Displaying items by tag: VoIP
It’s no secret that telecom operators have struggled against the popularity of over-the-top (OTT) applications like WhatsApp and Skype, who have challenged traditional voice and SMS revenue streams. Some operators have called for regulators to subject OTTs to legacy telecommunications regulations in order to even the playing field. But such suggestions are misguided, according to the ITU.
Telecom operators are stuck in a predicament regarding OTT services who utilize their networks. They have little control over the growth of OTTs because users should be free to use the internet as they please. The network carrier only carries the IP packets from source to destination. They might be aware of the packets and their contents, but cannot do much about it. Carriers have had to roll with the punches and figure out how to adapt.
Ultimately, using VoIP (voice-over-IP) is a cheaper alternative to making expensive phone calls because the user doesn’t have to pay to use the dedicated phone line and instead utilizes an internet connection without any extra costs. As is the case with most VoIP services, calls made using the internet are often free while calls made to a cellular network require a payment. The advanced communication functions of modern smartphones have played a role in the rapid growth of OTT services.
The question is: what can network carriers do about it? Telecom carriers have lost hundreds of millions of dollars of revenue to VoIP services, statistics show. Some network carriers reacted, of course, by imposing restrictions on VoIP services. AT&T did this when Apple released its iPhone and the US telecom operator didn’t want its network being used for VoIP calling. AT&T lifted the block in 2009 after pressure from the Federal Communications Commission (FCC).
AT&T had an agreement with Apple to ban apps that would enable iPhone users to make phone calls using a wireless data connection. The scandal was revealed when the FCC requested that the companies explain why Google’s Voice app was rejected for the iPhone app store. The FCC was led to investigate if AT&T and Apple were colluding to prevent competition, sparking the beginning of a sour relationship between telecom providers and OTTs.
Can telcos come out on top?
For decades, telecom operators had free reign to charge rates for voice, data and SMS largely in excess of their marginal cost, which created a market ripe with innovation. The International Telecommunications Union’s (ITU) recent report ‘The State of Broadband 2017’ highlights the struggle telecom operators have faced since that period began to wane, as online applications became increasingly popular with consumers around the world who wished to interact in ways not possible through traditional communications channels.
Communication has been transformed by the likes of Facebook, Instagram, Skype, WeChat, Google, WhatsApp and Viber. These OTT services have “transformed the way people build communities and search for information, and made valuable contributions to health, education, finance and entertainment,” ITU claims in the report. “Online applications now generate a significant proportion of the socioeconomic impact of digitization and utilization of the internet itself.”
The demand for OTT services has driven the telecom industry to a new era, and some telecom operators – in defense of their traditional revenues – have sought to “handicap” the growth of OTT players, the report suggests. It’s important to note, however, that these OTT services, however disruptive they may be, are driving demand for telecom operators’ broadband services. Without the content and services that OTTs provide, consumers would be less willing to pay operators for internet access, ITU claims.
“The operators’ complaints make as much sense as cable operators that sell access to cable channels complaining that people are watching too much TV, driving up the demand for their own services,” the report says, “Or a restaurant complaining that too many people want to eat its food driving up food costs. Operators sell access – not content – but people only want that access to use online content.”
Telecom operators, according to the report, claim they cannot invest in their networks because online OTT services have limited their ability to generate revenue. The ITU says this is “inaccurate” and “misguided”.
Some telecom operators have called upon regulators to apply the “same rules for the same service” by encouraging authorities to subject all online OTT services to legacy telecommunications regulations. ITU rejects this, emphasizing that OTTs don’t offer the “same service” as telecom operators, and that subjecting them to the same rules would be “entirely inappropriate”.
OTT services like Facebook and Google, for example, don’t provide equivalent services as telecom operators, the report points out. Operators provide access to the internet and some vertically integrated services that take advantage of, and are bundled with, general access. Online OTTs, on the other hand, provide interactive experiences for internet users that go beyond traditional voice and SMS, including payment services, chat services and photo/video sharing.
The fundamental differences between the telecom sector and online OTT services has led to the establishment of different rules, the report highlights. For instance, telecom regulations are intended to ensure that established operators – who own network infrastructure with high barriers to entry and face limited competition – do not use these privileges to the disadvantage of consumers. OTT services, by contrast, don’t control network infrastructure and must compete fiercely to retain customers who could easily be swayed.
There’s also the perception that OTT payers get a “free ride” on telecom network infrastructure which is financed by operators. But in truth, OTT players invest billions of dollars annually in a combination of physical facilities, according to the ITU, including data centers, fiber networks, servers and routers, which form an “essential part of the physical fabric of the internet”. In fact, according to the report, online OTT players invested an average of US$33 billion per year in infrastructure from 2011-2013.
ITU argues that telecom operators should recognize how much online OTT players drive consumers’ willingness to pay for internet access, which then provides more opportunities to generate revenue and finance new infrastructure. According to the report, consumers who demand the most data tend to spend more money on mobile contracts that feature high-speed data – revenue that goes directly to the telecom operators.
“Regulatory authorities do not have to choose directly between the interests of online application providers and telecom operators,” the ITU report concludes with. The most important aspects of internet usage that regulatory authorities should focus on, the report suggests, are adhering to customer needs, ensuring that the internet is widely available, and prioritizing connectivity, competition and innovation.
Voice communications in New Zealand is in for a massive upgrade with Spark New Zealand, the country’s main telecom operator, announcing it is switching from the ageing Public Switched Telephone Network (PSTN) to a next generation IP-based network.
The new network, to be progressively phased in over the next five years, will provide the foundation for Spark’s voice services into the future and will bring together all voice communications – be it landline, mobile, video or data-based.
It will enable richer, better customer experiences with voice, video, and collaboration features over whatever Spark service is available to them at the time, and provides the platform for new voice products and services into the future.
“This is a significant and essential upgrade of our oldest network, providing us with a future- proof platform for the latest voice technology, and allowing us to develop and deploy new services. We’ve been talking about doing this for over a decade now, and many other countries are also in the process of retiring their PSTNs, so it’s great to finally be able to get on with it here,” says Spark’s Chief Operating Officer, Mark Beder.
“The PSTN has served New Zealanders extremely well for many decades, but it’s now nearing end of life and the clock is ticking. Its last big upgrade, to a digital switching platform, was over 30 years ago. Maintaining the network is becoming harder and harder – components are no longer manufactured, we’ve bought every second-hand part we can source from around the world, and people with the skills to maintain the technology are harder to find.
“Increasingly, customers are choosing alternatives to the old copper-based PSTN as their use of digital voice applications increase. Already, around 50% of New Zealand homes and businesses are using other technologies like Voice over Fibre, Voice over Wireless, using their mobile for voice communications or relying on messaging applications. It’s time to make the switch.”
Beder says although the upgrade is a massive technical and logistical undertaking, it will be largely invisible to customers with minimal disruption to services. The vast majority of customers won’t need to do anything and their existing phones and devices will continue to work normally when they switch over from the PSTN to the new IP-based network, which Spark is dubbing the “Converged Communications Network” (CCN).
Spark has already been successfully trialing the transition by consolidating and decommissioning 10 of the smaller, more remote exchanges – out of the 482 PSTN exchanges scattered around the country. Another four exchanges will be decommissioned shortly.
Beder says, “These trials have been very successful. All the changes take place behind the scenes and disruption to customers has been minimal. The migration entails a small outage of a few minutes, scheduled during off-peak times for residential customers.”
Most customer devices being used today will be compatible with the CCN, but there may be some rare exceptions with legacy low-speed dial up services such as older medical and house alarms, EFTPOS terminals and PABX systems. Newer IP-based digital products with more and better functionality can replace these services and Spark will be working with vendors and customers to help make the transition as easy as possible for customers as the upgrade rolls out in coming years.