Voice-over-IP (VoIP) phone services are reaching million people around the world by providing really cheap phone calls that are carried primarily over the Internet. VoIP has gone from being the replacement for a three-minute long-distance call to a virtual audio presence where people effectively hang out together across continents and different timezones. Bob Cringley writes, The big Internet service providers, say the big telephone and cable TV companies, are about to start taking back that third-party VoIP traffic, leaving traditional players like Vonage and the others at a distinct disadvantage. Excerpts with edits and my comments added:
The telephone companies, have never been comfortable carrying over Internet backbones traffic directly affecting them. The cable TV companies have traditionally ignored VoIP, too, until they realized that it could become a new source of revenue. Offering VoIP is an attractive proposition for cable providers looking for new revenue streams. The cable players want to ensure that the VoIP service is their VoIP service.
Cringley writes,"as the phone and cable companies begin offering their own VoIP services in real volume,they plan to "tag" their own VoIP packets so that at least within their own networks,their VoIP service will have COS (Class of Service) assignments with their routers, switches, etc.They also plan on implementing distinct Virtual Local Area Networks (VLANs) for the tagged packets.Tagged packets get both less restrictive rules for passage and a private highway lane to drive on.The net effect is that any packet that isn't tagged will only get "best effort" service.This is the beginning of a web services war where the advantage lies almost entirely with the broadband service provider. It starts with VoIP but could move on to movies and music, too. The incumbent suddenly has a real, unassailable advantage. If Vonage (or CinemaNow or even Bit Torrent) wants to play along, that's fine, but they'll see most of their profits going to Comcast".
Downside:Innovation in VoIP and similar services may come down. The telcos and cable companies will offer generic VoIP service and only change it if some startup comes along offering better features. But the potential for IP based services are bound to increase.
My Take: Internet service providers will begin to provide add-on services, such as higher speed movie downloads, or enhanced online gaming, for additional fees paid by consumer.As subscribers increase their use of latency sensitive and graphic rich traffic, broadband and cable providers could give network precedence to their own revenue-generating services. Unless VoIP players pay fees to the network provider, there is no reason the operator should not make the service a lower priority on the network.Network neutrality is the answer but enforcing this may be fraught with difficulties – Broadband and cable players are beginning to offer several services and may claim that their configurations may be optimized for this which by the way also has this tagging built –in.(By network neutrality -The effort is to strike a balance between control and freedom: to forbid broadband operators, absent a showing of harm,from restricting what users do with their Internet connection, while giving the operatorgeneral freedom to manage bandwidth consumption and other matters of local concern.The principle achieves this by adopting the basic principle that broadband operatorsshould have full freedom to "police what they own" (the local network) while restrictionsbased on inter-network indicia should be viewed with suspicion.This non-discrimination principle works by recognizing a distinction betweenlocal network restrictions, which are generally allowable, and inter-network restrictions,which should be viewed as suspect - More on this topic can be found here.). The issue looks tricky with logic and reason telling that telecom and cable players may prevail but history tells that innovators and swift players move fastly and more cleverly and establish themselves.