More Than 20% of Consumer Broadband Lines Now Come with VoIP

Voice over IP is becoming increasingly important to service providers as a bundle component, say researchers at Point Topic.

“Over 22 percent of consumer broadband lines worldwide now come with a Voice over IP service, and in some markets, such as France, penetration surpasses 90 percent.

Point Topic says there are more than 100 million consumer VoIP subscriptions in service, while another 12 million subscribers were added in the first half of 2010,” says Point Topic’s Senior Analyst John Bosnell.

In some cases, the apparent "killer app" status is likely an artifact of how services can be bought. In many countries, a broadband connection requires purchase of a voice line as well. It might be going too far to say voice is the killer app for broadband access. For most people, Internet access likely is that driver. But voice has emerged as a key feature for broadband access packages, at the very least.

More Than One in Five Consumer Broadband Lines Now Come with VoIP

Verizon Marketing "Digital Voice" in 11 States and District of Columbia

Verizon now is marketing "FiOS Digital Voice" in FiOS markets in New York, New Jersey, Massachusetts, Rhode Island, Florida, Texas, Virginia, Maryland, Washington, D.C., Delaware, Pennsylvania and California, marking Verizon's initial wave of efforts to transition customers off the legacy voice network and onto the packet voice network.

The transition process could easily last a decade or more, requiring Verizon to maintain dual access and switching infrastructures for the interim period, before being able to decommission the old switching network completely, along with the legacy copper access network.

Verizon touts an easy-to-use, online account-management tool as a key element of FiOS Digital Voice, enabling customers to conveniently use a broadband-connected computer to access and manage the service's integrated features. Customers also have the option to add another FiOS Digital Voice line, with its own assigned number and all the same features, for $9.99 a month.

The service comes standard with 22 features including "Live Voice Mail Screening," which allows users to hear voice mail messages as they arrive and then decide whether or not to take the incoming call.

Call logs list the caller name, telephone number (if available), date, time-of-day, location and duration of every incoming and outgoing call. Users can easily transfer contact information directly into their FiOS Digital Voice personal address book.

"Caller ID on TV" allows FiOS TV customers to see incoming caller ID information displayed for several seconds in the corner of their TV screen.  They can decide to pause their TV programming to answer the call or let it go into their FiOS Digital Voice mailbox.  The feature can be turned on or off from the customer's set-top box.

"Locate me" allows users to program up to three numbers where they might be reached when not at home, and incoming calls will ring at each of those numbers, one at a time. Unanswered calls are sent to voice mail.

Simultaneous ring, do not disturb, voicemail with email notification and virtual numbers also are available.

New customers who sign up by July 24 for FiOS quad- or triple-play bundles that include broadband, TV and FiOS Digital Voice also will receive a guaranteed monthly rate for two years and a $20 monthly discount.

Live Blog of Voice 2.0 Panel at PTC

Jonathan Rosenberg, chief technology strategist at Skype; Rodrigue Ullens, Voxbone CEO; Frank Fawzi, IntelePeer CEO and Mke James, Metaswitch Networks director of systems engineering kick around "Voice 2.0."

Voice 2.0: Beyond the Hype: Lots of ways people are using voice today, let’s look at changes. Gary Kim moderating discussions from Rodrigue, Mike, Frank, and Jonathan.

Jonathan: Voice 2.0 (see yesterday’s talk): it’s not voice anymore, it’s video. Voice is becoming integrated with other media, part of a broader communications experience. As voice and video permeates the web, everything fits together as interactive content experience with seamless integration.

Frank: interactive video being woven into experience. We’ve seen significant interest by enterprise carriers to enrich end-user experience, trying to reach audience by any means possible (clicking links, sms, etc.). It’s critical that you deliver quality as part of business process. We’ve seen minutes double, 4.5B end of 2008 to about 10B annualized run rate now, coming from all kinds of customers, uses, and sources.

Mike: Traditional voice now dull and boring, now it’s about software and applications. Voice embedded in PC, more integration with TV. No one carrier is everything to everyone, need support for 3rd parties to develop.

Rodrigue: Internet-based company with Internet-based business model, voice as part of it. Not a fight between AT&T and Google, is an ecosystem of business models in global market. Enterprises are next opportunity (IT direct, management and apps), mentality of using certain apps is going to change. Telcos can afford their business model is by staff and host switching, engineers, need to embrace new opportunities.

Gary: What strikes me about this panel is that panelists will benefit from creative applications and capability. This is clearly a good thing. What advice would you offer others in the ecosystem? No way to fight this, many new ways to drive revenue. Frank: We talk with carriers about opportunities to reach their end users, deal with hundreds of millions of phone number in their registry. How do you think about creating opportunities to expand embedded voice, lower cost of communications, increase applicability of voice in new ways? Expansion and connectivity between voice and multimodal technologies? (15 times more likely to convert with human interaction).

Gary: Rich voice? Jonathan: what makes voice sales more effective is the real people. All this technology is about replicating face to face interactions. It’s not just the words, it’s the nuances, facial expression, the reasons we get on airplanes. Voice is lowest level, video is next step closer to experience of sitting next to each other. As quality gets higher, you get increasing value of return.

Gary: implications of infrastructure with regard to partners? Mike: Sometimes we need to get out of the way and allow the end points to negotiate.

Gary: voice has always been cloud-based, but now there’s more to the cloud. Frank: communications as a service, using (common) links to access cloud. Slight distinction: now all we need to do is enable an IP pipe. Jonathan: leveraging the IP model, worldwide network model. Allows new service providers to offer new services. Voice was regional, now you can reach anywhere in the world. Rodrigue: one of the ways of providing voice over other apps: use hardware, open source, infrastructure where costs are declining and redundancy is scalable. Mike: agreeing, legacy connectivity enables… Rodrigue: lots of affordable solutions available today. Jonathan: a lot of cloud service providers develop locally, value is in software.

Question: What drives this Voice 2.0 development? Suggested application stores, is there community and/or clearinghouse function, who is gatekeeper? Jonathan: There is no one answer. One interesting area is the web and different web apps, distribution channel is the browser. Other: mobile apps, e.g., iPhone and Apple App store. Frank: types of folks that we work with, we’re not opening an app store, working with communities of interest who may want to add voice as a feature to enrich their end user experience. Mike: many models of distribution including the web, branded carriers and app stores; other carriers distribute through their own channels.

Gary: regarding voice as an app: abilty of smartest guys to be surprised. For example, Apple may not have expected App Store to be as big as they are. Now others are building app stores. Rodrigue: takes several months or years to create new products, while on the web you can launch, analyze, relaunch. Innovation can be brought online on behalf of their users.

Gary: executives express concern about protecting their brand. How to make use of developer community? Jonathan: on the web, if you want to see how things work, try it, collect results, improve or add new features. That new model of massive “learn as you go” is a hallmark of success of the web. Voice 2.0 is about embracing the benefits of the web, contrast with traditional telecom models (long time to roll out new features, compared to adding IM to Facebook).

Gary: US telecom industry replaced 50% of their revenue model in the 1990s. I’m calling for them to replace 50% over next 10 years. (You’ve done it.) Jonathan: it comes down to embracing the developers, doesn’t give up value to user. Windows: huge group of 3rd party developers. Devices and networks open up, carriers become portals, to become operating system of voice 2.0. Frank: wireline revenue disappeared, new technologies can displace existing revenue models. Wireless can help, uses for voice increase abundance of opportunities (scalable networks).

Question: Future of mobile environment: Jonathan: hoping for open environment where providers like us can add value-added services. It’s one of the next frontiers: getting quality up is a big challenge and growth opportunity.

Gary: experience is limited where networks are not robust (really cooking). Jonathan: capacity changes the equation.

Question: how do you tackle voice 2.0, what are trends? Rodrigue: identifier (phone number) from voice calls enable new innovation. Jonathan: enterprises are seeing vast deployment in IP communications (video, presence, IM), but landlocked inside of enterprise. Need to create new generation of peering technologies, security, etc. Cisco just announced product that’s focused on this problem, using phone numbers as identifiers (VIPER), peering.

Joe Weinman: concern for stability, scalability and reliability (911 and safety-critical apps), what strategies for innovation of massive disruptions, dilemma of brand protection vs innovation? Frank: point where scalability, robustness and quality becomes critical, need to have a high quality services, how does that apply on telco level, how to you move a large organization into disruptive model without affecting customers, mission critical services, and existing revenue streams? It’s more challenging. Jonathan: questions that presumption: reliability can be obtained, available; data is more critical than voice link going down. IP pipe needs to be always up. Rodrigue: difference between telco and app provider: telco provides infrastructure, everything is redundant, critical lines. Have a different business, e.g. BT and Ribbit, play at another layer (other business units). Frank: you guys are providing the infrastructure, reliabilty from traditional means; disruption does not take away responsibility of network providers. Joe: Mixing apples and oranges. Access is a critical issue, but at application layer testing becomes a brand protection mechanism. Mike: in some places, telcos are tied by regulatory bodies, services like Skype do not replace 911. Frank: we’re all capable of creating opportunities for ourselves. Gary: would be interesting to do a study about when we think things will break, all critical apps are IP based. We rely on the connection, not our hardware or software that can be fixed by rebooting. Interesting what human beings are becoming accustomed to. Frank: we’re willing to accept certain things, like quality of wireless compared to wired.

Skype Traffic Grows 63%

International long distance traffic growth has slowed, while Skype traffic is accelerating, says Stephan Beckert, TeleGeography strategy VP.

Over the past 25 years, international call volume from telephones has grown at a compounded annual rate of 15 percent. In the past two years, however, international telephone traffic annual growth has slowed to only eight percent. To be sure, growth rates always slow for any product or service that has attained high penetration, simply because any additional growth is compared to a larger base of existing users.

There have been some recession-related changes, though overall demand obviously has remained strong. Traffic to Mexico, the world’s largest calling destination, declined four percent in 2008, and aggregate traffic to Central America declined five percent, for example.

While international telephone traffic growth has slowed, Skype’s traffic has soared. Skype’s on-net international traffic (between two Skype users) grew 51 percent in 2008, and is projected to grow 63 percent in 2009, to 54 billion minutes.

"The volume of traffic routed via Skype is tremendous," said Beckert. "Skype is now the largest provider of cross border communications in the world, by far."

Incumbent Telco VoIP Transition is Not Technology-Led

The fact that AT&T has asked the Federal Communications for a definite date to shut down the public switched telephone network is, like most regulatory filings made in Washington, D.C., more complicated than it might appear.

Virtually all telecom service provider executives believe IP voice is the future, whether in the mobile or fixed domains. But the economics of the transition are complicated, at least for an incumbent provider.

Attackers, such as cable companies or independent VoIP providers, have no installed base of customers to cannibalize. Incumbents most certainly do, and that makes all the difference in perspective.

A Verizon executive recently noted that, “at this point in time, the business case does not support a technology-led migration off of the PSTN with the combination of land line loss, the economy, competing priorities and competitive dynamics.”

The key phrase is "technology led." Cable digital voice, Skype and Vonage build on VoIP: the technology directly supports the business case.

For an incumbent telecom provider, the technology in some cases harms the business case. To the extent that VoIP services largely replace an existing service with no incremental revenue, added investment is not met by added revenue. To the extent that VoIP services are priced lower than the voice services they replace, the business case is negative.

Under such circumstances it is rational to harvest PSTN voice as long as possible, despite market share losses. At some point, the logic reverses, however. As the fixed costs of the old PSTN are shared over a smaller base of customers, it will at some point be advantageous to switch to IP voice, strictly on the basis of operating cost savings.

That point has not yet been reached, but it is inevitable. The issue right now is what regulatory regime will apply to incumbents as that transition occurs. And one might argue that is the real point of the AT&T request for the FCC to specify a firm timetable for shutting down the PSTN.

The replacement of PSTN technology with IP telephony also creates an opportunity for new rules about carrier obligations that directly affect the costs of providing such service. That is why the AT&T request also argues that legacy rules must be altered as the transition is made.

Those rules are arcane and of little visible consequence for the typical consumer user of fixed voice. But they have enormous impact on the voice business case, as viewed from an incumbent perspective. Basically, all the rules that govern how networks compensate each other for terminating traffic are the heart of the matter.

So incumbent sunsetting of the PSTN will not be "technology led." The institutional and business frameworks remain the key issue.

Best Buy Sells Phone Power Nationwide

Best Buy now is distributing the "Phone Power" VoIP service nationwide. That's a pretty big boost for any retailer, and especially so for an independent VoIP provider aware that the market is consolidating and that scale is sorely needed.

Phone Power costs $19.95 per month with no contract, $16.95 with a one-year contract and $14.95 for a two-year contract. The service offers unlimited calling within the United States and Canada and 60 international minutes in 88 countries.

The Best Buy offering includes a two-line home adapter as well as a USB travel adapter. It sells for $79.95, and comes with a $79.95 instant service credit to be applied when the customer activates service on an eligible one or two year service plan.

It isn't clear yet whether Best Buy also will be actively selling Phone Power business packages, which come in both multi-line and single-line versions, offering unlimited inbound calling and 5,000 minutes of outbound calling with auto-attendant feature, and other popular business features, included on multi-line packages.

Why Isn't All Voice Free?

"When I wrote a story about various VoIP initiatives a decade ago, nearly every expert I spoke to spouted the same prediction: within 10 years, all phone calls will be free," says John Dvorak, PC magazine columnist. "The rationale behind the pronouncement was that the wires and systems used for phone calls will eventually be used to transfer data, just like everything else."

"You don't get charged for visiting a Web page, so why get charged for making a phone call, if both are essentially data?" he muses.

It's an old argument, but is akin to asking why a diamond, made of carbon, is worth more than a thimble's worth of oil, also made of carbon, or a tiny cube of apple.

The answer to the question of different incremental pricing or costs to use network features has little to do with the representation of symbols and everything to do with larger permissible business models mandated by government entities.

In a legal and regulatory sense, bits are never "just bits." Cable TV bits are regulated differently from voice bits that touch the "public phone network," while Internet bits are regulated differently from each of those other types of bits and from private network data.

Still, it is one thing to argue that use of communications or other bits may not impose an incremental cost to a user. That is not to say there are not specific costs associated with use of the bits. Google Voice might not charge an end user for completing a specific call. But there are actual costs, imposed by the regulatory regime. Google pays them, not the end user.

But that does not mean the call has no cost, only that the cost is indirectly paid.

As for why others, besides Skype, other instantt messaging-based call providers, have not moved more aggressively to offer various forms of "no incremental cost to offer" calling, financial interests are involved as they always are.

One might as well ask why no-incremental cost education, music, video, books or plane tickets are not available.

In 1977, for example, long distance calling represented about half of all U.S. telephone company revenue. By 2007, that was no longer true. Instead, wireless services had taken the place long distance once played in underpinning the whole business. That isn't to say long distance has dropped to insignificance. It remains important. It is to say that there must be some revenue model underpinning the business, and if it is not long distance or voice, it will be something else.

No, there is no mystery about why VoIP has not lead, over the last 10 years, to "universally-free" (no incremental cost to end user)  voice calls. Voice, though declining, remains a key underpinning of the carrier business model. Nor do government regulators permit "free to end user" calling between networks.

Google Voice might not charge a U.S. user for a U.S.-terminated call. But Google Voice is compensating the terminating networks for use of their networks. Google Voice envisions a different business model for domestic calling than "per minute" use of the network. Lack of end user charges does not mean "terminating minutes" do not carry costs.

That, in fact, is behind Google Voice's blocking of some numbers, in some high-cost exchanges. And those charges are radically higher. Some firms report that the high-cost termination charges are as much as 25 times higher than typical.

Mobile VoIP is Inevitable, Yankee Group Says

Flat-rate data pricing has made mobile VoIP applications inevitable, and over time, all U.S. carriers will end up allowing them, says Yankee Group analyst Carl Howe. That, in turn, is going to have profound impact on the mobile service provider business model, as voice now is the key revenue driver.

Some of the effects are easy to predict. International call traffic will migrate to VoIP. In the U.S. market, for example, domestic voice calling minutes are cheap, but international rates are fairly high.

On the other hand, mobile VoIP also will shift international traffic from the landline networks (including use of VoIP from fixed broadband connections) to the mobile network.

Less easily quantified is the boost mobile VoIP will give to purchase and use of specific handsets, and the emergence of specific mobile VoIP user segments. For example, devices with front-facing cameras potentially can become the foundation for mobile videoconferencing services and applications.

If you think of BlackBerries as "email" centric phones, and iPhones as "mobile Web" phones, while other devices are "social networking" or "navigation" oriented, you can see where the niches might be.

It is conceivable that "flat-rate data plan caps will tighten," says Howe. Mobile service providers might try to avoid a wholesale collapse of voice revenue by trying to manage network capacity through through more-stringent bandwidth caps.

The operative word in that sentence, however, is “trying,” says Howe. Data caps and over-cap pricing are likely to receive intense regulatory scrutiny to ensure that operators aren’t gouging customers in an attempt to replace lost voice revenues.

The other big unknown is whether service providers will be allowed to create optional "voice optimized" or "conferencing optimized" service plans for users that want priority handling of their own conferencing and voice bits, or "video optimized" plans for users who deem video apps to be key.

In a sign of things to come, Verizon Wireless and AT&T now allow use of mobile VoIP. Google's Android phones running on Verizon's network have VoIP applications available on them.

AT&T also now allows use of the Skype VoIP application on AT&T’s 3G network and iPhones. Vonage and iBasis, among others, also support mobile VoIP calling.

The VoIP trend actually only accelerates an on-going trend. U.S. mobile service provider monthly voice revenue per subscriber has declined from an average of $58 in 2000 to less than $35 in 2009. VoIP might accelerate that process, but is not singlehandedly causing it.

Data plan revenue is the obvious replacement revenue source. And with more application stores offering mobile VoIP clients, it will be hard to stop users from substituting VoIP for traditional calling. Of course, mobile providers have options.

They might not want to do so, but one way to prevent substantial migration to VoIP calling is simply to lower prices for tradtional calling, especially under conditions where voice is carried on one network, and data on a separate network. Part of the overall equation is the additional load mobile VoIP calling will place on 3G networks. In a sense, providing incentives for users to use the voice network for voice offloads traffis from the 3G networks.

Ease of use will emerge as a key issue as more mobile VoIP clients are made available. For many users, domestic calling is cheap enough that mobile VoIP will not provide much advantage, as compelling as international VoIP will be. Anything other than the normal process people now use to dial calls will create huge barriers to domestic VoIP usage.

Call quality also will be an issue. People are used to mobile voice call quality being less than landline. They are used to VoIP calls being equivalent to mobile call quality. But quality less than mobile will create barriers to usage.

On the other hand, use of high-quality codecs will be an incentive to use of mobile VoIP. Anybody who has used Skype high-definition codecs might have new incentives to use VoIP calling services that offer such experiences. Adoption barriers exist here, as both ends of a circuit must be equipped with high-performance codecs to maximize the experience.

The other unknown is the impact of devices able to support multitasking and integrate data services such as instant messaging and presence functions with voice sessions.

Carriers might want to ationalize data and voice pricing, says Howe. A $30 per month data plan capped at 5 GB a month allows your typical 24 Kbps codec VoIP user to talk for nearly 21,000 minutes. That makes the $60 AT&T charges for 900 voice minutes a month look pretty expensive, says Howe.

Operators should do the math on tariffs they charge and adjust rates so VoIP arbitrage becomes less attractive.

Service providers also should build their own mobile VoIP apps, optimized to work with 3G networks as well as Wi-Fi and 4G networks they also may own. That of course assumes such optimization will remain legal once the Federal Communications Commission finishes its rulemaking on network neutrality.

How Junction Networks Deals with Traffic Pumping

Google Voice recently has drawn attention from the Federal Communications Commission for its practice of blocking calls to some high-cost telephone numbers used by free conference calling sites. And it appears Google Voice is not the only provider of affordable calling services that finds the high-cost numbers a problem.

Junction Networks, a provider of hosted business IP telephony, has taken another tack, announcing that it will begin charging a higher fee for outbound calls to those exchanges.

“Free conference calling and other ‘traffic pumping’ services exist because the current carrier compensation system allows rural carriers to pass extremely high fees on to other carriers, who often cannot come close to recovering the cost of calls,” says Rob Wolpov, president, Junction Networks. “As a result, we have been left with an overwhelming increase in fees for calls to a number of rural locations where these services operate.

“In order to maintain our low-cost business VoIP options and at the same time, allow our customers to call any number they choose, we have decided to charge the market rate for calls to the designated areas used by these services," Junction Networks now says.

Free conference calling services, adult chat lines and other “traffic pumping” services are often reached through the telephone exchanges of very small, rural operators. "In a legal but questionable arbitrage scheme, these calling services choose these rural exchanges precisely for their high termination charges -- the fees that sending carriers pay them to complete (terminate) the calls," says Wolpov.

Charging as much as 20 times the typical domestic termination rate, the rural telco then splits the profits with the service. While GoogleVoice has responded by blocking calls to those numbers, Junction Networks prefers the alternative: allowing customers to continue using these services at their discretion, but paying the actual cost of such calls.

Under the newe plan, Junction Networks customers can control the cost of any calls costing more than 2.9 cents per minute by simply completing an online extended dialing form.

Such traffic pumping schemes are expected to be addressed at some point. For the moment, blocking is seen as the lesser evil for some service providers who do not make a living from call termination, though cost-based pricing will make more sense for firms that do charge for calling services.

Google Voice arguably has a different problem. It provides Web-enabled calling features that sometimes require call delivery to such telephone numbers. Sometimes Google Voice provides the actual outbound call origination, rather than processing inbound calls to a user's own telephone numbers. When originating calls to the high-cost terminations, Google Voice has no direct revenue model at all.

Pingo Launches Smartphone-Based Global Calling Service

Pingo, the prepaid international calling service from iBasis, now has released a smartphone application enabling simple international calling from a wide variety of smartphones, including the iPhone, Blackberry, Treo and phones using operating systems such as Nokia Symbian, Windows Mobile and Google Android.

"Pingo EZ Dial" automatically syncs with the mobile's address book, so dialing happens the way it always does, but the Pingo client recognizes that an international number is being called and routes the call using the Pingo network.

EZ Dial users don’t dial access numbers, PIN codes or change their calling behavior in any way and does not require users to connect to Wi-Fi. Users will consume domestic or local airtime minutes of use, but incur no global calling charges from their mobile provider.

Users go to the Pingo Web site (http://www.pingo.com) to sign up for a prepaid account. Users of iPhone devices can download the client for free from the Applie App Store. Users of other phones simply enter a phone number and Pingo sends out a text message with a hot link that initiates the over-the-air client download.

Pingo thinks the move is important since more calls are being initiated from mobile handsets these days, so more global calling also is being initiated from handsets.

Users with feature phones can get the same low rates, but will have to dial a local access number, since those phones cannot download the EZ Dial client.

All of that will change as Long Term Evolution or WiMAX networks become more ubiquitous, since all devices operating on those networks will be data devices able to download clients.

In many ways, the Pingo mobile calling capability is a reflection of the broader shift to mobile-originated and terminated calling. Pingo long has been a huge supplier of white label wholesale services to other retail providers, and most of those providers were wired network providers.

Since the U.S. market is by far one of the largest global markets in the world, mobile support is important for any company that makes a living from international voice traffic. Also, mobile origination is more important in the U.S. market, since the ratio of origination to termiantion is about three to one outbound compared to inbound, says Jayesh Patel, iBasis VP. "Most countries don't have that sort of  imbalance."

Recently, iBasis has noted more use of its calling plans by business users as well, so EZ Dial is offered in a business account version that allows easier administrative setup and call tracking.

Google Voice has 1.4 Million Users

Google Voice has 1.419 million users, some 570,000 of which use it seven days a week, Google says, in information Google apparently released accidentally in a letter to the Federal Communications Commission and discovered by Business Week before the information was discovered and removed.

The early version of the documents also suggested Google has plans to take Google Voice global. Google apparently said it already has signed contracts with a number of international service providers.

How Do You Measure the Value of Something That Has No Price?

Global end user spending on communications services (voice and data, not entertainment video) runs about $1.8 trillion a year or so, one can extrapolate from the most-recent International Telecommunicatons Union statistics.

Fixed line voice probably sits at about the $740 billion range in 2009.

Infonetics Research says VoIP services bring in $21 billion for service providers in the first half, so assume an annual total of $42 billion. Assume 16 percent of those revenues are for trunking services of one sort or another and voice revenues might hit $35 billion or so for the full year.

That suggests VoIP services represent about 4.7 percent of total global voice revenues in 2009.

The point is that VoIP remains a relatively small portion of global voice revenues. But the situation is more complicated than simply how VoIP stacks up as a revenue driver. The larger problem with voice revenues, as everyone agrees, is that it is trending towards becoming an "application," not a service. That means it will sometimes be provided "at no incremental cost," or at "very low incremental cost."

The value VoIP represents cannot be strictly measured using "revenue" metrics, anymore than the value of email or instant messaging or presence can be measured by revenue metrics. Probably all that anyone can say with some assurance is that the value VoIP represents is greater than five percent of the total value of voice communications, as many sessions occur on a "non-charged" basis.

Many years ago, consumers got access to email in one of two ways. They got email access from their employers, or they bought dial-up Internet access and got their email from their ISPs. In neither case has it, or is, possible to calculate the economic value of email, as the measurable "product" for a consumer was the value of the dial-up Internet connection.

Business value is even harder to calculate, as organizations can buy software and hardware to host their own email, and then buy access connections that support any number of applications, without any specific fee required to host email services.

The larger point is that, in future years, the service revenue attributable directly to voice services will be a number that might remain flat, might grow or might shrink. If voice revenues ultimately shrink, as they might in many markets, or if VoIP replaces TDM versions of voice, that will not necessarily mean that people are talking less, or that the value ascribed to voice is less.

It simply will mean that the value is only indirectly measurable. Only one thing can be said for sure. Markets whose products cannot be directly measured will not be measured. The first sign of this is the increasing use of metrics such as "revenue generating units" or "services per customer" or "average revenue per user."

At some point, though it might still be a measurable quantity, the value of voice services will be only partially represented by "service" revenue. It's tough to measure the value of something that has no specific "incremental cost."

So what will market researchers and agencies do? What they have done before: they will measure the value of some associated product that does have a market price. They will measure the value of purchased access connections, rather than particular applications, much as one could measure ISP access subscriptions, but not the value of email.

Google Blocks Calls to About 100 High-Cost Telephone Numbers

Google says that although it still blocks use of Google Voice to terminate calls to fewer than 100 U.S. telephone numbers with unusually high termination cost, it still does so. Earlier, Google Voice had been blocking calls to thousands of numbers in some exchanges.

In a letter to the Federal Communications Commission, Google says a June 2009 study it conducted found that the top 10 U.S. telephone prefixes Google Voice was terminating accounted for 1.1 percent of its monthly call volume, about 161 times the expected volume for a "typical" prefix. That 1.1 percent of calls also accounted for 26.2 percent of its monthly termination costs.

Google says terminating those calls costs as much as 39 cents a minute. Google therefore blocked Google Voice calls to less than 100 U.S. telephone numbers, based on that study.

The difference is that where Google had before only been able to block calls to prefixes, it now can block specific telephone numbers with highly asymmetric traffic typical of free conference call services, for example, which never place outbound calls, but simply receive them.

Real-Time Internet Traffic Doubles

Real-time entertainment has almost doubled its share of total Internet traffic from 2008 to 2009, while gaming has increased its share by more than 50 percent, says Sandvine. Real-time entertainment traffic (streaming audio and video, peer-casting, place-shifting, Flash video) now accounts for 26.6 percent of total traffic in 2009, up from 12.6 percent in 2008, according to a new analysis by Sandvine.

As the percentage of real-time video and voice traffic continues to grow, latency issues will become more visible to end users, and will prompt new efforts by Internet access providers to provide better control of quality issues not related directly to bandwidth.

One reason is that video downloads, for example, are declining in favor of real-time streaming. Downloaded content is less susceptible to latency and jitter impairments.

Traffic to and from gaming consoles increased by more than 50 percent per subscriber as well, demonstrating not only the popularity of online gaming, but also the growing use of game consoles as sources of “traditional” entertainment such as movies and TV shows, says Sandvine.

Gaming, especially fast-paced action games, likewise are susceptible to experience impairment caused by latency and jitter.

.The growth of real-time entertainment consumption also is leading to a decline of peer-to-peer traffic. At a global level, P2P file-sharing declined by 25 percent as a share of total traffic, to account for just over 20 percent of total bytes, says Sandvine.

The changes have key implications for ISPs and end users. One way to protect real-time service performance for applications such as voice, video, videoconferencing and gaming is to take extra measures to protect latency performance for such real-time applications. And that is where clumsy new network neutrality rules might be a problem.

Whatever else might be said, user experience can be optimized at times of peak congestion by prioritizing delivery of real-time packets, compared to other types of traffic that are more robust in the face of packet delay. File downloads, email and Web surfing are examples of activities that are robust in the face of congestion.

So it matters greatly whether ISPs can condition end user traffic--especially with user consent--to maintain top priority for streaming video, voice or other real-time applications when networks are congested. Enterprises do this all the time. It would be a shame if consumers were denied the choice to benefit as well.

FCC Opens Inquiry into Google Voice Blocking

The Federal Communications Commission has opened an inquiry into Google Voice's call blocking of traffic to some high-cost numbers used by free conference calling services.

Google does not deny blocking access to those numbers, but argues it is a Web service offering an optional call connection service, and does not have a common carrier obligation to deliver calls to virtually any phone number.

AT&T obviously believes Google Voice has to terminate those calls, even though it is an application, not a common carrier provider of voice services.

Google says its phone management service isn't subject to common carrier telephone rules because it is free and consumers can use it only if they have a traditional telephone line.

AT&T and other carriers say they don't want to pay high access charges either, and do not believe any providers of termination services should be able to selectively block calls.

It isn't yet clear where the inquiry might lead, but it is another reminder that the regulatory framework that treats common carriers differently from application providers is intellectually incoherent.

The only issue is whether we are yet at a regulatory tipping point where some drastic revision is needed.

For at least three years, regulators have debated--without clear conclusion--where voice services over the Web fit in. Web services, which can include Skype, maybe Google Voice, and Comcast Digital Voice, are for now viewed as information services and not subject to the more heavily regulated treatment "service providers" are subjected to.

What is clear is that the old distinctions are becoming unworkable.

"Much as the FCC wishes there was still a clear distinction between 'the Internet' and 'the telephone network,' technology has obliterated that difference," Larry Downes, a non-resident fellow at the Stanford Law School Center of Internet and Society, notes.

He proposed the FCC wipe the slate clean: "Hold everyone to the same rules regardless of what information they are transporting-whether voice, video, television, data. Because regardless of who's doing what, these days it's all bits."

Such a sweeping reform necessarily would mean ending the way the nation now regulates cable TV, telephony and the Internet. That will ruffle lots of feathers, but it has been clear for some time that the differing regulatory frameworks increasingly are old of step with market realties.

To wit, we use one set of rules for "telcos," a different set of rules for "cable companies" and a third set for application providers, even when they offer similar, iidentical, overlapping or functionally similar services and applications.

"If it walks like a duck, talks like a duck, it's a duck" is a non-technical way of dscribing how the FCC traditionally has looked at resolving questions within the common carrier world. As more providers enter that business, but with different regulatory treatment, there has to be pressure to treat all ducks as ducks.

Net Neutrality Not Good for Real-Time Services?

One of the unknowns at the moment is how any proposed Federal Communications Commission network neutrality rules might affect a service provider's ability to offer quality-assured services.

That's possibly important for any users or providers of real-time services (voice and video), since bandwidth alone is not a guarantee of quality experience.

Real-time services are highly sensitive to latency and delay. The issue then is whether consumers will have the option of buying services optimized for real-time services.

Think of this as an end-user opportunity to buy bandwidth services that are akin to the Akamai content delivery service currently available to businesses.

Wireless Net Neutrality Will Spur Mobile VoIP

This forecast of mobile VoIP, like most forecasts, probably needs to be pushed out "to the right," but is one concrete example of what is likely to happen if the Federal Communications Commission does manage to push through rules applying wired network application non-discrimination rules to the wireless realm.

The first thing that will happen is an immediate increase in marketing of mobile VoIP apps.

Carriers, of course, can react in ways to shape adoption. For many users, lower calling prices would dampen interest in VoIP over mobile services.

Carriers also would have incentive to create their own mobile VoIP offerings, and that might offer them a way to boost data plan sales as well.

The most immediate impact of any new wireless non-discrimination rules will be to hasten the day when voice no longer is the key revenue driver for mobile operators. Mobility executives are anything but dumb. They know that day is coming. They just aren't in any hurry to see it.

Penny Wise, Pound Foolish Complaining About Communications?

Lots of people enjoy complaining about how bad their mobile service is, how expensive and slow their broadband is or how useless their landline voice service is. It isn't that the complaints have no foundation.

And even if unfounded, consumers are under no obligation to be "happy" about products they believe do not offer proper value-price-quality relationships.

Oddly enough, people are less happy when change is occurring. Students of revolution often have made that observation: that unhappiness is highest when there is hope for change, compared to situations where there is no hope of change.

The simple way of maintaining perspective is to ask oneself how much one was paying for such services--compared to the value one was getting--for any services as they existed in 1980s or in 1995. Then evaluate what one now gets, compared to the price, compared to when one first began using any new service (mobility or broadband or the Web).

The less conducted exercise is to compare how much complaining gets directed at all communication services as a whole, compared to what one spends for fuel on one's automobile. As it turns out, U.S. consumers spend 2.2 percent to 2.5 percent of disposable income on all communication services they use and buy.

Of late, they have been spending 2.5 percent to four percent of disposable income on fuel for autos and about 11 percent on transporation overall.

Of course, most people likely feel there is only so much they can do about spending on fuel or transportation, but considering that people spend more on fuel than all of their communications, and perhaps four to five times more on transportation, one wonders if people are not being "penny wise, pound foolish."

In other words, people seem to worry lots about a smaller amount of spending, but seemingly worry less about larger amounts of spending.

Will AT&T Wireless Support VoIP?

For Apple and Google, the recent inquiry by the Federal Communications Commission into VoIP blocking on iPhones and Android devices is a reminder that the communications business is rather more suscepible to political pressure than the software business.

For AT&T the inquiries are just part of the background of doing business, but AT&T's response to the FCC inquiry suggests that what typically happens, will happen again. Namely, when regulators decide it is time to do something, market contestants typically try to head off more onerous rules by making voluntary business decisions that reduce the need for such rules.

So it is that AT&T now says "we plan to take a fresh look at possibly authorizing VoIP capabilities on the iPhone for use on AT&T’s 3G network," says Jim Cicconi AT&T Services senior EVP.

That doesn't guarantee clearance for unlimited VoIP use on AT&T mobiles, but it is a sure sign AT&T does not want to regulated into such a position.

Google Voice for Active Duty Military Now Available

Any active U.S. service member with a .mil email address can sign up for a Google Voice account at and start using the free service within a day. It's a good thing.