Google is always a trend setter. Sadly, in this case, the trend is the refusal to complete calls to certain free conference call or free porn sites. Now Speakeasy.com has decided to do the same. Unless the FCC acts quickly, I expect other VOIP providers to follow this trend.
As I explained when this first came up, for various reasons, phone networks in rural areas get paid much more money when a call comes from another network and terminates on the rural network. This means if you have a business where lots of people call in and few people call out, you can make money from the uneven compensation. So some clever folks figured out how to take advantage of this and offer some very popular services — free conference calling and porn being the most well-known.
The major telco-carriers fought this for years through the strategy of inventing nasty names (“traffic pumping,” “traffic stimulation”) and fighting in various regulatory arenas and the courts. When that took too long, they tried the “self-help” method of just not connecting to these sites. The FCC — recognizing that allowing telephone companies to decide with whom they will or won’t connect would completely undermine the telephone system which depends on interconnection — slammed down on self-help hard. They also opened a new docket to look at the question of “traffic stimulation” and decide whether it constituted an “unreasonable practice” under Section 201.
That was June 2007, and the FCC has done absolutely nothing since then. In fairness to the FCC, it is hard to turn off people’s free conference call service. It is also not so easy to write a rule that distinguishes nasty bad bad traffic pumping from “legitimate businesses” like service call centers that often locate in rural counties (when not in India) for the low labor costs. Also, I expect this was probably part of the Great Big Honkin’ Huge Global Intercarrier Compensation Reform that Kevin Martin tried to push through in the last days of his Administration, and when that died the traffic pumping proceeding went back into deep freeze like everything else that wasn’t DTV related.
VOIP providers seem to have kept a low profile on this and honored the rule against self-help. But the flap around Google Voice and its defense that as an application the requirement to complete all calls doesn’t apply has gotten cash-strapped VOIP providers thinking they could save some big bucks this way. As we observed when the traditional telcos pulled this trick two years ago allowing self-help here is a bad idea.
OTOH, I have to say that if VOIP providers are going to block these calls, Speakeasy did it right. Not only did they send an email notifying their customers in very explicit terms about the change of service, they explicitly list in a very clear way what sites they block.
Unless the FCC acts, we can expect other VOIP providers to follow suit. But the problem is it is not at all clear what the right decision is for VOIP providers even in the short term. Worse, it is not even clear what the right answer is or whether Google Voice is like Speakeasy or like something else entirely. Google described Google Voice to the FCC as an application that manages existing phone numbers and services, implying that they just leverage the user’s existing phone connections. But why does Google Voice care about intercarrier compensation if they don’t actually make calls? OTOH, if I understand correctly, GV only reserved the right to block without actually blocking, so it may just have been proactive lawyerly caution on its part. But maybe not. Also, does it matter that Google Voice is a free service?
Meanwhile, the regulatory status of VOIP providers remains in limbo. They look like Title II telecommunications providers, but the FCC doesn’t want to treat them that way. Unless it’s about E911 or CALEA and maybe universal service. On the other hand, under the famous Madison River case, the FCC requires telecommunications companies to complete VOIP calls, and (separately) also requires number porting to VOIP services.
So what should the FCC do to keep this wildfire from spreading? Having thought about it for a bit, here are my recommendations:
1) Issue a Declaratory Ruling & Order similar to the one issued in June 2007 prohibiting self-help by regular carriers. The Ruling should: (a) Declare that any VOIP provider or other service that assists users in making calls to the public switched telephone network (PSTN) that refuses to complete calls to any PSTN number is not eligible for protection under Madison River. If you want to be an application, then you don’t get interconnection. No privileges without the accompanying responsibilities. and,
(b) Declare that any VOIP provider that elects to block must meet the same explicit notice standards as Speakeasy.
2) The FCC needs to finally settle the regulatory status of VOIP providers and, in particular, figure out the status of Google Voice. If Google is smart, they will frame the issue by filing a Petition for Decl. Ruling along the lines they would like to see. If AT&T were smart, they’d file something real instead of that ridiculous letter they filed last week. But even if no one files anything (and I have enough to do this week, thank you very much), the FCC can and should investigate on its own authority and figure out what the heck Google Voice actually is so we can stop being distracted by this question.
But whatever the FCC does, it needs to do it soon. Otherwise, we will see a lot more self-help.
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You are right - VoIP providers think that VoIP is the end all and have no regard for the quality and consistency of the PSTN. It is a per minute network and not an all you can eat network.
Companies that sell Unlimited Long Distance are selling unlimited access to other companies’ networks and that is a risky risky proposition and if they lose money doing so they should.
Price to your cost on the PSTN and you make money every call no matter where the termination point because all cost are known in advance.
The VoIP guys think the PSTN should be sold in an all you can eat model like the IP network but the IP network is an All You Can Eat model but the PSTN is not. So they try to sell it as one or give it away for free but that doesnt work because it is a per minute network. So then they try to block calls. Here is the problem part of the beauty of the PSTN is that those who interconnect need to connect to all points on the network. Let’s not change that to save a couple of bucks.
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…because Google gives large sums to Public Knowledge and the others don’t. Hmmm.
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good article!!
it’s a very difficult problem to solve that won’t yield to quick & simple solutions.
However I disagree with the statement of a previous poster who said “IP network is an All You Can Eat model but the PSTN is not.”
The fact is that many PSTN companies already offer Flat-Rate All You Can Eat long distance service. Consider for instance that every cell phone company has a plan for unlimited long distance dialing (continental usa) and that landline connections from companies like QWest also offer a flat-rate unlimited long distance service, usually with fewer restrictions then then cell phone plans.
But I also agree with the poster that unlimited use is subject to abuse. And this is the real problem. The culprits are not companies like google and speakeasy. The source of the problem are the companies that deliberately game the system with their “free-calling” services which are designed to cost those providers money.
Providers should have the right to protect themselves from abusive situations. The current regulations were designed to ensure fair access to individual people in hard to reach areas. It is a distortion and misuse to claim that a phone-sex line or other commercial operation is entitled to the same subsidy. If a call center wants to locate in a rural area so that they can take advantage of cheaper labor costs and cheaper building and land cost, then great! But they should also expect to pay higher phone costs based on the extra expense involved in providing service to that location. Since they are already saving so much on other costs they should not mind if some of their expenses are a bit higher. Besides, if they are so concerned about their phone costs then nothing is stopping them from using VoIP to receive the calls. The only reason they don’t is because they are deliberately trying to abuse the system.
We are going through a painful transition period, eventually everybody everywhere will have fiber (or wireless) and all traffic will be IP. But getting there is going to cause major restructuring and dislocations.
Hasty policy decisions can do a lot more harm then good.
So far the governments “hands-off” policy towards the internet has worked pretty well, and the motives of “old-guard” telco companies in trying to get regulations created is highly suspect.