VoIP - Voice Over IP and Modems
Special Report 24-Jan-04

VoIP - Voice Over IP - has suddenly become a hot topic. In case you've missed the basics - a broadband Internet connection (DSL, cable, etc.) can be configured to provide telephone service in addition to Internet access.

As VoIP proliferates - and it will - new challenges will emerge for dial-up modem users. And, VoIP opens up significant public policy issues. This special report touches on both.

Technical: Direct-dial local, national and international telephone service is available nearly everywhere and is based upon a 100+ year-old "circuit-switched" architecture. Once your call is routed (after you dial last digit and before the other end can ring), you effectively have a 64kbps dedicated channel between your line and the other end. This channel remains yours until you hang up. Each end provides an analog 2-wire line. A codec codes and decodes the analog and digital portions of the telephone network and a hybrid separates the 2-wire circuit to '4-wire'. This is imperfect, and there will be some 'echo' of the send on the receive - and if both ends are 2-wire, there will be near and far echo. The codecs are designed to provide speech-range ( ~300-3000hz) frequency response using the 64kbps datastream. As calls get more distant, there will be more delay, but, once the call is setup, the delay remains constant.

Note the 64kbps data rate used in the global switched-circuit telephone network. This is a high-enough data rate to provide near CD-quality mono audio using today's compression techniques, but what we've got today is pretty horrible audio - just acceptable speech because the system is based upon ancient technology. Modern codecs can provide switched-circuit phone network quality audio using around 5kbps! Not that VoIP uses such a low rate - at least not yet.

VoIP replaces all or part of the circuit-switched call with IP (Internet Protocol). With IP, packets of data are sent and received over local and/or wide-area networks. Each packet is routed to the destination and travels on a shared network. 

VoIP provides a "virtual switched-circuit" connection: the phone is connected via the broadband Internet connection to an Internet-telephony service provider, which routes the call via Internet Protocol to a switch that is connected to the public switched-circuit phone network to complete the call. Note that this allows all sorts of possibilities and features that used to be out-of-reach: with VoIP your phone number can be in a different area code, or even country, than where you actually are!

Compression and Internet Protocol Routing introduces more delay than with a traditional switched-circuit call. While the IP end isn't restricted to a virtual 2-wire phone line, the other end is. If echo cancellation isn't perfect (and it often isn't), this delay can be much more significant - but tolerable? - for voice calls. Analog Modems, on the other hand, weren't designed with anything but traditional circuit-switched networks. When VoIP technology is used in any part of a call, the VoIP-switched-network interfaces need to recognize and support analog modems: more bandwidth than voice may require and if there's too much delay, the connection may fail. Dropouts - when the IP portion isn't working like it should - may be a new irritant to VoIP users, and a connection killer for modems - including fax modems. (Most VoIP providers claim to support modem/fax connections.)

VoIP is poised to take off due to compelling economics and competitive forces: Why does caller id cost you $7.95 + tax from your phone company when  the phone company's cost is near-zero? Why is caller id provided at no extra charge with cellular service? Answer: because no one else can offer you that service on your line, and, for cellular, everyone offers it. The game changes for wired-telco providers with VoIP - on all the enhanced services like call-waiting, 3-way calling, etc. Right now, telephone services are highly regulated (although "monopoly" services like caller id and call waiting often are treated as "competitive non-regulated"). Internet Service Providers are not. While VoIP service may not provide the reliability of the almost bullet-proof phone line we've come to expect from our phone companies, the cost savings may be more than enough to win customers.

VoIP requires broadband. While broadband is widely available in the US and elsewhere, broadband availability is not nearly as universal as phone service, and will not have such wide availability for some time. The 'last mile' - the connection to your home remains the biggest hurdle, and defines your options for any particular location.

For most home users, cable is today's only VoIP alternative. Cable companies are not among consumers most-loved and respected companies. But, cable companies have made huge investments to upgrade their networks to support 2-way digital connections, and cable modem service has become more reliable. Cable's primary high-speed competition - DSL - requires a phone line, and your phone company has the most to lose from VoIP (although most phone companies are making plans to provide their own VoIP services...). Expect the cable companies to begin offering telephone service - TimeWarner has already announced. Even without the local cable company offering phone service, third-party providers already offer it. Just remember: one would hope your cable company would do a few things to enhance service reliability before they offer telephone service: like UPS (uninterruptible power supplies) and the maximum possible fault-tolerance/redundancy. Anytime the cable internet service is out, your phone service will be out, too. With a third-party provider, your service becomes vulnerable to problems with your local Internet connection as well as with problems at the third-party and the connection between your ISP and the third-party. 911 issue: you may not be able to call 911, and if you are able, the call will not be handled like a normal 911 call and the emergency response center may not receive any information regarding your phone number or location.

The public policy issues are huge: Billions and billions of dollars are collected today in the USA from taxes, fees and surcharges on telecommunications services: the Universal Service (Slosh) Fund, Federal Excise Taxes, Line Cost Charges, etc., etc., etc. A VoIP provider must purchase access to the public switched network in order to allow you to make calls - so, look for a fight as the players try and lay down rules to catch up with technology. The phone companies will fight for regulation of VoIP providers to protect their turf, as VoIP argues for a chance to compete.