TRANSITION TO VOICE-OVER-IP SAID TO RAISE REGULATORY QUESTIONS
Introduction of voice-over-IP (VoIP) telephony equipment to circuit switched telephone networks inevitably will raise regulatory questions that could have been asked sooner, Alcatel Chief Technology Officer Niel Ransom said at VoIP tutorial Fri. hosted by FCC Office of Engineering & Technology: “Speaking as an equipment manufacturer, I would have appreciated some advanced forethought” on issues such as competitive access to VoIP gateway equipment. VoIP equipment manufacturers such as Alcatel “are trying to optimize costs and don’t randomly add places to the equipment for competitive access,” he said: “People buying the equipment don’t want it. They don’t want to buy extra equipment for that use.” Not knowing regulatory requirements that might appear in future “keeps equipment people like myself up at night in the fear that we may have to go back and modify all the product out there,” he said.
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Ability of IP telephony to bypass public switched telephone network (PSTN), especially long distance tolls, is problem ITU grappled with at World Telecom Policy Forum in Geneva earlier this year (CD March 7 p1). Report estimated IP telephony could make up 25-40% of international voice traffic in 5 years. Fearing dramatic loss of settlement fee income with widespread deployment of unregulated IP telephony, some developing countries with state- run telephone monopolies have banned use of Internet to make phone calls. Ransom characterized debate as 2 diametrically opposed camps: Industry group VON Coalition as well as network equipment makers and worldwide telephone carriers are firmly against regulation of VoIP. Group contends VoIP is new technology that should be allowed to develop free of regulation because it will make telephone networks more efficient and allow carriers to develop new advanced services to offset lost voice revenue. (2) Opposing side is best represented by EU, which professes “technology-neutral” stance, Ransom said. Despite new technology at core, IP telephony is commercial service offered to public, delivers traffic to and from PSTN access points and consists speech transport and switching of voice, he said. “The EU argument is if it quacks like a duck, it should be regulated,” Ransom said.
Among specific regulatory questions VoIP could raise include regulation parity, unbundling requirements and customer-premises equipment (CPE) deregulation, he said: “Should a call be regulated differently whether it is based on TDM, voice-over-IP, fiber to the home or DOCSIS?” Each type of call currently is regulated differently, with DOCSIS protocol cable modem telephony potentially least regulated, Ransom said. As to question of bundling, “what are the unbundled network elements of a voice over IP network? How do you provide competitive access to VoDSL or fiber to the home environments?” he asked. As carriers develop advanced IP services, ordinary handsets may be replaced by specialty screen phones and other types of intelligent terminals such as personal computers or personal data assistant (PDAs), Ransom said. As intelligence moves to edge of network part of its switching, capability could reside in CPE. With VoIP switches can talk to each other and determine best route for call. “In the PSTN what’s inside of the customers’ wall belongs to the customer and is essentially deregulated. We are looking at case where some of the network switching capability could pass over a ‘magic line’ into the home,” Ransom said.
In short term, those questions won’t be raised because VoIP technology will replace only parts of the network, he said. Endpoints of IP phone calls still will use PSTN infrastructure with core of voice network receiving first upgrades to packet technology. Based on requests for proposals received by Alcatel, Ransom predicted early PSTN replacement would be by interexchange carriers as Class 4 tandem switches run out of capacity. “The question a carrier has to ask is: Do we want to buy the last TDM switch to roll off Lucent’s assembly line, or is this the time to invest in new technology?” Class 5 replacement will come sooner than many realize, he said, but “it takes a lot of effort to replace all the features of a Class 5 switch.” Citing development of Class 5E software at Alcatel, he said the effort was measured in “staff millennia.”
Carriers, including all incumbents, eventually will replace PSTN with packet switched technology, which represents mammoth opportunity for IP telephony startups but lethal danger to incumbent telephone equipment makers, Ransom said: “The nature of the telephone market is that once a carrier selects a supplier, that supplier is pretty much locked in.” Although Alcatel is worldwide telephone equipment manufacturer “we don’t have a single Class 5 switch in the U.S.” He said effort to market Alcatel’s Class 5 offering to U.S. carriers “would be madness.” However, with major shift in technology, he said, incumbent suppliers “tend to stumble.” AT&T lost half of U.S. telephone switch market to Nortel in transition to digital TDM technology in 1960s, he said: “Incumbents try to hold on to the old technology a bit too long. Of the major telephone equipment suppliers in the U.S. -- Nortel, Lucent and Siemens -- none seems to be getting any traction with voice-over-IP offerings.”