My My, VoIP Has Certainly Grown Up

VoIP used to be the vanguard of the tiny challenger to the status quo, the David we could all root for against Goliath.  There have been three big VoIP stories MicroSoft’s Skype purchase that drive home just how much our world has changed:  Microsoft’s Skype purchase, a recent FCC filing by TW Telecom, and Facebook’s Skype integration.  Perhaps its time that we stop thinking of it as that proverbial innocent child swinging on the tire in the back yard who needs his freedom to encourage creativity and more as that slacker with five o’clock shadow who lives in his parents basement with few possessions but fewer obligations.

In that FCC filing late last week, TW Telecom (NASDAQ:TWTC, news, filings) appealed to the FCC to declare VoIP a telecommunication service.  Why?  Because incumbent providers are saying that they don’t have any obligation to interconnect on an IP to IP basis.  One of the basic tenets of being part of the PSTN was that you had to interconnect, it’s what made it one phone system and not dozens so you could always call anyone else with a phone.  Now that so much of our voice traffic is IP either to start or somewhere along the way and the PSTN is fast becoming a backwater, do we risk having communications systems fragment into potentially disconnected islands?  While TW Telecom is talking about the gatekeeping mentality of the last vestiges of the PSTN, mandatory interconnectedness or the lack thereof is a theme that I think can only grow from here.

So often in the past decade it has been Skype that sat at the middle of this battle.  They have from the beginning fought not to be regulated, to interconnect with only those they choose.  We rooted for them against the big bad monopolistic ILECs, and they actually won!  They liberated vast amounts of voice traffic – much of which would never have happened without them, and they make nearly a billion in revenue despite the forces that were once arrayed against them.  Now the company will soon be owned by MicroSoft, which earned its own monopolistic chops a decade ago.  MicroSoft will now own a voice system used by billions that claims no obligation to interconnect with anyone else – it’s a very different concept in their hands.

And then finally there’s the recent Facebook/Skype arrangement, whereby Skype will power Facebook’s video and voice chat.  In becoming one of the very largest internet companies, Facebook has come to serve as a platform for a vast amount of communication between people.  There’s no obligation to interconnect there either, whether for the Skype powered service or all the other stuff they do.  I can’t reach a Facebook user in any form without using their system and technologies with their permission.  There’s no phone book and universal system that I can use to do it let alone chooose between long distance providers.  (Remember when we all cared so much about that?)

Voice in general is a much, much smaller fraction of our overall communication pie.  And yet, despite the fact that the majority of communication that happens between people nowadays happens on systems that are not obligated to interconnect, somehow it all still works.  The internet was built that way from the beginning, as the occasional peering war and internet partition reminds us.  The question is, do we need to obligate it to connect?  Won’t it do so on its own because of the basic economic concept that connected networks are worth more than unconnected ones?  Or is it all still held together by what remains of the PSTN, and when that dies so might our current interconnectedness?

One could argue that it will interconnect itself without our help, and regulation is inherently bad when it is unneeded.  But on the other hand it does not take a fully monopolistic situation to hinder innovation.  If small companies face hurdles in interconnecting with rivals, you will obviously have fewer of them – and that could lead to calcification at the top even if it doesn’t take the form of Ma Bell.  Perhaps we have been spoiled by the rapid turnover at the top in the internet sector.  What if ten years from now, the internet is still led by the exact same industry giants it is today, with no new faces?

According to Avaya, the FCC is looking at 2018 for the sunset of the PSTN.  Are VoIP and its brethren ready to put away the skateboard, join the family business, and shoulder the same societal burden that the PSTN has for generations?  Should they?

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Categories: VoIP