Voice over Internet (Protocol)

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1 Voice over Internet (Protocol) Kevin C. Schoen, President This Presentation: What is VOI(P)? Universal Service 911 Inter-Carrier Compensation

2 Who s ACD? Facilities based CLEC. Operates a large regional ISP. Operates a 90 mile fiber network. Largest Independent DSL provider in Michigan Operates networks in Lansing, Jackson, Grand Rapids metro areas Operating VOIP network, will be first major VOIP provider based in Michigan. Sustainable and Profitable. VOI and VOI(P): Voice over Internet uses public and direct internet connections Voice over Internet Protocol Uses the protocol but not necessarily over the Internet.

3 VOI(P) and its Market: Within 5 Years: 90% of Long Haul traffic will be VOIP. 50% of all residential end-user traffic will be VOIP. 80% of all business end-user traffic will be VOIP. 20% of all wireless calls will be VOIP. Long Distance Service (per minute of use) service will be effectively non-existent. This is already occurring with many of the plans SBC, MCI and other providers are offering. (How much of their flat rate plans are actually long distance) Emergence of All Distance Service: Long Distance Service (per minute of use) service will be effectively non-existent. This is already occurring with many of the plans SBC, MCI and other providers are offering. (How much of their flat rate plans are actually long distance.) Under current rules: No long distance = means a decrease or loss of USF funds. How do we deal with the loss of USF? We need to keep USF so universal service can be preserved in highly rural areas.

4 Inter-Carrier Compensation on Internet ILEC s have fought for years to not pay compensation for Internet Traffic They got their way. All ILECs have or are likely in process implementing the FCC ISP remand order. However since the ILEC now realize that having no inter-carrier compensation is a double edged sword, ILECs are saying that this does not apply for one specific sub-categories of Internet Traffic: VOIP. How Ironic! VOI(P) is exactly Plain Old Internet

5 Intercarrier Definition of LD ILECs are now saying that Internet calls that originate from a location that is long distance from the terminating point is a long distance call (*Not an Internet Call) This is so they can protect the billions in profits from intercarrier compensation for terminating long distance minutes from the existing LD providers, and not have to pay for Internet Calls. What if the LD providers start operating all their calls as VOI(P) calls? Originating Carrier Defines LD Area If ILEC gets the ability to define that VOI(P) calls are long distance, then the VOI(P) provider answer will be: Expand the local calling area to the entire ILEC operating area. The originating carrier defines what calls are long distance, not the terminating carrier. Free calling everywhere! Small CLECs can do this since they have no historical monopoly profits to protect.

6 ILEC rumblings: ILEC wants the FCC to say that if the call terminates on the PSTN then it is a PSTN call, in terms of Intercarrier Compensation (and probably long distance). This does not make any sense, since the FCC has already ruled on Internet Calls. ILEC also says: well lets just allow the market to figure it out. We ll negotiate. Won t happen with 85% of the US under control of the ILEC. The only way ILECs negotiate is in the courtroom Bill and Keep: The only way it will end up working in the long run. Must be for all traffic: Internet, Local, Long-Distance. Must have not specials, limits caps for anyone. No regulatory headaches. OR: Set a specific fee for ALL types of traffic. No caps no limits USF will now come from the amount of phone numbers assigned. End-user pays the fee.

7 Universal Service Funding: How do we deal with the loss of USF? We need to keep USF so universal service can be preserved in highly rural areas. Since there is no long distance in the future, we are probably going to have to fund USF by local customers. The easiest way is to asses fee is by Quantity of Phone numbers in use: Will apply to local, new entrants and VOIP providers regardless of traffic type. We Also fund 911 service this way. 911 Service: VOIP providers should be required to do 911 service upon customer request. Customer should advise VOIP provider if they are going to stay in the same location. Customer can also submit their address if they change the location for a period of time and want 911 service. Roaming customer should forgoe 911 service since there is no way to geographically determine the location of a roaming customer on the Internet. FCC should phase this 911 Internet Locational service in for numbers assigned.

8 Contact Information: Kevin Schoen, President ACD.net, ACD Telecom, Inc Northwind Drive East Lansing MI ext Go to >about >presentations

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