8-10-96. WaPo:

"Phone Service Via the Internet May Slash Rates."

Labs of Advanced Technology has developed a way for people to make long-distance calls over the Internet using only their telephones, at about half the price of ordinary toll calls. Customers would merely call a central number, then dial their long-distance numbers. The call is carried on the Internet, then put back onto the local phone system at its destination. The company plans to charge 5 to 8 cents per minute for all domestic U.S. calls, which represents a 50 to 75 percent discount off most domestic long-distance rates. International rates would depend on arrangements made with foreign phone companies. "Twenty years from now, and probably sooner, I don't see the giants of the telecommunications industry existing anymore," said the company's president. The giants hoot, "FCC, PACs, whack him."

This kind of report is often confusing and more often misleading. Most of the internet still runs on "the infrastructure provided by the giants of the telecommunications industry, who according to the report would cease to exist after some time". Bigbells and Babybells provide cheap [flat rate local calls] and expensive long-distance calls. They make most of their money on the later. This money goes into development and maintainance of their infrastructure. Once they loose these profits 1. They won't be able to provide cheap local-calls and/or 2. They would go bankrupt and shut the entire network which is used by many to connect to the internet. This is complex problem and the only solution I see to it is a different pricing policy. [Prolly a differential pricing system might fit the scenario but I don't have much idea about that] First flat rates would have to go out. If Alice uses her phone for 5 hrs in month and pay _x_ dollars and Bob uses his for 100 hrs and pays _x_ dollars, then Alice is subsidising Bob, which is not really ethical. Everyone should pay for the amount of bandwith one is using. Another criteria for pricing can be content. Which would also imply that a guy sitting in Delhi, India (like me) pays more for reaching a Server based in US, as compared to a local server. --- Vipul

(no crypto here, so delete it already) :) Yeah, right. The tier one ISPs are refusing to peer with anyone that does not have at least a T3 backbone cross-country, as they don't want to have to carry other's bits long haul at no charge.. This is to keep "small ISP" from opening locations all over the country, and connecting to "the Internet" (bigger providors with cross-country capacity) without paying for the long-haul capacity. Just because this scheme is economical on a small scale (probably only looking at the costs of the two "ends", and considering the long haul to be "free") doesn't mean that it will work on a large scale. Large ISPs pay the same costs for infrastructure as telephone companies - or more. POTS takes 64 Kb/s for one call, or 24 calls per T1. Analog from the CO to your house, digital in between COs. Packetizing the voice transmission to carry it in IP increases the required bandwidth, unless compression is used. Compression is getting better, but even state-of-the-art systems at 16 Kb/s sound like a bad connection on a car phone, IMHO. Go lower, and you sound like Mickey Mouse - or Mickey on a car phone. ;) I'd rather pay the dime lady $.10 per minute for a good connection than pay somebody else $.05-.08 for compressed audio. On top of all that, most sound cards in PCs (today) are only capable of half-duplex audio. If you don't know why that matters, go play with your walkie-talkie a bit. "The Internet" isn't "free", and as more delay-sensitive applications (voice, video) are added, ISPs will only become MORE aware of the demands their client's activities place on their capacity. I'd rather not see usage tarrifed on a volume basis, but this sort of approach to doing business on the 'net only makes such charges more likely. Twenty years from now, you'll still have a few players dominating the top level - the infrastructure needed to support communications is expensive to create, maintain, and manage. The economies of scale in this industry will drive others out of the top tier. There will still be plenty of niche providors that focus on the vertical markets, and lease their bandwidth from the big players - same as today. As for whether the players will be the same as today, that depends. If the railroads had realized that they were in the transportation business, instead of the train business, they'd be flying airplanes today. Anyone that wants to carry a large volume of traffic via the 'net will find that either the market will dictate that they pay for the bandwidth they use, or the FCC will. I don't see the FCC getting involved, unless the "phone service via internet" providor tries to use the courts to get out of paying for the bandwidth they use. They'll be restricted by the size of the "pipe" they purchase from their ISP, and the ISPs all charge more for access from larger "pipes." If they lease their own cross-country circuits, they'll pay the same (or higher) costs as the Telcos. The large telephone companies are moving away from circuit switched networks, and towards packet switched networks - have been for years. It's called ATM, and it's not in wide use yet. There are advantages to building large scale communication systems this way, but "free bandwidth" is not one of them. - Ranting Wombat On Sun, 11 Aug 1996, John Young wrote:

8-10-96. WaPo:

"Phone Service Via the Internet May Slash Rates."

Labs of Advanced Technology has developed a way for people to make long-distance calls over the Internet using only their telephones, at about half the price of

SNIP

phone companies. "Twenty years from now, and probably sooner, I don't see the giants of the telecommunications industry existing anymore," said the company's president. The giants hoot, "FCC, PACs, whack him."

SNIP