Regulate What?
VoIP bits transported over networks have no intrinsic meaning. To bill or tariff them would be an exercise in absurdity01-Mar-2004

This is a copy of my Mar/April 2004 VON Magazine Column

VoIP bits transported over networks have no intrinsic meaning. To bill or tariff them would be an exercise in absurdity.

I�m more amused than concerned about the debate over regulating Voice over IP. There is nothing to regulate! At best it�s possible to make it difficult to interconnect with the PSTN but that�s not a big deal. After all, email didn�t depend on interconnecting with the postal system.

I�m fascinated by Skype because my son who is spending a semester in Australia has adopted it as an extension to instant messaging rather than as a replacement for the telephone network. The quality is usually much better than I get over the phone network though sometimes it�s worse. It also does instant messaging so I can always fallback to text. It�s far simpler to use than a telephone. Skype focuses on solving a simple problem simply and can add features such as its directory service and encryption. Unlike the PSTN where competing systems add costs, Skype and SIP can coexist with both innovating in their own ways. And they will be joined by other innovations.

Skype isn�t the first program to mix instant messaging with voice�in fact Microsoft�s NetMeeting (now part of Windows and MSN messenger) has had the feature for years. The difference is in timing and targeting. The older programs couldn�t presume high speed connectivity and the ability of high quality microphones with noise cancellation. Skype and SIP-based applications coexist and add to the richness as we continue to discover the possibilities of voice connectivity.

Against this we have the popular perception of VoIP as simply cheap telephony and if it is telephony then it can and thus must be regulated like the PSTN.

It also leads investors to think there is a market for very expensive VoIP gear as if there were a physical phone network. A big feature is the creation of the billable entities which is what telephony is all about. We now know that the bits being transported have no intrinsic meaning. Once we have simple interconnection with the PSTN it would be difficult to justify either billing for a phone call or levying a tariff on it. The Telcos know that. At first they tried to stop it but now they realize they can�t keep lowering circuit-switched calling rates forever so they are moving to VoIP themselves. But the regulation serves their purposes by putting a price floor on telephony. The states depend on this revenue, even if just to cover the costs of collecting it. No wonder that they are desperate to try to tax VoIP in some way.

At CES I saw a number of companies offering do-it-yourself PSTN bridges. The incumbents� wall between the PSTN and the Internet will soon be porous because communities of friends around the world will provide their own bridging capabilities.

While interconnecting with the PSTN would be nice, we still have to address the problems with the underlying Internet which is hobbled with end points hidden behind firewalls and NATs (which make a whole network look like a single computer). The end points don�t have a stable identity. The DNS was supposed to provide that stability but it got repurposed in a futile effort to provide meaning. That�s why we need third parties like SIP servers and other directory services.

The Internet connects computers while the P2P community (including Skype) has developed various ways to connect application end points such as people or conversations. If we didn�t have to work around the Internet�s problems and could just connect end points I would be able to walk into a store, buy an IP phone and use it. I wouldn�t need to register with third parties. I could list myself in directories so others would find me or I could do what we do now with cellular phones and just give others the equivalent of my business card. The phone itself wouldn�t need wires�it would just use community connectivity like a car uses community roads. There would be no purpose for �dialing a number��since I�m connected to the net I�d just call people via my personal address book.

For now, each solution is idiosyncratic and just good enough for each application. My current focus is on bringing back the simple connectivity of the early Internet.

We don�t need to fix the Internet�just define P2P connectivity from the edges. This is far easier and simpler than arguing with all those who have a stake in the past. I still want to talk to regulators but with the goal of educating them rather than begging for permission.