to use their Yahoo Messenger for one leg of the call, requiring you do don a headset and boot up the PC. It won’t do much to sway the majority of phone users, but they’re marketing their services toward young people, and it will likely gain more traction there.

The VON Coalition is a nice idea. I’ll start by saying that. The concept of the coalition is a good one — to push the agenda that the government shouldn’t attempt to apply traditional Telco regulations to VoIP companies, and should, whenever absolutely possible, shy away from applying any form of regulation toward VoIP — treating it as just another Internet service.

I agree with this concept wholly and completely, and not just because I run a VoIP company. Were I just the average consumer, I’d still agree with it. It doesn’t make sense to treat VoIP differently from, say, grabbing news off the ‘net, or posting in an online journal.  VoIP is just another method of communication using the Internet, and there shouldn’t be special rules applied to it just because it superficially resembles older technology.  If they made everyone get an Internet Driver’s License because someone likened the Internet to an Information Superhighway, you’d think they were mad.
People are adamantly up in arms whenever anyone mentions charging postage for e-mail, but still they try and apply old telephone regulations toward VoIP.

The VON Coalition should exist. It’s there to lobby on the Federal level to get something accomplished that only the giant Telcos have been able to accomplish before –  getting Congress to listen. That takes money, and lots of it.

I thought, well then, I’ll do my part. I’ll join the coalition and pay membership fees of some sort. Every dollar counts, right?

Not so. I clicked on the application to join, as there is nowhere on the site that says, “To donate to our cause, click here.”  I pan down to the yearly membership fees and oh my GOD!  ‘Small’ companies need only pay a yearly membership fee of $10,000USD. By the Coalition’s definition, a small company is one that makes annual sales of less than $500 million USD.  Medium companies, those making between $500 million and $1 billion USD have annual membership fees of $15,000, and large companies, those making $1 billion or more, have annual membership fees of $25,000.

What about the real small companies? Have they no say? Are we supposed to simply assume that the ideals of the companies making $500 million into the billions are to be the same as those of the smaller companies to whom $10,000 yearly dues might seem a trifle steep? It seems to me as though the VON Coalition, which purports to be protecting people against the lobbying power of the big Telcos are doing so without the representation of anyone but the companies that can likely take care of themselves in such a fight.  Nowhere is an ‘associate membership’ or, as I said, even a place to donate to the cause you may fully believe in. It seems unless you’re an industry giant, the VON Coalition doesn’t much care what you have to say.

I understand that lobbying at the Federal level is an incredibly expensive task, and takes quite a bit of money to accomplish, but why should this just be a Coalition about keeping the rich from losing their money, but not about fostering an open world of technology and communication on the Internet — about protecting the consumer and the businessmen alike?