Friday, February 11, 2005

VoIP didn't kill Telstra, Again!

One of the fondest bits of the telco journalist’s utopia in Australia is that there’s a technology just around the corner which will destroy Telstra.

Telstra is about as popular in Australia as Microsoft. The enthusiasm for “get Telstra” stories is so strong that it overrides any consideration of factual rigour.

The story de jour is from Gerry Barker of the Age.

"As Telstra is groomed for its final leap into full privatisation, its biggest cash cow, the vast fixed-line public telephone network, is under threat. On one hand is Voice over Internet Protocol, VoIP for short, which promises calls to anywhere in the world for as long as you like, all included in the monthly broadband internet charge."


The caveats on "free" calls are too broad for me to deal with comprehensively, but: VoIP services only offer "free" calls to other members of the same network. PSTN termination has to be bought. And many of the broadband phone services charge their own monthly fees in addition to the broadband charge, and many or most VoIP services offer no indialling from the PSTN.

"VoIP is now cutting thousands of dollars a month from phone bills for big corporations, including banks, municipalities and the Victorian Government."

True, but the internal use of VoIP for the PABX has nothing to do with the consumer's use of VoIP. Corporate VoIP doesn’t much erode the PSTN – it erodes Frame Relay, which is right now the most common way to interconnect dispersed PABXs.

The author then tells us that VoIP is difficult because it involved "converting a sound into packets of data that are sent to the internet, routed through various servers, reassembled at their destination and converted back into sound."

That's the easy part. We've been digitising voice on the phone network for decades (OTC engineers were very excited at the first digital exchanges in the early 80s).

What makes VoIP difficult is not the transmission, but trying to replicate the stability and ubiquity of the PSTN.

Then we have the obligatory Skype worship. Skype, says the author, "allows computers to connect to telephones".

Mostly, not.

Most Skype conversations are between computers, with the SkypeOut service (allowing you to buy PSTN call minutes) brand-new. And whom do you think gets money when you buy a Skype call to a Telstra phone? Some of it goes to Skype, some to the minutes reseller in the middle, and some to…

Yep. Telstra, again.

Even if you make a “free” call on VoIP, the carriers will get something: money from the ADSL link, or perhaps Internet transit fees for the ISP traffic.

Of course broadband will erode "fixed line telephone" revenues, but consumers will still need some way to get their packets onto the VoIP network. That's going to mean, for most Australians, an ADSL connection over the copper customer access network. That network is mostly owned by Telstra - which means it will derive revenue from VoIP, because customers will have to pay for their ADSL service.

"Telstra is expected to have its entire network equipped to handle VoIP traffic by the middle of this year."

Wow. And to think that 1997 demo at Netcomm used the Telstra network with no Telstra enablement whatever…

(PS: if you want to run VoIP, read the Skype EULA first. Then go and sign up with someone who doesn’t want to own your soul…)

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