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The Internet's Coming of Age (2001)

Chapter: 4 Collisions Between Existing Industries and Emerging Internet Industries: Telephony as a Case Study

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Suggested Citation:"4 Collisions Between Existing Industries and Emerging Internet Industries: Telephony as a Case Study." National Research Council. 2001. The Internet's Coming of Age. Washington, DC: The National Academies Press. doi: 10.17226/9823.
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Suggested Citation:"4 Collisions Between Existing Industries and Emerging Internet Industries: Telephony as a Case Study." National Research Council. 2001. The Internet's Coming of Age. Washington, DC: The National Academies Press. doi: 10.17226/9823.
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Suggested Citation:"4 Collisions Between Existing Industries and Emerging Internet Industries: Telephony as a Case Study." National Research Council. 2001. The Internet's Coming of Age. Washington, DC: The National Academies Press. doi: 10.17226/9823.
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Suggested Citation:"4 Collisions Between Existing Industries and Emerging Internet Industries: Telephony as a Case Study." National Research Council. 2001. The Internet's Coming of Age. Washington, DC: The National Academies Press. doi: 10.17226/9823.
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Suggested Citation:"4 Collisions Between Existing Industries and Emerging Internet Industries: Telephony as a Case Study." National Research Council. 2001. The Internet's Coming of Age. Washington, DC: The National Academies Press. doi: 10.17226/9823.
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Suggested Citation:"4 Collisions Between Existing Industries and Emerging Internet Industries: Telephony as a Case Study." National Research Council. 2001. The Internet's Coming of Age. Washington, DC: The National Academies Press. doi: 10.17226/9823.
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Suggested Citation:"4 Collisions Between Existing Industries and Emerging Internet Industries: Telephony as a Case Study." National Research Council. 2001. The Internet's Coming of Age. Washington, DC: The National Academies Press. doi: 10.17226/9823.
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Suggested Citation:"4 Collisions Between Existing Industries and Emerging Internet Industries: Telephony as a Case Study." National Research Council. 2001. The Internet's Coming of Age. Washington, DC: The National Academies Press. doi: 10.17226/9823.
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Suggested Citation:"4 Collisions Between Existing Industries and Emerging Internet Industries: Telephony as a Case Study." National Research Council. 2001. The Internet's Coming of Age. Washington, DC: The National Academies Press. doi: 10.17226/9823.
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Suggested Citation:"4 Collisions Between Existing Industries and Emerging Internet Industries: Telephony as a Case Study." National Research Council. 2001. The Internet's Coming of Age. Washington, DC: The National Academies Press. doi: 10.17226/9823.
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Suggested Citation:"4 Collisions Between Existing Industries and Emerging Internet Industries: Telephony as a Case Study." National Research Council. 2001. The Internet's Coming of Age. Washington, DC: The National Academies Press. doi: 10.17226/9823.
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Suggested Citation:"4 Collisions Between Existing Industries and Emerging Internet Industries: Telephony as a Case Study." National Research Council. 2001. The Internet's Coming of Age. Washington, DC: The National Academies Press. doi: 10.17226/9823.
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Suggested Citation:"4 Collisions Between Existing Industries and Emerging Internet Industries: Telephony as a Case Study." National Research Council. 2001. The Internet's Coming of Age. Washington, DC: The National Academies Press. doi: 10.17226/9823.
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Suggested Citation:"4 Collisions Between Existing Industries and Emerging Internet Industries: Telephony as a Case Study." National Research Council. 2001. The Internet's Coming of Age. Washington, DC: The National Academies Press. doi: 10.17226/9823.
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Suggested Citation:"4 Collisions Between Existing Industries and Emerging Internet Industries: Telephony as a Case Study." National Research Council. 2001. The Internet's Coming of Age. Washington, DC: The National Academies Press. doi: 10.17226/9823.
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Suggested Citation:"4 Collisions Between Existing Industries and Emerging Internet Industries: Telephony as a Case Study." National Research Council. 2001. The Internet's Coming of Age. Washington, DC: The National Academies Press. doi: 10.17226/9823.
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Suggested Citation:"4 Collisions Between Existing Industries and Emerging Internet Industries: Telephony as a Case Study." National Research Council. 2001. The Internet's Coming of Age. Washington, DC: The National Academies Press. doi: 10.17226/9823.
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Suggested Citation:"4 Collisions Between Existing Industries and Emerging Internet Industries: Telephony as a Case Study." National Research Council. 2001. The Internet's Coming of Age. Washington, DC: The National Academies Press. doi: 10.17226/9823.
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Suggested Citation:"4 Collisions Between Existing Industries and Emerging Internet Industries: Telephony as a Case Study." National Research Council. 2001. The Internet's Coming of Age. Washington, DC: The National Academies Press. doi: 10.17226/9823.
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Suggested Citation:"4 Collisions Between Existing Industries and Emerging Internet Industries: Telephony as a Case Study." National Research Council. 2001. The Internet's Coming of Age. Washington, DC: The National Academies Press. doi: 10.17226/9823.
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Suggested Citation:"4 Collisions Between Existing Industries and Emerging Internet Industries: Telephony as a Case Study." National Research Council. 2001. The Internet's Coming of Age. Washington, DC: The National Academies Press. doi: 10.17226/9823.
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4 Collisions Between Existing Industries and Emerging Interned Industries Telephong As a Case Studs INTRODUCTION The general-purpose nature of the Internet and its basic technology makes it possible to provide services at least comparable to those pro- vided by other communication systems. Perhaps the clearest such trend today is the growing use of Internet technology by providers of telephone service and the emergence of a variety of voice communications services over the Internet. For reasons that range from reducing the costs of con- ventional telephony by using less expensive technology, to bypassing the tariff structure of the existing public switched telephone network (PSTN), to innovating new forms of telephony services and applications, many efforts are under way to use the Internet and its technology components to provide voice services. These services do not merely duplicate those provided by the PSTN; the ease with which new applications can be introduced over the Internet opens up the possibility of a wide range of applications involving voice and the introduction of many different en- hancements to what we think of as telephony today. Telephony over the public Internet is in its infancy, but telephony over IP networks that provide appropriate provisioning or quality-of- service technology is already viable today. Where Internet voice is de- ployed on existing data backbones lacking supporting quality of service and/or provisioning, such service today is generally a second-best alter- native. However, in other cases, where IP telephony is used either with separately provisioned bandwidth or with supporting quality-of-service 151

52 THE INTERNET'S COMING OF AGE technologies, it has proven to be competitive with circuit-switched tech- nologies. There are numerous small-scale examples of such deployments for long-haul telephony as well as several instances of large-scale sys- tems, including two Chinese telephone networks (China Telecom and Uninet).~ Telephony over IP networks is also being deployed within enterprises (generally replacing PBX functionality), with the goal of achieving lower costs by operating a single network carrying both data and voice.2 These developments are emblematic of a broader trend toward Internet services that overlap and potentially exceed or even supersede communications services that have long existed as distinct industries with distinct policies and regulations governing them. Another emerging ser- vice is Internet distribution models for audio and video, which overlap the capabilities of traditional radio and television broadcasting and music and video publishing and distribution. In both cases there are conflicts between the new technologies, systems, and players made possible by the Internet and the policies, regulations, and practices that have shaped the extant industry. This chapter focuses on telephony, where the conflicts have now become quite visible, but many of the issues explored here are also relevant to these other sectors.3 WHAT IS IP TELEPHONY? The terms "IP telephony" and "voice over IP" are used synonymously in this report to describe the broad range of options for using Internet- Protocol-based, packet-switched networks in support of telecommunica- tions services of various sorts, typically for voice communications. (The committee is careful in its use of the term "Internet telephony," because the term implies that the public Internet is used to carry telephone calls, which not all IP-based telephony does.) IP may be used for some or all of the transmission and interconnectivity path as well as to provide switch- ing, control, and services facilitation (e.g., call setup). IP telephony encompasses services that provide connectivity among normal telephone See Leslie Chang. 1999. "Internet Phone Service Catches on with Millions in China- Rivals Challenge China Telecom with Cheap Rates." Wall Street Journal. December 21, p. A14. 2The committee does not provide data on the extent of IP telephony deployment because assembling such information is complicated by the diverse offerings, definitional questions, and the highly dynamic nature of the business. 3This chapter is not intended as a thorough examination of technical issues underlying Internet telephony. Discussion of some key underlying technical dimensions, such as net- work robustness, scaling, and quality of service, is located elsewhere in this report.

TELEPHONY AS A CASE STUDY 153 sets, computers, or other computer appliances, and combinations of these types of devices. IP telephony may be used over a privately owned net- work, a network owned by the telephony service provider or some other third party, or over the public Internet. To carry voice over IP, the analog signals are digitized, (usually) com- pressed to reduce bandwidth requirements, and then broken up into frag- ments or packets with accompanying routing information for transport over a packet network such as the Internet. They are transported across one or more IP networks, making use of algorithms running on the de- vices at each end of the call to deal with late or lost packets and possibly also making use of quality-of-service mechanisms in the networks the call traverses. Call quality is determined by the algorithm used to digitize and compress the signals, the capacity of the network, and the effective- ness of any explicit quality-of-service mechanisms that are employed. IP telephony comes in many flavors; these may or may not involve the public Internet and may or may not involve the PSTN. Some IP telephony applications make use of only an IP network, whereas others make use of both IP networks and segments of the PSTN. If the PSTN is involved in any segment of the call, a gateway is required to translate the data and signaling (e.g., call setup or termination instructions) associated with the call. Another function that is generally provided in any tele- phony application is a directory lookup service that associates a phone number or other identifier with a particular telephone line or IP device.4 Some designs amount to little more than a substitution of IP technol- ogy for transport within the network. For instance, IP may be substituted for other means of transporting communications within the networks of telephony providers; this internal substitution of IP technology for trans- port within the network raises few policy issues that are distinguishable from those raised by the introduction of other new technologies or the entry of new players into the "traditional" PSTN business. Another fla- vor is the use of IP within the private network of an enterprise, where it replaces the elements of a traditional PBX system or other corporate voice network. Other designs make sole use of IP for transport and Internet application servers for control and directory services, while still others employ hybrids that combine elements of both the Internet and the PSTN. The set of possible sorts of services that might be labeled "IP telephony" is highly diverse and encompasses the following: · Network operators and transport media. For example, backbone trans- 4The PSTN provides several such mappings, including between subscriber name and phone number What the telephone directory contains' and between phone number and telephone line.

54 THE INTERNET'S COMING OF AGE port within a carrier network, telephony over the public Internet, enter- prise networks, virtual private networks, PSTN, and combinations of these; · End-user equipment. For example, conventional telephones, IP- based special-purpose devices (appliances), and general-purpose com- puters; · Local access technology. For example, PSTN analog lines, IP data networks, and IP over DSL; · Interfaces and gateways between IP and PSTN elements. For example, analog phone lines, ISDN primary rate interfaces, Switching System 7 (SS7) or none in the case of pure IP telephony; and · Architectures. For example, telephony services may be provided by a single vendor in a centrally managed way (perhaps over a dedicated network) or provided as a distributed service with individual users plac- ing calls end-to-end over the Internet, perhaps making use of services such as directory lookup provided by a third party. NEW AND EVOLVING ARCHITECTURES FOR TELEPHONY To understand the technical, operational, economic, and policy issues related to IP telephony, it is useful to understand the role of architectures and examine some specific examples. The concept of an architecture has been a cornerstone in the development of telecommunications systems. An architecture first requires that the underlying system be treated in terms of a set of commonly understood elements and that these elements have a clearly demarcated set of functions and interfaces that allow for combining the elements.5 An architecture is driven by two factors in addition to the identification and selection of elements and interfaces: technology and world view. The state of the technology places bounds on what is achievable. The world view is the way an individual, entity, or organization views the world, its relationship to that world, and how that world and that relationship will evolve over time. The PSTN, for ex- ample, with its more centralized architecture, reflects a world view differ- ent from that of the Internet, with its more distributed design. The limits imposed by technology are typically less confining than the limits that are self-imposed by the designers or architects; in practice, therefore, world view is often the more powerful driver of architecture. 5Terrence McGarty. 1sso. ''Alternative Networking Architectures: Pricing, Policy, and competition, Information Infrastructures for the 1ssos.~, John F. Kennedy School of Gov- ernment, Harvard university, November.

TELEPHONY AS A CASE STUDY 155 IP Telephony Architectures A multitude of network architectures and implementations are en- compassed by the label "IP telephony." One way to portray this diversity is to portray it in terms of architectural classes. A four-class taxonomy, with illustrations of each class, is presented in Figure 4.1. Even a single class of architecture has many possible configurations. As shown in Figure 4.2, the telco-to-telco (class 1) architecture encom- passes two quite different ways of employing voice over IP, even though each way makes use of a basic PSTN-IP gateway to convert telephony signals into IP packets. The first (Figure 4.2a) consists of a dedicated network or channel configuration that uses a private network. The opera- tion of this design can be explained as follows. A telephone user in, for example, New York desires to call a telephone user in Moscow. The local telephone user in both cases will access the system by means of a standard telephone. The user places the call to a local exchange carrier, which then sends the call to another switch. This switch places the call through an IP gateway node (ION) that connects locally to a router and the call proceeds over a private network. The process is reversed on the terminating side. The gateway provides translation from the telephony world to the IP domain by performing three conversions between telephone signaling and IP signaling, between the conventional voice signal and data packets, and between telepone numbers and IP addresses (if required). The sec- ond class 1 approach (Figure 4.2b) is the public Internet approach adopted by a number of IP telephony start-up companies. It uses the same generic form of entry a gateway between the PSTN and an IP data network- but replaces packet transport over dedicated IP links with transport over the public Internet. It reflects both a different architecture and a different world view of IP telephony. For example, in contrast to the architecture using a private IP network, there is no PSTN switch or function (such as a billing system) provided by a switch. Increasingly, one sees new applications based on a comingling of the Internet and PSTN telephony architectures. These emerging offerings include "click-to-speak" voice conversations launched from Web pages and unified messaging services (which combine voice mail, e-mail, and fax). Another application, Internet call waiting, is aimed at customers who use a single phone line for both normal phone service and their dial- up connection to the Internet. While the service, which uses the Internet to inform a customer when a call is being made to the customer's phone line, appears on the surface to be quite similar to conventional call wait- ing, it has very different requirements behind the scenes. Implementa- tion of conventional call waiting is internal to the telephone switches in

156 I Telco | 4= / Telco \ ~ | Device ~,~ J \ Transport / ~J ~L_.~ _ | Device | ~J \ Transport / ~J Class 1: Telco to telco. The end users employ existing telephony equipment through a conventional PSTN connection while IP (either private network or Internet) is used for a portion of the connection through interconnects with the PSTN (e.g., IP used over long-distance segments). THE INTERNET'S COMING OF AGE I P-Telco Gateway IP-Telco Gateway nit Lit < > Telco Device <~ g/ Telco \ ~Te oo Edg4 ~ If/ ~ I P-Telco Gateway I IP Device ( ~ Class 2: Telco to IP. Conventional telephone devices are interconnected with IP telephony devices (a computer or other IP-enabled device). FIGURE 4.1 Four classes of IP telephony architectures. SOURCE: Taxonomy adapted (with extensions) from David D. Clark. 1997. A Taxonomy of Internet Telephony Applications. Proceedings of the Telecommunications Policy Research Conference (TPRC).

TELEPHONY AS A CASE STUDY 157 IP Device ~J IP \Trans~ IP Device (it Class 3: IP to IP. Computer telephony devices are used at both ends and the connection is made solely through IP networks or the Internet. While gateways to the PSTN would be added to provide interconnection with PSTN customers, this architecture does not make use of any PSTN elements and thus depends on the development of a full range of signaling services using IP only. IP Device ~ ~ Rae; ~ IP T I P-Telco Gateway ~ ~ P Edge ransport / 4= I P-Telco | Gateway Telco \ Transport / Class 4: IP to telco to IP. Other combinations of PSTN and public and private IP network links. The figure illustrates the use of the PSTN to provide a connection between two Internet "subclouds." This architecture might be used to enable IP telephony across Internet providers in the absence of adequate quality of service or other capabilities over an IP connection.

158 New York Moscow PTT Switch Switch (a) Using a dedicated private network New York (b) Using the public Internet THE INTERNET'S COMING OF AGE Billing and Customer Care System En ' I Router Router Ed ~3 ~3 EM Router Router I nternet Seoul - Company Private IP Network NOC En ETCH PTT FIGURE 4.2 Two examples of class 1 IP telephony configurations. LEC, local exchange carrier; IGN, IP gateway node; and PTT, Post, Telegraphs, and Tele- phones.

TELEPHONY AS A CASE STUDY 159 the PSTN; in a hybrid PSTN-Internet application, switches have to com- municate with IP routers. Although the commercial viability of various forms of IP telephony remains untested, the prospect of future developments makes it possible to think in terms of a revolutionary as opposed to an evolutionary use of IP technology, in which phone calls become just one application on the public Internet. Not everyone agrees on how compelling the technical and business cases are for offering voice services over the public Internet or what the time frame for such a transition might be, but there is little doubt that both new and existing players will enter this market. The timing and viability of such developments depend in part on being able to provide the transmission resources needed to obtain sufficient voice qual- ity (either by deploying QOS mechanisms across ISP boundaries or by taking advantage of a rising tide of capacity that makes the average qual- ity sufficient to meet voice requirements; see Chapter 2~. The motivation for such a shift would not be just the cost reductions associated with using IP-based components and systems but would also be the ability to offer new features, particularly at the human interface, made possible by a shift to more intelligence in end-user devices. The Evolving Architecture of the PSTN Over the past several decades, the PSTN has also been changing, from a network with only basic circuit-switching functionality to a circuit- switched network architecture known as the advanced intelligent net- work (AIN). This architecture makes use of centralized, closed-applica- tion databases and a PSTN-specific software development environment (known in PSTN lingo as the service creation environment) to enable a range of capabilities such as toll-free number dialing (including routing a call to the appropriate point), credit card calling, and flexible call for- warding. As the architecture evolves, the intelligence of the PSTN is becoming increasingly distributed and open. The PSTN's architecture is evolving from the AIN model, which uses centralized switching system databases and interoffice signaling, into a model that uses direct signaling to more distributed databases. There have also been efforts to further separate the applications from the operating system (i.e., the basic switching soft- ware) and the underlying infrastructure so as to make the PSTN a more . . Open service creation environment. The opening up of the PSTN service creation architecture is aimed at increasing the flexibility of the infrastructure and enabling a greater num- ber of parties to create useful services. In the AIN, the service creation environment and the applications are provided by the service provider

160 THE INTERNET'S COMING OF AGE and generally closed to third parties. Open AIN was proposed by PSTN operators in the mid-199Os as a way of enabling a set of entities beyond the service provider to create services. Today, by virtue of the PSTN's connectivity to the Internet, service creation is being enabled at the edges of the network. These moves toward a more open environment increase flexibility but pose challenges related to maintaining the stable operation of the network; some of these are discussed below. While the intelligent network is becoming more distributed and open, there is another fundamental change under way in the PSTN: it is becom- ing more datacentric, with high-speed data access, transport, and switch- ing an architecture that many believe will ultimately replace the present intelligent, circuit-switched architecture. At the same time, the transport backbone is evolving, with greater deployment of optical transport, such as wave division multiplexing (WDM), to accommodate the voracious demand for bandwidth. IP over ATM over WDM or IP directly over WDM are emerging to replace other optical communications technolo- gies, such as SONET or SDH, as capabilities are introduced into the opti- cal layer. Also, local access is evolving to support higher data speeds as datacentric communications are introduced in the local loop in the form of DSL and digital optical fiber deployments closer to end users in tele- phone networks and in the form of hybrid fiber coax deployments in cable networks. PSTN's evolution from a predominantly circuit-switched to a packet- switched architecture is producing a significant change in architecture construct and concomitant operations. New packet-based data (ATM and IP) capabilities are being introduced in combination with the existing SS7.6 This transformation has included the adoption of new, packet net- work telecommunications protocols. Along with new protocols to estab- lish connections between IP and PSTN systems, these packet-based capa- bilities allow voice telephony to continue to be provided even as the network architecture moves away from the circuit-switched model. The new architecture, protocols, and intelligence capabilities together enable a richer set of prospective applications and services, such as Internet call- waiting. While there is surely room for the market to experiment with various price/quality trade-offs, customers will expect the emerging data- centric architecture and technologies to provide the quality they associate with today's PSTN a challenge being addressed at this time. 6In the long term, a possible direction is that the introduction of MPLS with core ATM switching could provide the necessary infrastructure and control capabilities.

TELEPHONY AS A CASE STUDY Architectural Contrasts Between IP Telephony and Today's PSTN 161 Although the PSTN architecture is changing in significant ways, there remain considerable differences of approach between it and the various architectural alternatives emerging for IP and Internet telephony. These differences, which stem in large part from the fundamental contrast be- tween the PSTN's centralized design and the Internet's open, distributed architecture, include the following: · Unlike in the PSTN, in IP telephony the function of transporting the packets carrying voice can be carried out by an entity different from the one providing application services (e.g., call agents and directory services). This means that voice telephony service can exist as an overlay to IP net- works indeed, voice traffic can be carried over networks unbeknownst to the IP network operators. Application support servers are not even constrained to be located within the same network as the customer or even the same country. It also means that Internet telephony quality depends not only on the quality of the functions (e.g., a call agent) offered by the telephony provider itself but also on the quality (including reliabil- ity and freedom from congestion) of all of the underlying networks over which communications pass. · Like other packet data, traffic associated with a phone call over the Internet will transit one, two, or many providers depending on which networks the calling parties are attached to and how the networks are interconnected. The route taken by a packet is a function of numerous routing decisions made within the network; it may change dynamically, and it is outside the control of the end user. · IP telephony application servers do not necessarily provide the samefunc- tionality as the PSTN. For instance, an application server established by a voice telephony overlay service might be concerned only with providing directory and call setup services. Once a call is established, data packets will only flow between the callers, and the voice telephony provider's server will have no access to the content of voice calls. It would, for example, be impossible in this architecture for the telephony provider itself to carry out a wiretap order to provide the content of a call to law enforcement. Nor would the provider itself be able to offer priority rout- ing for emergency calls, as might be desired to provide functionality analogous to 911 telephone calls. · The general-purpose nature of the Internet means that it can offer voice communication in novel ways that do not parallel classic telephony. Telephony is understood to refer to communication between devices attached to the public switched telephone network (e.g., telephony regulations do not apply to two-way radios or in-building intercom systems). The line be-

162 THE INTERNET'S COMING OF AGE tween telephony and other applications could start to blur. For example, today's popular text-based chat applications may well turn into voice chat. Are the latter to be considered telephony? There are, in fact, a variety of voice-communications-based applications running over the Internet today. Internet-based video games that allow players to exchange voice comments along with the game play do not, owing to their special- ized purpose, look like telephony, but the line is not sharp. Edge-driven innovation of voice applications means that such questions are likely to emerge frequently and rapidly. SCENARIOS FOR FUTURE EVOLUTION The extent, pace, and nature of a transition to IP- or Internet-based telephony services is unclear. The views of those in the two industries- the Internet and the PSTN as well as outside observers are based on their perceptions of how fast the Internet and its underlying technologies are evolving as well as on their world views. Many industry analysts predict that the rapid growth of data networks, particularly the Internet, will lead to the melding of voice and data networks, and that voice traffic will increasingly be carried using IP technology. There are a number of practical reasons why IP telephony could over time supplant traditional PSTN voice services. Carrying data and voice services over a common enterprise network promises reduced infrastruc- ture cost and ease of management. This would be especially true when the volume of data traffic is steadily growing, making the case for invest- ment in a datacentric architecture more compelling. Bypassing the PSTN by using a private data network for voice would also allow an enterprise to avoid long-distance charges. Others argue that for technical and economic reasons IP may not always be the best or most efficient choice for telephony, particularly in the short run. For instance, voice over IP is sometimes less efficient in its use of communications link capacity than existing PSTN technologies such as time division multiplexing (TDM) or ATM. Another challenge is that putting time-sensitive voice traffic on a corporate data network places substantial new demands (e.g., properly engineering the IP fabric and the underlying network) on network managers unaccustomed to managing a network for voice traffic. Several technical trends are promoting the integration of voice and IP service and the shift to IP. Efforts are under way to move the full range of voice services to IP technology, which would one day allow IP- based service to supplant circuit-switched network service. As a conse- quence of this shift, there is likely to be a far richer set of voice services available, raising the prospect of IP-based telephony offering a richer

TELEPHONY AS A CASE STUDY 163 and more powerful suite of services while the traditional PSTN remains in place. At the same time, considerable attention is being paid to the development of IP-PSTN interoperability capabilities in the form of gate- ways between IP and circuit-switching technologies, enabling the cre- ation of hybrid services. The course of IP and Internet telephony will be determined in part by the organizational and cultural factors at work in the two historically separate technical communities: those responsible for the PSTN and the Internet. From the PSTN community perspective, given the extensive investment made in deploying SS7 and the capabilities and features re- quired for telephony services, it would be easier to develop new services by leveraging the capabilities of SS7 than by building voice services from scratch. Efforts to bridge the gap between the communities are evident in the efforts of several IETF working groups, including their collaboration with more traditional telephony groups such as the International Telecommu- nication Union. Constructing robust gateways between the two infra- structures and building de nova IP-based implementations of all of the required functionality of the PSTN are both formidable challenges. The nature of the challenge as well as the inevitability of a long period of coexistence and interoperation between the technologies argues that suc- cess in building a seamless network for the future will benefit from greater cooperation between the two communities. From the Internet community perspective, the more centralized PSTN architecture runs counter to the distributed, edge-controlled Internet model. Motivated by a belief that open standards will permit more rapid innovation and development of a whole range of new services and appli- cations related to telephony, some advocate IETF-like processes to de- velop standards that can stand apart from the PSTN. Their advocacy stems in part from an expectation that the PSTN world will not open up PSTN network elements enough to permit the kind and pace of innova- tion characteristic of the Internet. Telephony is very much in flux, with many decisions being made in the marketplace today by customers, equipment vendors, and service providers whose landscape is changing rapidly. The PSTN is not mono- lithic; it has always been composed of multiple networks, and those net- works are managed according to diverse philosophies about deployment, upgrading technology, and so forth. The latest trend is the significant increase in the number of players as new competitors emerge in the local telephone market (the competitive local exchange carriers, or CLECs), with entrants such as Qwest and Level 3 challenging the incumbent long- distance telecommunications carriers. Cable operators are providing tele- phony and Internet access as well as content, and traditional entertain-

164 THE INTERNET'S COMING OF AGE ment and media firms are moving to distribute voice, data and video services the AOL-Time Warner merger accentuates that trend. At the same time, the traditional PSTN service providers are offering cable, Internet, and content services. The landscape of equipment suppliers is also changing rapidly. Tele- phone switch suppliers realize that they need to stay competitive and are responding accordingly, although it will be a challenge for them to evolve their business models fast enough to respond to the competition. Tradi- tional suppliers to telecommunications companies for the PSTN in the United States, for example, consisted of a few major switching suppliers such as Lucent (formerly AT&T), Nortel, and Siemens and since divesti- ture of AT&T a plethora of transport and access product suppliers. Their competition now includes manufacturers of other kinds of prod- ucts, and mergers and acquisitions further blur the lines between previ- ously distinct market segments. In the past few years, traditional router suppliers acquired ATM equipment manufacturers (e.g., Cisco acquired Stratacom), while traditional ATM/frame relay equipment manufactur- ers (one such was Ascend previously Cascade) were acquired by Lu- cent, and the router/hub manufacturer Bay Networks was acquired by Nortel. Now, the traditional telecommunications circuit-switching equip- ment suppliers, and others as well, are paying greater attention and de- voting more resources to packet switching and data networking prod- ucts, whereas companies such as Cisco are working or combining with other suppliers to meet PSTN and other service provider needs. At the same time, quality-of-service capabilities are being added to cable mo- dems, improvements reflected, for example, in the new DOCSIS 1.1 stan- dard, which supports IP telephony. Will IP telephony be largely confined to those places where it has proved viable on a large scale today, such as backbone transport within carrier networks or within private IP networks? Or will it ultimately be deployed much more widely on the public Internet? One possibility is that IP telephony networks will be melded together using IP, so that calls are carried end-to-end over IP. It is also possible that there will be many IP telephony networks built by a variety of players (both traditional local and interexchange carriers) that form growing clouds of end users em- ploying only IP telephony inside but relying on the PSTN to carry traffic between them. A factor that argues for this scenario is the difficulty of providing adequate quality of service for calls that flow across multiple IP providers. Because of the larger number of players involved, this diffi- culty is greatest in the case of telephony over the public Internet. Disin- centives to using the public Internet appear likely to decline to the extent that the quality-of-service and reliability issues are resolved, for with

TELEPHONY AS A CASE STUDY 165 these barriers removed, the public Internet allows leveraging of both com- mon technology and common infrastructure. How will the Internet and the PSTN relate to each other in the future? One possible outcome is that IP telephony and PSTN telephony services continue to convolve, with considerable effort going into dealing with addressing and signaling issues between the two networks. Another is that the two will develop in parallel but that ultimately the PSTN as it is known today will disappear. A third outcome is that the two will increas- ingly interoperate and, over time, will converge in terms of the network architecture and the technology employed. In this case, the PSTN will move to a more datacentric architecture, with the Internet and PSTN underlying architectures becoming increasingly similar. Circuit-switch- ing technology would not disappear immediately but would phase out for voice services over the next decade. Underlying this range of possible outcomes is a basic issue: Will IP telephony be driven primarily by the needs of interoperating with the PSTN or by a desire to have new, IP-only features? INTEROPERATION BETWEEN IP TELEPHONY AND THE PSTN Whatever the course of change for the Internet and the PSTN,itis clear that for the foreseeable future, dedicated IP networks, the public Internet, the PSTN, and hybrids of these will all play a role in delivering telephony services. From a customer perspective, a smooth transition will depend on the extent to which telephony networks remain intercon- nected (anyone can continue to place a call to anyone else) and the extent to which it appears seamless to the end user, who will not have to act in very different ways when calling different parties. Achieving this goal will require the development of standards for telephony functions within IP networks and at gateways between IP and PSTN networks. These include the algorithms used to digitize and compress the voice signal (coders), gateway functions, addressing, directory services, call control, and the like. As with other standardization efforts, this effort will have to balance standardization with flexibility that permits ongoing innovation in telephony services. A number of groups, with origins in both the telecommunications and Internet sectors, are working to address these issues. Among them are the following: · IETF. A number of IETF groups are working on telephony issues, including the IP Telephony working group, which is developing proto- cols for call processing and distributing information about gateway capa-

166 THE INTERNET'S COMING OF AGE bilities;7 the IETF Media Gateway Control working group, which is devel- oping an architecture for controlling gateways between the IP networks;8 and the Telephone Number Mapping group, which is working on proto- cols for mapping telephone numbers to other attributes (e.g., URLs) that can be used to contact a resource associated with the numbers.9 · International Telecommunication Union Standardization Sector (ITU- T). ITU-T activities include ITU-T Study Group 13,1° which is studying IP-based network issues such as interoperability with other networks, signaling requirements, numbering, and security, and Study Group 16, which is working on protocols and standards for multimedia services. · European Telecommunications Standards Institute. ETSI, the devel- oper of the GSM standard for cellular telephones, has a project, Telecom- munications and Internet Protocol Harmonization Over Networks (TIPHON), that is developing an architecture and requirements for inter- operability and exploring technical aspects of billing; call control; nam- ing, numbering, and addressing; and quality of service.ll · Softswitch Consortium. This industry group provides interoperabil- ity testing facilities, testing events, specifications, reference implementa- tions, and development resources for a number of voice and multimedia communications standards.l2 As this list suggests, there are areas of overlap and conflict among the activities of these groups. These have been diminishing, however, and there are instances of collaboration between groups. For example, the IETF Media Gateway Control working group is collaborating with ITU-T Study Group 13. Central to a successful convolution is the resolution of interoperability issues in numbering and addressing; signaling and control and service creation capabilities; and robustness concerns. Each area is treated in turn below. 7See IETF IP Telephony working group charter, available online at <http://www.ietf.org/ html.charters /iptel-charter.html>. 8See IETF Media Gateway Control working group charter, available online at <http:// www.ietf. org /html. charters /megaco-charter.html> . 9See Telephone Number Mapping group working charter, available online at <http:// www.ietf. org /html. charters /enum-charter.html> . 10See ITU-T Study Group 13 home page, available online at <http://www.itu.int/ ITU-T/coml3/index.html>. 1lSee the TIPHON home page, available online at <http://webapp.etsi.org/tbhomepage/ TBDetails . asp ?TB_ID=29 1 > . 12See Softswitch Consortium Frequently Asked Questions, available online at <http:// www.softswitch.org/FAQs /index.html>.

TELEPHONY AS A CASE STUDY 167 Addressing and Number Portability No matter what the ultimate end point, telephone number assign- ment will be more complicated as IP telephony services emerge. Number portability across the public switched telephone networkl3 and IP tele- phony services is an important consideration, at least over the short term. Today, local phone number portability in the PSTN is provided by the local exchange carriers, permitting customers to switch local carriers with- out changing their standard PSTN phone number.l4 In the future, there may be no conventional telephone number associated with customers using IP telephony; in fact, depending on how their IP address is as- signed, they may or may not have a fixed IP address. How will number portability be handled? Several requirements for a smooth evolution stand out. First, customers should be able to in some fashion transfer ("port") their existing telephone number to the Internet-based service, just as customers can today retain, at the same location, the same tele- phone number when they switch from one local exchange carrier to an- other, allowing them to continue to receive calls directed to the phone number provided by their original local exchange carrier. Second, there is the question of how someone on the PSTN calls an IP telephony sub- scriber. This suggests that Internet service providers and other Internet- based telephony providers should be able to issue new telephone num- bers to their customers, even to those who do not have conventional telephone service, so as to provide compatibility across calls originated or terminated on conventional and IP-based telephones. Additional issues arise when a given household uses both PSTN and Internet services. For example, what address or number should be used when a standard PSTN (E.164) number is assigned to a household that uses an IP address (perhaps from an IP telephony directory server that maps a name or other identifier to an address) for an IP telephony appli- ance? Portability needs to address both aspects for subscribers who wish to port their service as well as for subscribers using IP who wish to change their Internet service providers. 13E.164 is the ITU standard ("Recommendation") for the international public telecommu- nications numbering plan, which specifies a geographically hierarchical numbering plan in which numbers are assigned to customers by carriers. 14Local number portability was mandated by the Telecommunications Act of 1996. In its rules implementing the act, the FCC allowed local telephone companies to assess charges to recover the costs of implementing and providing portability both a charge to be paid by other carriers in exchange for the use of number portability facilities and a monthly charge for all telephone customers.

168 THE INTERNET'S COMING OF AGE Beyond these more immediate interoperability considerations lie broader questions of addressing. For example, telephone services today already allow using abstractions of the phone numbers. Voice-activated dialing allows a caller to substitute a phrase (e.g., "call Mom") for a phone number. Other services offer a single number that then follows the cus- tomer to whatever phone is in use at the time a call is put through. Such abstractions somewhat like the level of indirection provided by today's Domain Name System, which allows access to Internet devices via a name rather than a numerical address could also be applied to the IP tele- phony domain.~5 In the long term, phone numbers could be replaced by other identifiers. How to provide suitable directory services is currently being explored in the forums listed at the start of this section; agreement on a standard will be crucial to building hybrid Internet-PSTN or Internet- only telephony networks that appear seamless to the end user. While this report does not explore these issues in depth, the issues that arise when one starts to explore solutions for all of these name/ number portability requirements closely resemble those that arise for the Domain Name System (see "Scaling of the Internet's Naming Systems" in Chapter 2~. For example, there are similar issues of ensuring scalability, supporting dynamic updating, ensuring that the name/number infra- structure is robust and secure, and authenticating updates to directory entries. Signaling and Control and Service Creation As architectures for IP telephony emerge, there are unresolved ques- tions of how they will interface with the existing SS7-based global PSTN, including how signaling and control, the functions that allow calls to be set up and the network to be managed, will be provided for a hybrid PSTN/Internet infrastructure. Solutions must be sufficiently standard- ized to allow interoperation and yet flexible enough to encourage innova- tion in new applications. Open questions include the following: What signaling capabilities need to be established to provide messaging across all media (wireless and wireline) and different types of devices? What is required to meet the needs of telephony that runs over the public Internet in contrast with telephony that runs over private networks using IP tech- nology, and what are the implications for the signaling and control infra- ~5Unlike the old naming schemes for telephone exchanges te.g., '~Jacksonville 6-500 i, in which there was a fixed mapping between name and exchange, a naming scheme that provides indirection allows the number with which a name is associated to be easily changed, perhaps at the direction of the telephone user.

TELEPHONY AS A CASE STUDY 169 structure to support these changes? How is quality of service assured across the multiple providers for data services? These are some of the important questions that the working groups described above are ad- dressing. The control capabilities must be able to handle both the pure IP tele- phony and the interdomain calls between Internet telephony and PSTN elements. The committee foresees some interesting complications. For instance, a household of the future might well employ both conventional PSTN telephone and IP telephony equipment, with the latter making use of one or more local access technologies (e.g., IP over DSL or IP over a cable modem). Telephones of the future might use a variety of local access technologies, such as IP over ATM or over DSL. It will need to be possible to manage each of these capabilities with the appropriate proto- cols. Another example of these complications is the click-to-speak service mentioned earlier, which may involve a voice connection between the customer and the service representative or the downloading of streaming video from a server to the prospective customer. A suite of open standard protocols will be needed to enable these interoperable sets of PSTN/ Internet services. Robustness The robustness of the PSTN benefited in the past from agreement among a relatively small number of players to follow a tightly defined architecture and set of operating practices. As the PSTN market has grown, the number of players has grown, too, potentially affecting ro- bustness. However, the opening up of the PSTN architecture and inter- operation with other IP networks give rise to robustness concerns that go beyond those that would be posed by conventional new entrants to the PSTN. These concerns fall into two categories. First, there are concerns about how to ensure the reliability of a more open architecture in which there are fewer controls over the inputs, e.g., signaling and control mes- sages, received by PSTN networks and in which these inputs may inter- act. Second, there are concerns about how to ensure overload controls and network availability in this more open environment. As a network is opened up, additional attention must be paid to authentication (Is the originator of the message authorized to perform the function?) and validation (Is a request a reasonable one that can be ex- ecuted without harm to the network of signaling and control messages?. Another issue is how to localize the impact of problems. How can a more open service creation environment be designed to create new applications without adversely affecting the applications of others? What mediation capabilities and other new service-creation or application programming

170 THE INTERNET'S COMING OF AGE interfaces should be developed? Can there be service creation at the edges without having to worry about multiple-creator application inter- actions and adverse consequences? If so, how does this manifest itself in an Internet/PSTN environment a hybrid of centralized or partially dis- tributed service creation in the PSTN plus the fully distributed service creation of the Internet? How can the combination of SCEs flourish in this evolution? How do the provider-proprietary applications for specific customers affect the service creation environments? If networks carrying voice networks are to continue to meet stringent performance requirements in the face of opening them to a diverse set of providers, the ability to control against overload and provide enhanced robustness will need to be included. These mechanisms will need to be designed not only into the systems comprising the PSTN/Internet combi- nation but also into the basic signaling and control architecture, to pre- vent serious congestion, service degradation, and severe outages. IMPLICATIONS OF IP TELEPHONY FOR TELEPHONY REGULATION The emergence of IP telephony heralds conflicts between, on the one hand, IP telephony's practices and assumptions and, on the other hand, the practices and assumptions of the existing regulatory regime. These conflicts stem in large part from the contrast between the dynamic, rapid change that Internet-based innovation enables and the historically rela- tively stable nature of PSTN technologies and businesses. As IP tele- phony gains market share, it is likely to have a dramatic impact on the traditional, regulated voice service providers. Such developments have provoked and will continue to provoke calls for voice over IP to be subject to regulation akin to that in place for circuit-switched voice services or for the regulatory regime to be modified in other ways to cover this new form of telephony. As new IP- and Internet-based services emerge that in some way resemble PSTN services that are currently regulated, there will be a number of questions about whether these new services should be treated in the same fashion. At the same time, in the face of competition, PSTN operators may develop and offer new services in order to attract custom- ers, raising questions about how those services will be accommodated within the existing regulatory framework. The position of the Federal Communications Commission has been to keep the Internet free from unnecessary application of the existing regula- tions on telecommunications, and many have argued that this hands-off approach has been a significant factor in the Internet's explosive growth.l6 16See, for example, Jason Oxman. 1999. The FCC and the Unregulation of the Internet. Office of Plans and Policy (OPP) Working Paper No. 31. Washington D.C.: OPP, Federal

TELEPHONY AS A CASE STUDY 171 Nonetheless, to the extent that IP telephony applications increase their market share, it is reasonable to anticipate that pressure will come from the other players (e.g., other telephony carriers and consumers) to in- crease regulatory attention to Internet telephony. The potential inconsistency between the assumptions underlying ex- isting regulations and those that would be applicable to new forms of telephony is well illustrated by one concern raised by local exchange carriers that has been the subject of FCC regulatory attention: Would local termination tariffs be applied to phone calls carried on the Internet? Internet telephony services (or the ISPs that carry the data associated with the phone call) do not, for example, have to pay local exchange carriers for terminating calls when one of the callers is connecting to the Internet via a modem running over a PSTN telephone line (as a conventional long- distance provider is required to do when it hands off a call to a local exchange carrier). Some of the advantages of using the Internet for voice are thus amplified or in some instances even driven by tariff and regula- tory artifacts that treat IP and public switched telephone networks rather differently. Such advantages can be seen either as unfair to incumbents or as appropriately reflecting the emerging, evolving nature of telephony. A key question is whether IP telephony should be subject to common carrier provisions. The implication of such status could be positive (e.g., no liability for the content it carries) or negative (e.g., the need to meet certain standards of operational integrity that go beyond what is required of an Internet, cable, or other noncommon carrier provider) for the IP telephony provider. The Telecommunications Act of 1996 defines tele- communications as the "transmission, between or among points specified by the user, of information of the user's choosing, without change in the form or content of the information as sent and received." A telecommuni- cations carrier is defined as "any provider of telecommunications ser- vices, except that such term does not include aggregators of telecommu- nications services (as defined in section 226~." The act goes on to say that "a telecommunications carrier shall be treated as a common carrier under this Act only to the extent that it is engaged in providing telecommunica- tions services, except that the Commission shall determine whether the provision of fixed and mobile satellite service shall be treated as common carriage.''l7 Finally, telecommunications is defined as "the offering of telecommunications for a fee directly to the public, or to such classes of users as to be effectively available directly to the public, regardless of the facilities used." Communications Commission, July. Available online at <http://www.fcc.gov/opp/ workingp.html>. 17A subsequent FCC ruling in fact specifically exempted mobile satellite carriers.

72 THE INTERNET'S COMING OF AGE These definitions immediately give rise to the question of whether IP telephony providers or ISPs could fall under common carrier provisions. Resolution of this sort of question will depend on how existing definitions are applied to new technologies and services and, more fundamentally, on whether it is deemed appropriate to apply existing definitions and rules to these newly emerging services. For example, the act's definition of telecommunications could be read to say that if the input is voice and the output is intended to be the same voice, then regardless of the details of how the voice signal is processed internally, voice communications carried over IP would also be considered telecommunications. One answer to the common carrier question was provided by the FCC in its August 31, 1999, rulingl8 on the Communications Assistance for Law Enforcement Act (CALEA) requirements (see Box 4.1~.19 CALEA required telecommunications carriers to provide assistance for law en- forcement in carrying out wiretaps. In its ruling, the FCC mandated that cable television and IP services inasmuch as they provide telecommuni- cations services and are a telecommunications carrier and thus a common carrier, at least for the purpose of CALEA are subject to CALEA. The FCC has given IP carriers until September 30, 2001, to comply.20 This ruling opens the door for a broader interpretation and acceptance of IP telephony as common carriage. In addition to suggesting future directions with respect to the com- mon carriage status of IP telephony, the effort to apply CALEA in this area also suggests the sorts of societal expectations that surround tele- phony. The advent of IP telephony raises the questions of whether and how these expectations will be extended to the new technologies and networks. One such expectation is the use of telephony for public safety. Conventional wireline telephones provide enhanced 911 service, which automatically provides public safety organizations with the address of a 911 caller. Cellular telephone service providers are being required to provide analogous information for 911 calls that is, precise information on the location of the caller. 18Federal Communications Commission (FCC). 1999. Second Report and Order in the Mat- ter of Communications Assistancefor Law Enforcement Act. CC Docket No. 97-213, FCC 99-229. Washington, D.C.: FCC, August 31. Available online at <http://www.fcc.gov/Bureaus/ Common_Carrier/Orders/1999/fcc99229.txt>. 19CALEA, 47 USC 1001, PL 103414. 20The question of whether the IETF should participate in the design or modification of Internet protocols to accommodate requests for law enforcement access to Internet traffic was discussed with much fanfare in the November 1999 plenary meeting of the IETF. Pre- dictably, there were public statements critical of the notion. There were also statements supporting the proposition, citing, for example, vendor anticipation of demand for such capabilities in at least some segments of their worldwide markets.

TELEPHONY AS A CASE STUDY 173 Robustness and quality are also expected of telephony services, mani- fested in state and federal regulatory attention to carrier performance. The relative ease with which the Internet can offer voice services means that many businesses will be in a position to offer voice services, probably over a broad spectrum of service quality and reliability, from robust and high quality to fragile, unreliable, and low quality. In addition, the ability to overlay telephony on top of existing IP networks and the emergence of

74 THE INTERNET'S COMING OF AGE mixed PSTN and IP network environments can be expected to raise new questions about which parties are responsible for service quality. Busi- ness imperatives and customer demands can be expected to address many of these concerns, but consumers will still need to be clear about the differences between service offerings (e.g., from a consumer protection standpoint) and their acceptability from a performance standpoint (e.g., to meet public safety requirements). There are also particular economic arrangements in the form of uni- versal service charges and fees attached to telephony aimed at increasing access to telephone service. Today, these are imposed only on conven- tional telephony service. There are two views on this matter: Some would like to see a level playing field across technologies and providers and others are concerned about the potential for declining revenue from these fees. (A related question is what form universal service takes with respect to Internet service; see Chapter 5 for a discussion of the options.) Another set of issues arises from inconsistencies between the new technologies and architectures and the assumptions about architecture that are embodied in the existing regulatory regime. Three such issues are as follows: · In Internet telephony, there are no meaningful distinctions between local and interexchange carriers. The existing regulatory regime, in which local and long-distance services are separated and in which customers select a particular long-distance carrier to carry calls outside their local area, does not map onto Internet telephony because the architectures of the two networks are so different. In the PSTN, it is possible and indeed neces- sary to specify the long-distance carrier over which a call is to be switched. In contrast, the Internet architecture and protocols were not designed to provide carrier selection capabilities like those in the PSTN.2~ Today, the only way in which the long-distance segment of a call could be separated from the local segment would be a hand-off to voice services over a PSN interexchange carrier. An insistence that local and long- distance carriers be distinct entities could only be complied with by estab- lishing requirements that run counter to the Internet's basic architecture. · Owing to the separability of data transport and application service func- tions, meeting some regulatory requirements that have been established for tele- phony will be difficult or require different implementations. For example, it is possible to construct a telephony service where the application servers concern themselves only with providing directory services and call setup However, under current regulations incumbent local exchanges that provide Internet service must offer their subscribers a choice of long-distance IF network providers.

TELEPHONY AS A CASE STUDY 175 while the communications associated with the call depend only on the public Internet. If a wiretap is ordered for a customer of an ISP, the application service provider will have no means of allowing law enforce- ment to access the content of the calls (although it could provide informa- tion on the identity of the calling parties). The wiretap might require a different technical approach, such as one that relies on accessing data packets at their entry point to the Internet at the customer's ISP. · Attempts to force the Internet to fit the existing regulatory model could inhibit innovation by forcing modifications to the Internet's architecture. The current regulatory apparatus is, for example, not set up to respond to a world in which new telephony applications can be deployed simply by having a third party distribute some new software and set up a few serv- ers. Already, a number of telephony providers exist as overlays to the public Internet, and it is reasonable to suppose that these will grow in number and market share. One question these providers raise is whom to hold responsible for meeting such mandates as provision of 911 service or compliance with CALEA. There are two general ways in which this could be done. The parties offering themselves as telephony providers could be designated as the ones responsible for meeting the requirements. Or, the requirements could be imposed on the Internet service providers. The second alternative, while it might prove attractive because it makes the ISPs responsible for determining who is and who is not providing voice telephony, could have profound implications for the Internet. If ISPs were required to ensure that voice traffic carried over their networks falls under a particular set of rules, it would become necessary for them to examine all the traffic over their network to screen out "unacceptable" voice communications. Because telephony providers are free, in keeping with the Internet's edge-based innovation model, to design their own protocols for telephony, it can be impossible to reliably identify which traffic is associated with telephony applications. Compliance with screen- ing requirements might, in the end, make it necessary for ISPs to only allow traffic of known, acceptable types to be transmitted, an outcome that runs counter to the hourglass transparency of the Internet. This line of reasoning is discussed in greater detail in Chapter 3. LOOKING FORWARD: THE INTERNET AND OTHER INDUSTRY SECTORS The preceding sections illuminate, in the context of telephony, issues of regulatory inconsistency, protection of incumbent companies, and re- structuring of the service as perceived by the consumer. Technological developments and deployment of the first generations of new services

176 THE INTERNET'S COMING OF AGE make it apparent that the next decade or so will see similar collisions between Internet-based businesses and other large industry sectors. Looking beyond telephony, some of the easiest collisions to foresee today are Internet-based distribution of music, which is exemplified by the collision between the mp3 encoding protocol and traditional channels of music distribution; the more general transmission of radio-like audio content over the Internet; and, eventually, Internet-based television-like services, which would collide with broadcasting. These applications are not visions of the distant future. Internet-based music distribution is a rapidly growing service, and while little entertainment video is transmit- ted over the Internet, specialized applications such as continuing educa- tion and training video are run over the Internet today. Many radio stations are sending their content over the Internet simultaneously with their over-the-airwaves broadcasts. As industry groups such as tradi- tional network broadcasters, retail CD distribution chains, advertising marketers, and large content-creation organizations find their markets being nibbled at by Internet alternatives, they can be expected to react. The result may be large transformations and dislocations in existing mar- kets; the result may also be stressful for the Internet, its design principles, and its service providers. One predictable trend is the use of existing regulation by incumbents to protect a legacy industry position. For example, in radio and television, there are rules (about, for example, public access or political access) that presume that space on the broadcast spectrum is scarce. Since capacity on the Internet is not scarce and transmission does not require a federal license, anyone can, in principle, generate and distribute content, and it is not clear that there is a rationale for applying these rules to the Internet. However, much as one comes across similar arguments with respect to telephony, one can easily imagine calls for these rules to be imposed on some forms of Internet content providers. (The argument would be that it is unfair to impose different burdens on producers of similar sorts of content that happen only to use different forms of distribution.) Another area where existing practices and the capabilities afforded by the Internet collide is copyright, where the assumptions underlying the current copy- right regime are being stressed by the ability to make perfect copies of digital works as well as by the ease with which they can be distributed over the Internet. The technological, legal, economic, and social factors surrounding copyright are too complex to analyze here; for more discus- sion, see a recent CSTB study of these issues.22 22Computer Science and Telecommunications Board, National Research Council. 2000. The Digital Dilemma. Washington, D.C.: National Academy Press.

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What most of us know as "the Internet" is actually a set of largely autonomous, loosely coordinated communication networks. As the influence of the Internet continues to grow, understanding its real nature is imperative to acting on a wide range of policy issues.

This timely new book explains basic design choices that underlie the Internet's success, identifies key trends in the evolution of the Internet, evaluates current and prospective technical, operational, and management challenges, and explores the resulting implications for decision makers. The committee-composed of distinguished leaders from both the corporate and academic community-makes recommendations aimed at policy makers, industry, and researchers, going on to discuss a variety of issues:

  • How the Internet's constituent parts are interlinked, and how economic and technical factors make maintaining the Internet's seamless appearance complicated.
  • How the Internet faces scaling challenges as it grows to meet the demands of users in the future.
  • Tensions inherent between open innovation on the Internet and the ability of innovators to capture the commercial value of their breakthroughs.
  • Regulatory issues posed by the Internet's entry into other sectors, such as telephony.
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