Voice over IP

The news outlets are all carrying the story of eBay paying $4 billion for Skype.

I do think Voice over IP telephony is going to replace analog phone service, and that the transition will happen faster than many think, but Skype is hardly workth $4 billion USD.

Here is the problem: The technology Skype has is nothing special. There are not only competing commercial products, but there are plenty of Open Source VoIP projects as well, like Gizmo. And Gizmo shows every sign of being a big hit.

New Zealand Telecom has announced it will switch every phone in the country to the Internet-based VoIP system, starting in 2007. The company estimates it will take approximately five years to get every phone changed.

While our FCC dithers about the best way to preserve legacy telephone and cable services, Singapore has pushed VoIP into the mainstream by creating a system for managing telephone numbers assigned to VoIP service providers. Singapore is not requiring VoIP providers to give subscribers access to emergency systems (911 services), but is offering incentives to those companies that do make the effort. This is much more sensible than the confusing and potentially punitive policy the FCC is trying to enforce.

And the FCC is not really the main problem. Our Congress just passed a huge roads appropriation bill, which is terrific. We're trying to fix our twentieth century highway system, while other countries are building twenty-first century highway systems.

Voice over IP phone providers are trying to get their customers to acknowledge that they know their VoIP service may not work with 911. This is in response to an FCC ruling that requires all VoIP service providers to have 911 service working by July 29th or notify every customer that it does not.

The problem? It's darned hard to get some customers to acknowledge stuff like this. The FCC has not told VoIP companies what to do if a customer refuses to acknowledge they have received a notice, and some companies are being advised that they will have to cut off service.

Project Gizmo is a new Voice over IP application that seeks to challenge Skype, one of the best known free/fee Internet telephone applications. Project Gizmo is likely to win over the long run because the software is designed on an open source model that allows users to place calls to other voice software that uses the emerging SIP standard. Skype, by comparison, uses a proprietary protocol--you can only call other Skype users for free.

This CNN story demonstrates perfectly why the telcos are terrified of cheap community broadband. The story highlights a businessman who cut his $800/month business phone bill by 80% and is able to give better service to his customers at the same time--cheaper and better with VoIP. And he now has an extra $640/month to plow back into the business itself.

AOL has decided to jump into the VoIP marketplace. It might just save the company, which has been bleeding customers for the past couple of years as people switch to broadband.

The FBI wants to increase the cost of Voice over IP. The VoIP news article has a set of excellent questions that someone ought to be asking the FBI as they seek to extend existing wiretap requirements to VoIP companies. Not only will it increase the cost of commercial VoIP software by requiring those firms to install wiretap backdoors in their systems, the whole exercise is absurd. Here's why.

• As VoIP News asks, why would criminals use a commercial VoIP offering that was known to have a wiretap backdoor when they could just as easily use their own secure VoIP software. Dozens of VoIP software products are completely free and can be downloaded and installed easily.
• Some VoIP providers are located outside the U.S., beyond the jurisdiction of the FBI. Why would anyone use a higher-priced U.S. service if a less expensive offshore service with equivalent voice quality is available? Why would international drug rings ever use U.S. services if the FBI has their finger in them? One effect of FBI regulation will be to drive the entire VoIP business out of the United States.
• Wiretapping only the VoIP data streams of suspected criminals is, well, just dumb. If I were trying to investigate criminal behavior, I'd want to capture their entire data stream. And the FBI can do this now, just by going to the criminal's ISP with a court order and getting the ISP to re-transmit to the FBI every data packet coming from the criminal. This is trivial to do, does not require expensive new software, and is much more likely to provide useful information, since you'd also see email, Web sites, chat, IRC, and any other communications, along with VoIP conversations.

So what's really going on? Occam's Razor may be useful here (the simplest explanation is probably the correct one). Recall that this is the same FBI that just spend $170 million of our tax dollars on a "Virtual Case File" system that does not work. In other words, the FBI has neither good in-house technology advice nor do they seem capable of buying it. Like many other Federal government agencies, when the FBI wants technology, they run to the beltway bandits--the big consulting firms that inhabit the D.C. area, who have a built in conflict of interest when asked by those same agencies to both design and build systems.

The state of Texas has sued Voice over IP provider Vonage for not explaining to customers that 911 does not work over its service. In fact, 911 does not work over any VoIP service reliably, and the problem is likely to begin slowing the acceptance of VoIP.

VoIP Weekly reports that 40% of international phone calls are now carried by VoIP services, up from 2-3% in 2000. The article also states that VoIP has killed the calling card market. College kids have been a key demographic for that market, and apparently tech savvy youth are very comfortable using free services like FreeWorld Dialup and Skype to make phone calls. It's also a boon for parents of college kids who may have been buying some of those calling cards.

Costa Rica's countrywide telephone monopoly is trying to make it a crime to make a Voice over IP telephone call. From the article:

"One Costa Rican official of an agency seeking to promote the Central American country's software industry said last week that ICE's proposal would be "disastrous" to the country's efforts to grow its software development and outsourcing businesses."

Esme Vos at MuniWireless reports that Arizona has been testing VoIP via wireless on highways, and that telephone calls have been made successfully at speeds of 80 MPH. The effort uses equipment from a company called RoamAD. The mesh network system is able to hand off the signal from one cell to another without losing the telephone call.

Motorola has announced that it will build a GSM cellphone (the European standard now being introduced in the U.S.) that is also "Skype ready." This means if you are in a WiFi hotspot, you can make calls for free via the Internet. Not in a hotspot? Then the phone uses the old cellphone system.

Skype is a popular free VoIP service that was founded by two of the originators of popular peer to peer services including Altnet and Kazaa. Skype to Skype calls are free, and the company charges for calls made to the old telephone network (i.e. what most of us use).

It's not clear exactly what the future is for services like Skype. The company's software is proprietary, so they control their user base, unlike some other Open Source VoIP services like Free Word Dialup. Skype is popular right now because they have a more finished product that is easy to install and use. Some of the Open Source software is a bit rough around the edges.

I'll stand by my prediction that telephony as a business is dead, dead, dead. In the future, voice calls will be like email--we'll all have it and use it heavily, and it won't cost us a dime to call anyone, anywhere in the world.

Business opportunity: voice and video calls to the moon and to Mars will cost money for a while because of limited bandwidth. Real time calls to the moon will be just barely possible; the latency will make for a slight delay, but it will be manageable. Real time calls to Mars will not be convenient, as the latency will make it very difficult to have a conversation fluidly. According to my calculations, the latency to Mars will vary between about 4 minutes and 20 minutes, depending on the relative positions of the earth and Mars.

You might ask, "What happens to the phone companies?" The phone companies have to recognize that their only option is to think of themselves as access providers rather than service providers. And they are lumbering in that direction, albeit very slowly. The acquisition of AT&T and MCI by local dialtone companies gives the latter the long haul circuits to better serve the access market.

Om Malik reports on news from law professor Larry Lessig that some VoIP services may be blocked or degraded on some of the incumbent networks. I predicted this many months ago--that the monopoly infrastructure carriers would eventually block VoIP because it competes with their own "antique" phone systems.

Many of the VoIP services like Skype and iChat use "softphones," which means the phone is really a program on your computer. You still need a headset of somekind, but the whole set up is a bit clumsy compared to the time-tested "telephone" interface we've been using for, oh, a hundred years or so.

Engadget has an article on an inexpensive (about $45) VoIP phone that actually looks and acts like a phone. The neat thing is that you don't plug it in the wall, you plug it into a USB port on your computer.

Cnet has a story about how businesses are grabbing onto Skype, the free telephone service that works over the Internet.

We're just at the beginning of the biggest change in telecommunications since voice telephone service became available 100 years ago.

What in the world is Google up to? Sitting on a huge pile of cash, with more coming in every month from the successful Google AdWords service, one has to wonder if the company would be content.

This article from the Times in the UK suggests Google has something big up it's sleeve, with a possible foray into a worldwide Voice over IP phone service.

Esme Vos at MuniWireless thinks that the real reason behind Verizon's fevered opposition of community wireless in Philadelphia is that Verizon is terrified of cheap VoIP over WiFi.

Sun Rocket, a Voice over IP company, has the VoIP universe abuzz with their ambitious business plans to expand from 3 to 50 metropolitan markets in 2005, and the company says they intend to be a player in 300 metro markets in the United States. Particularly interesting is their flat rate annual fee--for $199 a year ($16.58 a month), you get flat rate, unlimited, nationwide calling.

The FCC released another ruling on VoIP. The Federal Communications Commission has barred states from imposing telecom regulations on Voice over IP telephony providers.