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Can You Hear Me? No More POTS!

Watch the progress of this initiative; it could have huge impacts.

Bell's question to Watson over a century ago may be relevant again, at least in the minds of some, if the FCC takes the expected steps to expedite the transition to VoIP. I don't think that basic quality of voice service is at risk, but there are some truly profound consequences to a decision to abandon TDM voice, and since it really looks like it will happen, it's smart to think about them--as relates to both opportunities and risks.

Telecommunications has long been more than analog voice and copper loops, but regulations have stayed in the Dark (or at least the "TDM") Ages. Operators like AT&T have proposed the FCC modernize things, and initiatives like extending universal service to broadband access are already forcing changes. To deal with these issues collectively, the FCC bundled its transitions (TDM-to-VoIP, fixed to mobile, copper to fiber) into a single Technology Transition Policy Task Force, and recommendations from that activity (made December 12) will launch experiments in promoting change while controlling the risk of unfavorable impacts.

The recommendations of the TTPTF (another acronym!) are posted online. You'll see that we've studied the need to study and approved an experiment to guide experimentation. While that's pretty slim evidence of progress, by bureaucratic standards it's actually like a clarion call for change, and so instead of taking about the process, let's look at the impact.

The best estimates I can make on POTS service usage today based on surveys, modeling, and FCC sources is that about 40% of US households still have TDM voice. The remainder have either mobile voice services only, or a form of VoIP for their home line. Businesses have a higher TDM commitment--it appears that nearly 70% of business voice is still TDM. Suppose we saw TDM voice go away completely; what would happen?

First, there's little besides voice that requires TDM services and trunks, which means we would see all access lines and trunks transition to packet--almost certainly to Ethernet. This could increase the number of Ethernet business connections by about 28% according to my modeling, and it would also likely increase the access bandwidth commitments by branch offices and SMBs (using DSL, fiber, cable, etc.) by over 50%. Metro and access vendors would benefit from this almost immediately because it's likely that operators would start to promote Ethernet access and IP voice more strongly as soon as the "experiments" showed signs of success (likely mid-2014).

Operators already like the notion of an "access-first" strategy where they supply a fat pipe to a customer and then build ad hoc services over it. Ethernet or packet access encourages that, so giving that to everyone would drive operators quickly to look for rapid service deployment tools so that they don't lose all of the new access-generated opportunities to the over-the-top players (OTTs). I think that operator interest in SDN (software defined networks) and NFV (network functions virtualization) may be linked to this very thing. After all it's silly to talk about "improved service velocity" if you have to restring an access connection to upgrade service.

The second impact is on Internet policy. This voice transition raises the question of the difference between "packet" or "IP" and "the Internet". You can do VoIP over any IP, including private networking. That's done with a lot of IP voice today in fact. Operators could in theory augment their services to customers by building IP services that bypass the Internet, but that would pose issues in linking the services to current devices in the home or in businesses. OTTs would surely want to get involved in any new service opportunity, and all that raises the triple-threat question of QoS, settlement, and Net Neutrality.

There's no barrier to QoS in "private" IP networks, but on the Internet, the Net Neutrality order last year said that you could offer QoS only if the subscriber pays for it. Most practical Internet QoS opportunities arise because an OTT (like Netflix) could gain by offering QoS to customers. They'd pay the ISPs and either embed the cost or perhaps eat it to improve their differentiation. But the FCC said "No!" Now the new FCC Chairman, Tom Wheeler, says "Perhaps"--at least he did in a speech to a university audience. If that were to become policy, it would likely drive QoS for Internet services, and that would drive settlement among ISPs and content players.

Settlement has been a big issue for the Internet since the 1990s (when I co-authored an RFC to propose adding it). Customers pay their own ISP, so if there's no money flow from that ISP to others, QoS stops where the ISP hands off the traffic. That's inhibited the value of the Internet for applications that need QoS, but it perhaps encouraged smaller players and startups who couldn't pay like Google or Netflix could. Whether this small-player benefit is more for VCs who then have to raise less funding to get an OTT off the ground is an interesting question--but in any event, adding settlement and QoS to the Internet would almost certainly increase operator interest in providing service quality for a fee, which in turn would increase network investment, helping equipment vendors and carriers alike.... In short, it would change the industry.

VoIP could be a back door to making the Internet a real network and not a service on top of carrier IP infrastructure. That could remake our experiences online, and the vendors' fortunes in the marketplace. So watch the progress of this initiative; it could have huge impacts.

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