July 2000

• IP Calling Conundrum
• Seeking Fax Advice

IP Calling Conundrum

In response to Laura Guevin's May 19 online Points of Presence column "H.R. 1291: A Storm Is Brewing In The IP Cloud:"

Your assertion that Internet telephony is largely free and, therefore, more accessible to the poor than standard long-distance service ignores a very important point.

How are the poor going to gain access to Internet telephony in the first place? They have to obtain a PC, probably on a payment plan if they have credit. The cost per month of gaining access to Internet telephony is higher than (about double) the typical long-distance bill. The poor in our country cannot consider this an alternative to long-distance yet. Not until this hurdle is cleared.

In a sense, the FCC has subsidized a budding industry, albeit unintentionally, by not applying the universal service charge (USC) to the Internet telephony providers. If I were a traditional carrier, I would argue that this practice unfairly impedes competition and would exercise whatever political muscle I had to ensure all carriers are subject to the same taxes.

Thank you for the opportunity to express my views on this complex subject.
-- James Walker

Laura Guevin responds:
Thanks for your comments James, and you make a very valid point. But the universal service charge is also meant to protect rural phone service subscribers, and those people with limited local calling areas would surely benefit greatly from free PC calling. As for the poor, you're correct -- financing a PC with multimedia capability is not a better choice. But being able to use their existing phones to place calls over IP would certainly be a savings over the PSTN.

I see that the issue is arcane, but something we might need to watch. There seems to be a need for our industry to be an active lobbyist on the matter. The concern not raised is that the access service providers (cable, RBOC, cell phone [wireless], etc.) stand between the user and the ISP. The user has already paid all service charges before accessing the ISP. The quandary is that the carriers now are trying to charge for content (what sorts of signals run over the already purchased carrier media) as if the carrier were a value-added reseller. The ISP pays for local carrier access, just the way the user does, otherwise the user could not contact the ISP. The connections are paid for, end to end, using the FCC model from 1934.

The carriers, unable to charge fees for content directly, are trying to say that the ISP is a carrier also and thus in need of regulation. The ploy is to distinguish content by end devices employed. Thus modem to modem would become digital, which it is not now. In Europe (notably, Germany) calls are monitored for content, and different fees apply for digital calls than the fees applied for voice calls. The local U.S. carriers are experiencing penis envy.

The FCC will probably want to split hairs on when a VoIP communication becomes a "telephone call." The truth is, carrier connectivity to, and from, the ISP is the only "telephone call" involved.

The ISP can currently complete a telephone connection to a user from the Internet in the sense that a user phone could accept a modem call, which originates from the net. The ISP has paid for the carrier access, and has the right to use it. This currently also means voice too. The ISP converts digital data to voice and sends the voice over a "paid for" carrier connection. The user calls the ISP over a "paid for" carrier connection if the user initiates a VoIP call through the ISP. At no point does the ISP provide or perform carrier circuit switching. VoIP connections are virtual (connectionless), not "nailed up," i.e. not fixed connection oriented. Carriers provide connections between the user and the ISP, which the ISP requires to provide various connectionless services to the user.

The ridiculous carrier argument has an analogy: The major transportation carriers want rental cars regulated as inter/intrastate transportation companies rather than vehicle rental companies. If we do not refute this specious argument, convincingly, we may all need to start learning to speak German so we can read up on the kinds of laws we will be getting.

PS: The local carriers get a fee from long-distance carriers when they "complete" a call. In some cases the local phone company charges for long-distance calls that are virtually local, i.e. in the same Local Area Transport Area (LATA -- see the white pages of your telephone book for your LATA). There is an exception: A local phone company, next to another local phone company in the same LATA and also within the non-measured toll range, waives these fees because they start and end in the local area. The waiver of fee is because it would cause too much bookkeeping and financially would be a wash. And of course, we have all heard of the "Spanish-American War Temporary Tax" that Congress has just realized we do not need anymore, so it will be phased out over several years.

However, the local carriers also get a special monthly fee, possibly being phased out, that we all pay for "long-distance access." I have no doubt that most of the "arcane" carrier arguments over these matters at the FCC are based on keeping and enhancing these carrier revenue streams intended to support the legacy communications structure.
-- Mike Winthrop

Seeking Fax Advice

I'm trying to find a fax-over-IP service that is analogous to VoIP services offered by companies like Net2Phone and deltathree.com.

We send between 1,5002,000 individual faxes during the first week of each calendar quarter to advertise seminars. This adds about $300 to the local and long-distance telephone bills, and requires about 18 hours to complete between dialing and transmitting.

Is there a product/service where we can send multiple faxes over an open Internet connection and have them received as regular (non-IP) faxes, and use a contact manager and fax software to manage and automate the process?
-- Jeff Levitt
Director of Research, Stanton Chase International

We invite readers to send their input and advice to ggalitzine@tmcnet.com.

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