The Very Expensive Myth of Long Distance

http://bits.blogs.nytimes.com/2008/11/03/the-very-expensive-myth-of-long-distance/

by echair • 18 years ago

41 19 18 years ago

bits.blogs.nytimes.com

maarek2• 18 years ago

So, a bunch of regulations passed with the intent of helping the "Little Guy" are being abused by the people with the power and influence to have them rewritten. I really hope no one is surprised by this.

Clearly the answer is to have Congress hold some hearings and add new layers of regulation. Since that always works so well.

scott_s• 18 years ago

I think that misses the point that the regulations are for an infrastructure that no longer exists. The telecommunications infrastructure has changed significantly, but the laws governing it have not.

maarek2• 18 years ago

Again, this is pretty much typical of regulations. They cannot keep up with the market they are trying to regulate, and just end up causing problems.

Prrometheus• 18 years ago

We have many laws on the books that were meant to address situations that occurred nearly 100 years ago.

gibsonf1• 18 years ago

The answer: VOIP. (I highly recommend PhonePower, btw - saving me in excess of $200/month with better features than AT&T business lines.

timcederman• 18 years ago

Or Skype. $3/month for unlimited domestic calls, 2c/minute to most countries. I believe I'm also paying $30/year per SkypeIn number (1 in San Francisco, 1 in Brisbane). It works on my iPhone, although basically I can have access to my home phone line so long as I have a net connection and some computing potential. I also have a dedicated wireless Skype home phone for convenience.

Shame about the woeful customer service.

shimon4• 18 years ago

This article briefly hints at the less regulated internet transit industry. I worked for two years at a company that sold competitive intelligence tools to large ISPs, and what I learned about the global telecom business was pretty eye-opening.

First, internet transit is incredibly competitive. The protocols are designed from the ground up to support changes and redundancy in network routes, so there is not a lot preventing any company from switching ISP service aside from their contracts and the constraints of what wires reach their data center. Because of this competition, prices are always getting lower and vendors are constantly working to reduce costs. Geography is a very significant variable, of course: getting a lot of bandwidth in rural Idaho is going to be much much more expensive than getting it in New York, London, or Seoul because you won't have many options. The most expensive, of course, is in markets that are regulated monopolies; many African countries have absolutely ludicrous bandwidth costs for the same reason they are expensive to fly to.

On the bright side, though, ISPs are constantly working to make the network more efficient. One mechanism for this is peering, where two ISPs agree to exchange traffic that is bound for destinations on each other's network directly, rather than each individually paying their provider to do so. It used to be that only large ISPs would bother to work our peering agreements among each other, but over the past 10 years peer-to-peer traffic has dramatically increased traffic between different ISPs in local and regional markets, so those smaller guys have learned to do peering as well.

What does all this mean? I'm no libertarian, but it's hard not to be awed by the efficiency and power of the unregulated global internet. For whatever reason, tens of thousands of companies are working together around the world in an amazingly cooperative and efficient way, even though many of them are fierce competitors. We could certainly stand some of that in the domestic telephone market, and we'll probably get it eventually, if only because the cost of VOIP transit will probably round to zero within our lifetime.

lhorn• 18 years ago

You just saved me 30 minutes of googling for these answers. Thanks a bunch.

wallflower• 18 years ago

I came across this blog about the Wild West of Internet peering/transit when they had the undersea cable episodes. You might find it interesting.

http://www.renesys.com/blog/

acgourley2• 18 years ago

So would you mind giving your opinion on Net Neutrality? I've always been a bit torn and I bet you have a good perspective on it.

shimon4• 18 years ago

As far as I can tell, net neutrality is an interesting mythology that probably is not reducible to specific technical requirements in a long-term-meaningful way. One one hand, there have been good rulings from the FCC, e.g. preventing ISPs from (anticompetitively) slowing down VOIP traffic that isn't handled by their own VOIP service. But on the other hand there are intrinsic physical limitations to the way networks are designed, so it's perfectly reasonable that if you have a Comcast internet connection your VOIP packets will have a faster route to Comcast VOIP servers than to Vonage.

There's also a tricky distinction going on here. If you have a Comcast cable line going to your house, your network connection is already non-neutral. That cable carries video signals over IP on a certain share of the wire's bandwidth; this share is always dedicated solely to Comcast IPTV and no matter how many blip.tv videos you have going on your laptop your digital TV will always have the same dedicated bandwidth. Is that unfair? Comcast did a lot of work putting up wires to your house, navigating a bunch of annoying state and/or municipal laws, and investing in a lot of network infrastructure, for which they clearly deserve some reward. Is it OK to dedicate bandwidth on the wire but not over IP? Seems like a distinction that will get meaningless pretty quickly.

On the other hand, there are many good reasons to be suspicious of telecom conglomerates, and it might be a reasonable policy position to say that comcast-the-internet-provider and comcast-the-cable-service should be separate companies. All I've heard from the Net Neutrality heroes, though, is vague and inactionable invective. It worries me not because I think it might work, but because it's (1) likely to generate incompetent legislation and (2) crying wolf now when we might well need coherent opposition to specific industry actions or proposed mergers in the future.

olefoo• 18 years ago

"""One of the concepts that has run through phone regulation for years was that the price of local service should relate to how many people you can reach in your local calling area. So the people in cities where it is cheap to offer phone service have been paying high bills to subsidize low rates for people in the country."""

The original rationale for this was to help spread telephone service to those parts of the country where it was more expensive to build out. This actually made sense since phones are much less useful if significant portions of the population don't have access to them. That this policy outlived it's usefulness to the extent it did is somewhat surprising.

The Very Expensive Myth of Long Distance

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