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Internet Telephones: Hanging up on Regulation?

Internet Telephones: Hanging up on Regulation?

Hahn, Robert W., Crandall, Robert W., Litan, Robert E. and Wallsten, Scott J., "Internet Telephones: Hanging up on Regulation?" . Milken Institute Review, Third Quarter, 2004

Abstract:

    The Federal Communications Commission has requested comments on the regulation of voice telephone services delivered over the Internet, dubbed "VoIP" or Voice over Internet Protocol. This paper examines whether there is a need to regulate VoIP. We conclude that there is no economic rationale for regulating VoIP and that consumers will likely be worse off if VoIP is regulated. Furthermore, the emergence of new technologies, such as VoIP, is rapidly eroding the rationale for continuing to regulate local telephone services.
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Facts on voip

  • Although few office environments and even fewer homes use a pure VoIP infrastructure, telecommunications providers routinely use IP telephony, often over a dedicated IP network, to connect switching stations, converting voice signals to IP packets and back.
  • Implementation challenges Because IP does not provide any mechanism to ensure that data packets are delivered in sequential order, or provide any Quality of Service guarantees, VoIP implementations may face problems dealing with latency (especially if satellite circuits are involved), and jitter. They are faced with the problem of restructuring streams of received IP packets, which can come in any order and have packets delayed or missing, to ensure that the ensuing audio stream maintains a proper time consistency. Another main challenge is routing VoIP traffic to traverse certain firewalls and NAT. Intermediary devices called Session Border Controllers (SBC) are often used to achieve this, though some proprietary systems such as Skype traverse firewall and NAT without a SBC by using users' computers as super node servers to route other people's calls.
  • VoIP technology still has a few shortcomings that have led some to believe that it is not ready for widespread deployment. However, many industry analysts predicted that 2005 was the "Year of Inflection," where more IP PBX ports shipped than legacy digital PBX ports.

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