Column from PC Magazine: Whitacre: Threat or Menace? You Tell Me
The Triple Play option I have heard about in the Telecom world refers to Voice, Video and Data, not Voice, internet, and mobile referred to in the original article.
Cable companies are trying to add Voice and Data to their existing video cable systems. Telcos are trying to add Data and Video to their existing wirelines. All to get into the customers home.
Some arguments can be made that Mobile phone systems may carry all three to wireless terminations, but we will need to see how well that will work given the general bandwidth restrictions on cell systems.
The SBC CEO is saying that SBC owns the telco pipes that carry all this information and that they can tariff the content providers so they can get a cut of the pie. This can be in reference to Voice bypass service providers such as Vonage or Skype or Video providers such as whoever is streaming video over the internet. Both of these potential competitors are using the internet to provide their services to the end customer, who is requesting these services. And there is the rub.
A telco customer pays some amount a month to have a wireline connection run to their premise and maintained. The telco may offer Voice, Data or Video services over that wireline. Depending on the type of services the customer subscribes to and pays for, the wireline is conditioned to support the bandwidth needed.
Voice only needs 4 Khz or 64 Kbps bandwidth.
Data can get by on 64 Kbps, on up to X Mbps. Data also implies that the telco will provide the routing infrastructure, the network, needed to connect the customer to the internet.
Video will require X Mbps and may use a special network or will just be an extension of the data network. i.e. if a customer just gets Video service they should not count on getting Data services included.
(Note: Technologies are changing and the data rates needed to support voice and video are ever decreasing.)
The telco should be pricing these services to pay for the installation and maintenance of the infrastructure needed to support them. In the current TDM Voice world, this would include dedicated voice switches and an inter-switch network to complete phone calls. For the Data service, the telco provides IP-based routers that are connected to the internet. They will also provide IP addresses, resolution services and other basic requirements of the internet protocols. For Video services, they will provide the content and the network needed to deliver it.
All three services, Voice, Data and Video, are migrating towards an IP-based solution.
It is up to the telco to decide what sort of pricing model they want to charge to maintain these networks. They may charge $30 a month for basic phone services (Voice). They may charge an additional $30 a month for a 512 Kbps Data service. And they may charge $30 a month for basic Video service. Or they could roll all those service into a bundle for $50 a month.
What the telco also needs to do is define the limits of these services. That’s something that most don’t seem to do and then they get upset when the customer that is paying for the service starts to use it past the forecasted usage. This is particularly true with data services. If the telco originally based its pricing on the idea that a customer would only be downloading a Gigabyte of data a month and then find that the customer is downloading a Gigabyte a day, then that’s poor planning on their part. (I wonder what the customer could be downloading?) With Video and Voice services it is easier to say “Only one Voice or Video channel at a time. If you want more, order another line.”
And there is another end to the connection on the telco’s side, the connection to the internet. If all their customers are trying to download a Gigabyte a day from the internet, then their access pipes are going to have to be huge. And their routers have to handle an incoming flood of data while only sending out a trickle. If they size their network connections to the trickle of requests that their customers generate, they won’t have much room for data coming back in (i.e. pipes sized to handle 500-Megabytes a day) and they will have some unhappy customers.
What the telco will need to do is start charging the networks they are connected to carry the traffic that is being offered from outside their network. Alternatively, they can provide content producers homes within their network so their customers make requests to these hosts and don’t try to get large chunks of data from the internet. Just as they charge home customers $X for a bit rate, they can charge these hosts $XX for the amount of traffic they generate. This should be commensurate with the amount of infrastructure needed to support them all. These network hosts can also ameliorate the uneven rate of data exchange on the internet gateways. Outsiders will be requesting data from the local hosts and the outgoing trickle increases to a torrent and the in/out bit rates achieve parity.
The whole reason the internet is supposed to work, economically, is that each network pays its own way and it agrees to accept as much traffic from the internet as it gives to other networks. When there is a lopsided balance of in/out bits, the debtor needs to pay up. It is a Zero-Sum Game between the networks. They should be collecting from their end users to make a profit and to stay in the game.
All that said, the telco, as a service provider, can not, and should not, control the content that an end-user sees. If an end-user requests a connection with a Skype server, it is not the telco’s business to prevent the successful setup and running of a session with Skype. If a customer requests a video download from GreenCine, it is not the telco’s business to prevent that session, either. Just because the Data Service customer may be infringing on other potential Voice and Video services the telco is offering does not allow the telco to monitor the content or connectivity of the Data services.
Of course, the Telco could price their Data services through the roof and any poor sucker that wanted to browse the internet would end up paying a fortune to the telco, because there is no competition to speak of. Fortunately, that is what PUCs are for. I hope they keep an eye on it.