Fall VON 2002
by John Latta
Wave Issue 0238 10/25/02

Atlanta, GA
Ocotber 7-11, 2002

Let there be no mistake – this is Jeff Pulver’s conference. Attendees are like family. VON was a very good event.

Jeff Pulver

Jeff Pulver gave the opening presentation on the second day of VON. His view of the state of the industry framed the conference. It was an impassioned plea for a re-examination in these difficult economic times. Points made include:

The Internet would absorb the voice as just another application. The future of communications is IP communications.

The impediment today is the lack of customers.

We as an industry have been limited in our thinking based on what previously existed rather than what was possible.

The next generation communications solutions will like communities using free spectrum (802.11x) wireless technologies. Look for this to seriously challenge the growth of 3G.

The viral growth of consumer owned and operated VoIP 802.11x systems will challenge the establishment.

The industry needs to rethink on a clean sheet of paper: connectivity, community and applications.

As examples of applications which will change the industry the following were cited:

"The Voice Inside" - adding voice to anything - ? Who needs a phone to make a phone call?
The Personal Central Office, Service Creation Environments to manage call control.
Context-sensitive call completion from all perspectives.

Communications Applications come from the edge - e-mail, web, Internet Telephony and Instant Messaging… and are built on Community and Connectivity.

What is needed in VON today?

A royalty free, single variable bit rate adaptive codec from dialup to broadband;
Low cost, low end IP edge devices;
Use and architecture that distributes service execution
Take advantage of the great QoS available today on the Internet's backbone
IPv6 needs to be supported and rolled out.

One of the most important aspects of Jeff's talk is that he brought a personal and consumer view of the market. The conference focused on the enterprise opportunities, how the carrier market had disappeared, but in large part very little was said of the role the consumer plays. In our view this is where the opportunity will ultimately lie.

Presentations

On the first day of the event we heard different perspectives of the market. There were as many variations as presenters. Consider the following:

Microsoft

There was a whole day devoted to an RTC overview. In Microsoft's view, expressed in the forthcoming Greenwich, it is about Enterprise IM. When asked about voice it was stated that this is up to 3rd parties to build on our platform. Microsoft also is in the position to set which standards best suit its offering of RTC - SIP and SIMPLE. Issues such as MEGACO vs. H.323 are not relevant.

Microsoft owns the PC on the desktop and its view of this market is based on how it can extend the value of the PC, not move into the VoIP world.

Cisco

As many expressed, if one company owns the VoIP market it is Cisco. In its overview presentation the company stressed the breadth of product from gateways, to gatekeepers, to softswitches, to routers to phones. Further there are products for the small organization to the carrier. Cisco repeated many times the fact that they have 99.999% reliability. Cisco was proud in saying there are 90 variations of its softswitch. This is driven by the need to comply with many telephony standards. Thus, compliance with many different standards and interfaces is essential to winning business.

Cisco's view of the world is based on its strength in the IP routing business.

Lucent

They see the softswitch as just another switch. The offering includes support for cellular, operators and non-traditional operators, such as cable companies. Its view is that one switch design will work for all markets. Yet, even from the audience, doubts were raised about Lucent's commitment to this market. Lucent took the standards compliance position a step further by building a switch to meet many markets - it's only in the software.

Lucent's view of the world is based on its view as the major supplier of CLASS 5 switches for TDM networks.

Microsoft did a good job of framing the current market at $800m. The last two years have been chaos. An important trend is that it was originally expected that the market would kick off based on operator buys, but now this has changed. Now the expectation is that the enterprise market will sustain VoIP. David Fraley stated in his Industry perspective that during the go-go years following the Telecommunications Act of 1996, and when the Internet fever was at its highest pitch, capital spending by the carriers was at 20% of revenue. In a recent survey they estimate this at 8% and falling. At this level the industry is using up excess capacity and not keeping up the networks.

The industry has progressed from the early days of IP phone calls that were outbound only and distinguished by low quality. Now IP telephony is very much about consistency of telephony irrespective of location. Since it does not matter where the IP phone is, it is possible to place and receive calls anywhere there is an Internet connection. If there is a niche in this market, it is selling to companies that have a high percentage of its workers who are mobile. With VoIP it is possible to provide the same telephone features anywhere. If the person is not near broadband, the calls can be rerouted to a cell phone.

Given the emphasis on enterprise sales there are many ways to approach the market. One speaker used an old computer analogy - sell them mainframes with dumb terminals or provide a distributed system with intelligent terminal devices. The mainframe analog is the old PSTN using Centrex while the new system is VoIP with digital screen phones. Well the analog is not quite so easy. Centrex service is one that has been offered by the ILECs for some 15 - 20 years. The office PBX (Private Branch Exchange) - my phone switch in the office - is actually held by the phone company. The services of handling all my calling needs in the office is done remotely by the phone company using their equipment in what is called the Centrex service, thus the mainframe analogy. Yet, Centrex is dated but for the phone companies it is a cash cow. Many businesses are tired of paying the high monthly bills for what they see is an increasingly inflexible service.

With VoIP there are two approaches: IP Centrex (or managed or hosted VoIP), or IP PBX. The former is a direct analogy with the older Centrex, where the service provider holds all the equipment; the latter involves the customer buying equipment for the office(s). The market shift, which is VoIP enabled, is that either the communications provider offers the VoIP equivalent of Centrex, thus the name IP Centrex, or the customer buys a new form of PBX for the office.

All of this creates new opportunities for selling. The softswitch market brings the potential for significantly less cost. Further, the dynamics for entry into the market are also different. If a customer has broadband to the office, even ADSL, it is possible to offer a whole range of new services enabled by VoIP. The disruptive nature of this was illustrated by the company - GoBeam. Here Verizon is seeking to offer local telephony services out of region. This is a big deal in that it would pit two ILECs against each other - SBC and Verizon. Verizon has partnered with a wholesale provider of managed VoIP, i.e., the IP Centrex, to SME in the Chicago area. It is the economics of IP telephony and the increasing prevalence of broadband to offices, including ADSL, that makes it possible to offer sophisticated calling services and yet not control the underlying transport infrastructure. It is interesting that this ability to leverage existing infrastructure and provide innovative lower cost solutions is, in part, what the Telecommunications Act of 1996 was intended to do. The Verizon example is one where they would hate this in their own territory but went so far to do it in a competitor's territory, and through a 3rd party. If this works economically the telephony market will change in ways that the CLECs could never accomplish.

The controversies around the pro and cons of IP Centrex vs IP PBX are sufficiently strong that there was an evening panel which pitted 3 from each camp. In the end the issue was not about features, as both could offer essentially the same, but if the SME, which was used as the example, wanted to buy the equipment or lease the service. Just the fact that there is this debate, signals that the industry has gone a long way - hardly mentioned were issues such as quality and latency which appear to have been largely addressed.

One of the topics during the panel, which came up multiple times, is the importance of supporting legacy equipment. That is, businesses have existing PBXs, phones on their desks and in many cases limited skills in telephony. If a company is to sell new service or a new set of equipment it must leverage and effectively use much of this existing investment that the business has made. Thus, in spite of the promise of an all new telephony environment, even in the enterprise, is tempered by both the existing environment and the economics of use and returned value.

Not to be lost in all this are the gross margins of the business. There are the so-called smart, digital or intelligent phones. These can run upwards of $400 per unit. One would expect that these are a major impediment to the market but in reality they do not have to be. During the panel it was stated we can offer the same functionality on a standard analog phone as the most sophisticated digital phone. How? With a web based interface which selects the features and functions which are enabled on the dumb phone. Here is where the PC and phone converge. However, there is no question that the high costs of the digital phones are a market hold back. Phones have yet to appear for less than $100 per phone, which we consider an important market milestone. One of the key issues is that the interface between the switch and the phone should comply with standards - such as MGCP and SIP. Cisco, for example, uses their own interface between the switch and the phone to exclude phone entrants. Thus, the gross margins of the phones are important to the equipment suppliers and an impediment to the buyers.

There is a harsh cold reality in this market for VoIP and the new world of IP telephony - very little money is being spent. At the same time the revenue curves for long distance, switched non-IP data, private line and Internet continue to fall. Siemens presented some very interesting curves which showed how bleak the revenue side is. Thus, attacks on the capital spending and the lowering of revenues makes for a very tough market. With a slow economy, companies are very reluctant to do anything about making a VoIP investment if the existing equipment works. On the panel much was made about new features for the same price, but this is likely not to make a sale.

Day 2

AT&T and Cisco said it well in the industry perspectives - we are at a 100 year event - the massive shift in the telecommunications infrastructure. The PSTN has served the world well but we are in midst of a transition to an IP based communications infrastructure.

Impact of today's economic environment

Throughout VON the black cloud of today's difficult economic environment and depressed state of telecommunications hung over the conference. This was seen in the following ways.

The equipment and service providers are totally focused on the means to either or both raise the revenue line or decrease costs for the operators. Much of this is directed at building products and services with VoIP which are similar to what is being offered today. The IP Centrex is an excellent example of this. The softswitch is the analog of the CLASS 5 switch in use today for TDM switching.

As the carriers seek to protect their revenue streams they are also monetizing access. As an example, "walled gardens" have become much more prevalent.

(This is a totally corrupted term. It would be much more accurate to call this Customer Prisons. It limits consumer's freedom of action and directly relates to the current trend to making the Internet closed based on how it is being accessed. It is a fundamental threat to the long term value proposition of the Internet.)

Virtually all the presentations are focused on features and applications. Nothing is said about price. The consumer market is based on choice, which is a direct result of competition, and price, which is not being addressed here.

The result of this is that many of the presentations here at VON are highly biased and not reflective of the impacts of a mass market. They represent the simple reality of what the providers are trying to sell today. Yet, this is not what Jeff Pulver was advocating - building community with creative new products and offerings. Further, Jeff gave the only talk which represented a consumer view, as described above. Thus, to extract the potentials of this market on a mass scale one must step back from the myopia which is totally driven today by seeking to sell anything the carriers will buy.

Across the Talks

The presentations today made many important points.

Security is a two edge sword. It enhances the sense of security of the Internet, but firewalls are also are blockers of innovation. Many firewalls block VPNs and IPsec sessions. This limits many applications for broadband customers - both inbound and outbound. (Microsoft)

WiFi has the potential of being a truly disruptive technology. One aspect of this is VoIP on WiFi. There are two paradigms of wireless voice usage - while moving and while sitting down. The former uses the cell phone but the latter is ideally positioned to WiFi. Thus, there is the prospect that WiFi could severely limit the ability of 3G to succeed, the simple reason being that a free service will kill a monetary service when the basic services are the same. We certainly saw this at the 802.11 Planet conference with the community network presentations. Thus, the ability to use WiFi for voice carriage is very similar to the wireline concept for VoIP outlined above. The carriage is independent of the application. There is also the need for a wireless PBX.

Mesh networks change the dynamics of WiFi networks because there is not the need to backhaul connectivity from every AP.

By 2005/6 every PC will have a microphone and all will be enabled to support a web cam. (Microsoft)

In the Cisco talk a quote was given from the Cook Report:

"We have built the technology and tools by means of which abundant and affordable end use controlled broadband networks are possible. The result of the attempted introduction of these tools into a global, centrally-controlled, scarcity-driven, debt-ridden, legacy telecommunications infrastructure has been and will continue to be a series of bankruptcies."

In other words, the old system based on limited bandwidth which is carefully controlled and where distance is a pricing element has disappeared. Those companies unable to make the transition will continue to fail.

ADSL, including the DSLAMs, make VoIP ugly. This is the problem in accomplishing voice over broadband which uses DSL. The A in ADSL is also a serious offender. Further, firewalls typically block VoIP sessions and IPSec sessions. NATs also break VoIP connections.

In spite of the recognition that the magic "killer app" is what will drive VoIP usage, it was stated over and over that no one has a clue what that will be. In fact, the question was raised - is there a killer app?

According to the ITU, in May 2002, the number of wireless lines (devices) exceeded for the first time the number of wired phones - the parity number is 1.1billion.

Walled gardens, which are increasingly prevalent in cell phones, are preventing innovation, in part, because they remove competition for service providers and make the business models more difficult for the innovators to realize.

Worldcom

Henry Sinnreich, of WorldCom gave a blunt assessment of the technology.

Since IP routers and SIP edge devices can support superior communications, why are softswitches and IP PBXs required? Are these not an alternate to SIP and thus unnecessary? Is not today's softswitch just an IP replacement for the CLASS 5 switch that the carriers are used to?

Softswitch is a marketing term and no one knows what it means. It is a marketers dream - creating a market out of nothing. The softswitch is the old model of telephony being extended to satisfy the phone companies and is dumb.

The Internet is based on a model of smart devices and dumb network. What the softswitch does is to invert this relationship and makes the switch at the center of the network and the edge devices dumb, i.e., the phones. Yes, the phones may be smart but this can only be realized if the switch knows about all the features, functions and displays in the phone. The power of the Internet applied to telephony, as reflected in SIP, is that any device can be a phone as long as it meets the signaling requirements of the interface. This includes a PDA, a PC, a SIP phone and virtually any other device. Yet, the softswitch makes this virtually impossible.

The softswitch has created a much more complex environment to provide VoIP. The reason is that there has been an integrator business created to make phones work with the softswitches. On a practical level it is nearly impossible to keep track, at the switch level, of all the features on the phone and the current status of the phone revisions. This is totally unnecessary and inconsistent with the power of the Internet.

There are some contradictions in today's push for softswitches. For example, what was a $20m CLASS 5 switch was on eBay recently and selling for $400,000. There is no way that even a softswitch can compete with this pricing.

The move to softswitches is actually backward from the PSTN in that they lack new features, say compared to SIP, there is no data integration including with voice.

Strange things happen.

Strangely enough, avoiding the true shift to IP by emulating the circuit switch and its central control over IP is popular with many telephone network operators and they seem willing to spend significant investments in this area.

In a similar manner, IT managers still seem to be willing to buy proprietary IP voice systems, without worrying about the cost and limitations further down the road.

We asked Henry why are so many speaking of SIP phones, yet, there are no low cost SIP phones like PSTN phones?

The issue is not - will SIP phones work together. Tthe signaling is what is defined by SIP, and a phone that is compliant with this can connect to another SIP phone. However, the callers may not talk to each other due to incompatible codecs. The codecs are not standardized. Thus, this is the reason that Jeff Pulver appealed in his presentation for a royalty-free codec that worked from dial up rates to broadband.

Voice over Broadband

This session got to the heart of many of the issues with the feasibility of VoIP using broadband to the home. Key points include:

Much of today's backbone can handle the requirements of voice traffic with MPLS. What is required are trunk-side label-switched edge routers. That is, at the access edge of the infrastructure there is a router that adds labels.

A complication of providing VoIP on broadband is the need to comply with CALEA requirements. There is a need to be able to make copies of the packets and vector them to legal intercept software.

In Japan, Yahoo BB is doing VoDSL using Annex B.

The rollout of VoB has been much slower that predicted.

The cable statistics, which are nearly all switched voice based on AT&Ts cable infrastructure, are:

1.7 m cable telephony lines in North America
66% growth in 2001
2 year offers are getting a 20 - 25% take rate.

Silicon on a chip is happening now. This will integrate both a DSL modem and residential gateway in one box. The era of the isolated modem is rapidly fading. The home CPE will integrate the functions that are present in multiple boxes in the home.

In providing VoB phone service, the carriers have abstracted the IP aspects of the service. The customers do not know or care it is IP based. What the carriers have done is to market this as a lower cost phone service. In fact, because the cost of the offering is lower than the price, the carriers are able to maintain gross margins on telephony.

PON is showing considerable strength in Greenfield implementations. This is especially true in municipalities and power companies. In all cases this is also a VoB offering that is IP based.

Show Floor

The Korean company HS Teliann stood out. They had a range of VoIP products in the booth. What caught my attention was a H.323 phone for $120. This phone can be attached directly via the Internet to a gateway provider. It breaks the operator lock on the VoIP market, as we have discussed. When asked, HS Teliann stated that they will have a SIP phone out next year. The price will be basically the same, in that the only change required to go to SIP is the software in the phone.

FCC Town Meeting

Dr. Robert Pepper of the FCC was available in the evening to discuss the current regulatory environment and answer questions. The topic of VoIP as an independent service was raised. Here are the key points.

The FCC recently issued a declaratory ruling that the Internet services, i.e. Internet over ADSL and Internet over Cable Modems, is an information service.

There are basically three categories of regulation at the FCC based on the law. These are

Title 1 - Information services

The rules for this fall under Computer II and Computer III
which means that the services are basically unregulated.

Title 2 - Telephone service

Based on the type of service, this is still regulated in areas such as universal service. The push by the ILEC for regulatory relief is all about making this much less regulatory. However, the devil is in the details and there is fierce resistance to many of these proposals. Some see them as being anti-competitive and a significant move back from the intent of the Telecommunications Act of 1996.

Title 6 - Cable

Largely unregulated. This is the framework that the ILECs would like to emulate - the so-called regulatory reform.

The key issue is:

If VoIP services are offered over the Internet, does the FCC have the power to stop blockage by the carriers, both cable and telephone?

The carriers have shown a strong tendency, already, to block access or usage if it is not in their interest:

Walled gardens on the phone system;
Limitations on the use of servers on the consumer's side;
Prohibition by cable companies of the sharing of access to the Internet by extending the bandwidth over a community WiFi wireless network.

Open VoIP over broadband to the home brings the prospect of true local loop competition. Broadband becomes no more than a carrier and the consumer has choice based on selection of service providers over the Internet.

Answer:

Not clear. Given that Internet access is under an Information service for both cable and ADSL, as per the recent FCC ruling, this would imply no regulation by the FCC. However, there is a requirement to implement end-to-end connectivity, under the Computer II rules, as an information service, but this only applies to businesses.

WAVE Report Bottom Line.

Both the ILECs and the cable MSOs will fight this like a hawk. There are enough loop holes in the law and regulation that they could fight this in the courts for years, in much the same way that the ILECs have been very successful in fighting the Telecommunications Act of 1996.

The cable industry sees voice as the killer app in the triple play that will allow them to complete with the ILECs. If revenue was drained off by "off cable system" voice services where they do not share in the revenue stream, they will have a regulatory fit.

The ILECs, and in particular, SBC, have been crying for "regulatory relief" - which is regulation speak for "let me hold on to my customers any way I want." Under such a proposal it is likely that the ILECs will interpret their ability to limit off-system access to services as inconsistent with their function as a carrier. Expect blockage in the same way they have already begin to block other services and sites on the Internet.

Day 3

Broadband VoIP Exists Today

Vonage is offering VoIP to the home today. In fact, 2Wire is using them as a carrier in its trails. (see below)

Vonage offers service that includes unlimited local and long distance calling for $39.99 and a 500 minute plan for $19.99. Rates for international calling are also claimed to be low. The ordinary home phone can used by plugging it into a small box called an MTA which in turn plugs into a router and then the cable or ADSL modem.

http://www.vonage.com

2Wire

Its President and CEO Brian Hinman spoke on Voice Over IP Opportunities for DSL. Here are key points from the talk:

2Wire is shipping 1,000 unit s a day. Its largest customers are SBC, Verizon, BellSouth and Earthlink. The installed base is over 200,000 HomePortals.

The company has secured $144m in funding and remains private.

Brian's comparison of the PSTN with IP was interesting. He offered the following for advantages of each:

PSTN

Solving 911 is easy
Billing is already solved
Fewer QoS issues

VoIP

Cost savings of packet voice
Potential to avoid termination fees

2Wire is working to implement VoHPNA. Silicon became available in 2001 and there are field trials of VoHPNA with VoIP in 2002. Phones are expected to be available in 2002.

2Wire is engaged in two trials. A small business trial used VoHPNA devices and gateways. Sylantro provides the MGCP service and the long haul transport is over PSTN. The consumer trial uses Vonage for the SIP service, and H.323 gateways are provided by Cisco.

2Wire is working with Vo802.11 cordless phones. The advantage of these is that they eliminate the need for cordless phone base stations. To date, limited phones have become available from SpectraLink and Symbol Technologie,s but these are expensive. 2Wire sees that the standardization around 802.11e will support market adoption. What is needed is better phone power management and a total phone silicon solution.

2Wire is seeking to use its HomePortal as a platform for VoIP. 2Wire has proposed, assumed to a standards body, using 802.11b with a tunnel for VoIP. What is most important is that 2Wire is proposing that its HomePortal serve as a termination point for cellular connectivity in the home. This is a significant proposal and a complex one.

In the near term it is doing a proof of concept with Bluetooth. A Bluetooth to Ethernet access device has been developed and the 2Wire router handles NAT ALG and packet prioritization. Currently, in support of this effort, a major handset vendor is providing a high-power Bluetooth cell phone for the tests.

2Wire would much rather use 802.11b as the cell phone access solution. One of the key reasons is that it minimizes any additional costs to the HomePortal. The impact on the cell phone was not described.

From this 2Wire concluded that Vo802.11 may become the ultimate handset solution - for the use of the cell phone in the home.

WAVE Comments

One advantage of IP voice is that it enables a decoupling of

The terminal voice instrument;
From the transport and;
From the service provider.

To visualize how profound this can be consider this prospect:

Consumer walks into WalMart and buys a SIP phone for under $20.

At home the consumer plugs the phone into either the cable modem or ADSL modem.

The consumer goes on the Internet and selects a phone service, out of 100's, which best suits their needs. It is just like buying an airline ticket - pick from many options for service and craft the plan best suited for the individual.

Provide an identifier for the phone and the service provider does autodiscovery to locate the phone and set up the services.

The service starts.

At VON we saw many of the components:

A $120 H.323 phone that requires only a software change to be SIP capable;

Silicon from TI that could go into the phone, and;

Hardware/software offerings for service providers to enable an Internet-only phone service provider.

Note the value of this.

This is has the same level of direct impact on the monopoly broadband carriers, today the ILECs with ADSL and Cable with DOCSIS Cable Modems, that the Carterfone decision did on AT&T's monopoly position in the supply of phone equipment when it had its original monopoly of the phone system.

It introduces huge competition for phones - using a standard between the phone and the modem, which does not exist today - where the phone is like cell phones are today.

It introduces significant competition in the service provider sector, including the potential for even providers overseas to offer services in the US and other countries. The service providers are totally decoupled from transport and even location because the only requirement is that the service providers have a presence on the Internet and can autodiscover phones.

Broadband to the home is just transport with this service offering.

The downside of this is that the cable and telephone companies will hate this. Consumers will love it. However, based on our sampling at VON we have significant doubts, at least in the near term, that the mass market potential for VoIP will be realized. The potential for market retardation are too large to be readily overcome.

Mass Market VOIP

It is very important to understand that the issues we describe are for mass market VoIP - millions of line equivalents. A few 100,000 lines are largely inconsequential compared to the deployment of 130m wirelines to consumers in the US.

Market Potential for VoIP

Many naively assume that VoIP is a killer app of the Internet and especially for the home. This is another zero-sum fool's game. Just because there are so many phone lines the assumption is made that providing a new one immediately creates a market opportunity. Consumers will seldom spend for new services but spend for replacement services. In the presentation at the Industry Perspectives today a Verizon executive stated: "…one of the reasons that VoIP has not taken off is the overall decline in landline phone usage." For the first time in the history of fixed telephony there has been a decline in total the number of lines over the last 2 years. There was a short period during the depression when a similar decline happened but the current decline in usage has been more sustained and likely to continue. Why is this happening? One reason is that the impact of mobile phones is being felt - with increasing frequency individuals are making the cell phone the only phone. Second, the need for second lines is declining and one of the reasons is the Internet - no longer is an independent dial up line necessary. Consumers are seeking to lower their overall communications cost, not take on new costs as they modify their phone ownership and service spending.

One of the reasons that the telcos fear the cable companies is their entry into telephony. Yet, as we heard from Cable 2002, the cable companies have been very careful in this market. For example, a key reason cited for the value of cable telephony is lowered churn. But cable companies are loath to describe their telephone service as "primary," which would imply a host of new regulations they do not want. Basically the cable companies are cherry picking the telco business at the edge.

To be a supplier of non-primary phone service dictates that price is a critical component. This further complicates the prospect of seeking to make money with VoIP because landline parity pricing just will not work. Further, with the collapse of long distance rates, pricing bundles which offer low long distance calling are ho hum.

All of this points to the obvious conclusion - to offer VoIP as an alternative landline service to the home is far from a significant market opportunity but one that will be a complex, costly and with uncertain market entry.

Regulatory Complexity

Verizon stated in its talk at the regulatory session that it seeks to make the Internet open end to end, as a policy of the company. This certainly would imply it would not block competitors but the situation was less clear when asked. That is, one of the issues the company faces is that without a National Broadband Policy it is unclear what the rules are. It was asked:

Are we not seeing a decrease in the end to end transparency of the Internet due to walled gardens, restrictions on server placement in homes, and restrictions on sharing of broadband over community networks?

The only response received was - "it must not be us on the ADSL side." But it also has been.

President Bush has passed the ball to Michael Powell, FCC Chairman, to shape the National Broadband Policy. As we have written in the past, this has distinct limitations in that the FCC cannot propose legislation in the same way that the offices of the administration can. However, there are a number of proceedings before the commission which Robert Pepper used to sum up the development of the policy.

The study of the FCC Spectrum Policy Task Force due to be released shortly;
The Cable Modem NOI;
The National Performance Measures NPRM;
The Incumbent LEC Broadband Notice;
The Dominant/Non-Dominant NOI;
The Triennial UNE Review Notice and;
The Wireline Broadband NPRM.

As the FCC has stated: "These proceedings are intended to build the foundation for a comprehensive and consistent national broadband policy."

It should be noted that these efforts are "being coordinated out of the office of the Chairman," which is consistent with the intent of the President.

There many issues surrounding VoIP that are waiting to surface based, in part, on the level of penetration. Many of these issues are required by Title 2 or the rules issued under Title 2. Further, the level of compliance changes if the phone service becomes primary, which the cable industry has sought to avoid. Consider the following:

Lifeline Support

The ability to support calling without power.

911 Calling

Note that even the Vonage phone does not support this. Note that this is really hard with VoIP due to the need to provide location information. One might call this emergency presence. Given the focus of VoIP on enhanced services one would like to think that this from of presence would be a good revenue generator - wrong - it will be mandated by the law at no cost.

Universal Service

Participation in the fund which supports low cost service. In this area the states are much more active, especially those with rural coverage.

CALEA Compliance

This is the requirement to support for interception of signaling and phone calls for law enforcement. The issues are complex and being worked via the TIA and others within the government. A presentation was given on this and many issue remain open but one can be assured that in the end VoIP will have to comply.

VON was excellent.