Internet telephony (jokingly pronounced tel-laugh¢ -phony) refers to computer programs which allow you to talk with someone through your Internet connection, just like you were on the phone. Well, almost. Okay, not even almost; maybe like talking on ham radio, where your voice is often garbled, and you learn to say "Say again?" a lot.

Like all multimedia programs, these "nettalk" programs work best on a fast computer with a direct connection to the Internet; either a "T" connection, one supplied by your TV cable provider, or the Integrated Services Digital Network (ISDN) service from your local telephone company. If you’re on a dial-up connection, even with a fast modem, you can forget about Internet telephony for the present.

This technology is barely out of the woodshed, and at this stage of its development it has a very limited market. However, this didn’t stop a trade group representing over a hundred long-distance telephone companies from petitioning the Federal Communications Commission (FCC) last year, asking them to outlaw this technology, and ordering the manufacturers of the software to stop selling it, under penalty of law. The full text of the ACTA Internet Phone Petition is available online.

This is an example of corporate greed at work. ACTA claims to represent over 100 long-distance providers, but it is interesting to note that the major players, AT&T, MCI and Sprint, did not join them in supporting the petition.

The following report appeared on iWorld’s Netday News Online, on March 8, 1996:

FCC Petitioned Over Net Phone Calls

The America’s Carriers Telecommunication Association (ACTA) has filed a petition with the Federal Communications Commission (FCC) in an attempt to prevent companies from selling products that enable people to use the Internet for long distance [telephone] services.

The ACTA, a trade association of long distance carriers, claims that the FCC should exercise jurisdiction over the use of Net for what it feels is unregulated interstate and international telecommunications services.

The organization argues that users can bypass more traditional means of getting long distance service thanks to companies that are producing software programs with hardware options that enable computers to transmit voice conversations.

This new "misuse" of the Net allows users to avoid long distance charges and the resulting traffic may affect the Internet’s ability to move the additional amounts of data, according to the trade group.

The ACTA believes that advancements in technology may have surpassed the government’s ability to keep it under check, and as a result, it has petitioned the FCC in an effort to gain a clear definition of what kind of communications are indeed permissible over the Net.

The trade association points out that long distance and international carriers require approval by the FCC for operation and are also required to file tariffs before the FCC and state public service commissions.

Soon after the petition was announced, a Voice-On-the-Net (VON) Coalition was formed on the Internet which urged members to testify before the FCC in an effort to preserve VON rights for users. VON was founded by Jeff Pulver, who was described in NetGuide (July 1996) as follows:

Jeff Pulver is the David who took on Goliath in the form of long-distance telephone companies. As publisher of NetWatch, an online publication that chronicles the progress of telephone-like voice transmissions on the net, Pulver sprang into action and founded Voice on the Net, a coalition representing the collective voice of Internet telephony software companies. Pulver started the organization after several long-distance phone companies asked the FCC in March [1996] to make net telephony illegal unless it conforms to long-distance regulations. It would be a first, as the FCC has never regulated software before.

As a result of VON’s efforts, the FCC set up an email address to facilitate comments on the ACTA petition, and extended the deadline for comments to June 8, 1996. Some of the comments were quite interesting, as you can imagine.

Eric S. Raymond summed it up this way:

[At present] "…the FCC has not acted on RM 8775. Looks like you lose, ACTA scum! :-)

Mr. Raymond’s "Open Letter to the FCC Commissioners" is much more eloquent than his closing remarks, although the vernacular seems appropriate, in this case.

On May 8, 1996, Netscape Communications Corporation, joined by Voxware, Inc. and InSoft, Inc., formally asked the Federal Communications Commission to dismiss the ACTA petition. If you don’t have the time (or the inclination) to read several pages of lawyerspeak, here’s a summary of what Netscape, et al asked the FCC to do about ACTA’s petition:

Dismiss the ACTA Petition and;

(1) forebear from Title II regulation of Internet telecommunications services

(2) preempt all state regulation of the Internet, and

(3) promote the Internet and US-based Internet entities in the international communications regulatory environment.

On June 28, 1996, FCC Chairman Reed Hundt explained his thoughts regarding ACTA’s petition, in a speech that was actually delivered by his Chief of Staff, Blair Levin. Remember, this is not a formal FCC ruling on the petition, just an opinion expressed by the Chairman of the commission. Several members would have to agree in order to formally respond to the petition by issuing a ruling, either to implement, dismiss or take other formal action on the petition. However, the chairman’s opinion does carry some weight, as you might imagine. Here is the part of his speech regarding the ACTA petition:

The FCC has received a petition from the America’s Carriers’ Telecommunications Association asking that we restrict the sale of "Internet phone" software, because the providers of that software do not comply with the rules that apply to telecommunications.

I am strongly inclined to believe that the right answer at this time is not to place restrictions on software providers, or to subject Internet telephony to the same rules that apply to conventional circuit-switched voice carriers. On the Internet, voice traffic is just a particular kind of data, and imposing traditional regulatory divisions on that data is both counterproductive and futile.

More importantly, we shouldn’t be looking for ways to subject new technologies to old rules. Instead, we should be trying to fix the old rules so that if those new technologies really are better, they will flourish in the marketplace.

Internet telephony may well become, in time, a competitive alternative to traditional circuit-switched voice telephony. After all, as the growth of the cellular industry demonstrates, people are willing to give up a significant level of quality in exchange for other benefits. In the cellular case the benefit is the ability to make a call from virtually anywhere; in the case of Internet telephony the benefit is a vastly lower price. This is especially true, for example, for international telephone calls.

Should we be concerned that the economics of pricing on the Internet won’t sustain the development of the Internet?

With the number of users and host computers connected to the Internet roughly doubling each year, and traffic on the Internet increasing at an even greater rate, the potential for congestion is increasing rapidly. Moreover, at a certain point Internet routers are simply unable to handle the load and will "drop" packets, causing network "brownouts." Such brownouts are already occurring.

The increasing levels of Internet use are also beginning to affect the telephone network. Internet usage is placing unexpected demands on local exchange carriers’ switches, to the point that switch congestion is threatening service quality for voice users.

This might not be such a big problem if we had an all-digital phone network that was based on a packet-routing multimedia technology such as ATM. But we don’t, yet. So the hard question is: if there are costs for upgrading the network to support the explosion of Internet and other data usage, who pays those costs?

The FCC decided in the early 1980s that enhanced service providers, which include Internet service providers, should not be subject to the interstate access charges that long-distance carriers pay to local phone companies for originating and terminating calls. ISPs are therefore treated as "end users" and can purchase lines that have no per-minute usage-based charge for receiving calls from their customers. The phone companies argue that the absence of usage charges means that ISPs do not provide the revenue to cover the additional costs they impose on the network.

I don’t know what the full answer is to this problem. But I’m inclined to believe our best guidance is to let technology, competition, and access reform make the problem go away. We are working to open markets so that these forces can operate most effectively.

However, the dragon of corporate greed was not so easily slain. In a subsequent letter to the FCC, the chief attorney for ACTA (paid for out of your telephone bill) continued to argue that the government should pass a law to prevent anyone from giving away something that they have been selling. That’s quite a political concept, isn’t it?

In the letter, ACTA General Counsel Charles H. Helein noted that even though FCC Chairman Reed Hundt recently admitted that higher levels of Internet use are harming the traditional phone infrastructure, the FCC continues to signal a reluctance to undertake prompt action. Here’s a quote from the ACTA lawyer’s letter:

Whistling by the cemetery, Commissioner Hundt suggests that technology, competition and access charge reform will "make the problem go away." If this were true, the Chairman seems to have written the need for his agency’s involvement out of the picture. If there is no need for the Commission’s involvement in such issues as raised by Internet telephony, what is the purpose of having an "expert" body to deal with such far-reaching issues?

...the [FCC] cannot and must not wait until Internet telephony produces a more palpable impact on the nation’s traditional communications infrastructure. As developments in software and technology continue to occur ever more rapidly, a real danger to even the largest carriers in today’s market continues to grow, and with it a danger for the vast majority of the telephone using public and for Internet users themselves.

However, Chairman Hundt had made his position quite clear, and the FCC has taken no formal action on ACTA’s petition, allowing it to die of natural causes. Chairman Hundt’s more recent speech in support of the Internet is available online.

If you don’t have time to read the whole speech, take comfort in the fact that the government bureaucracy we love to hate has stood up to the dragon of corporate greed, in this case. Chairman Hundt’s remarks left little hope for the phone companies’ chances of preventing Internet telephony by federal decree. Hundt called for an Internet Freedom Act that would be "blessedly short" and have as its key components a prohibition on regulation of Internet content, the authority for the FCC to order states not to regulate digital packet network services, an assurance that data networks will remain free from subsidy, clear FCC authority to open all communications bottlenecks to competition, and a single court of appeals for judicial review of essential FCC decisions promoting telecommunications competition.

So what was all the fuss about? Still not many people are talking on the Internet, because it wasn’t designed for that! If you read my column last month (WWWiz, October 1997, "A Brief History of the Internet"), you know that the delay which occurs in packet-switched data transmission works fine for Web data or email, which can be reassembled when it gets to your computer, but it makes your voice sound funny, if not unintelligible.

In the August/September issue of Technology Review, a publication from the Massachusetts Institute of Technology (MIT), there was an article entitled "Reach Out and Net Someone." Unfortunately, TR did not select this article for online display in their archives, so you won’t be able to read it unless you have a paper copy of TR. However, it contained some interesting comments on the present state of Internet telephony. MIT’s Research Program on Communications Policy is addressing this issue in terms of its future effect on the Internet, but it points out that Internet telephony is currently "not ready for prime time."

Their research found Internet telephone so choppy and unreliable that both parties became frustrated. One of the participants, Robert Howe, a professor of mechanical engineering at Harvard, said, "The delays threw off the cues you normally rely on in a conversation." It was likened to the delay one experiences on overseas telephone calls, but "ten times worse."

Lee McKnight, associate director of the research program, explains it this way: "Right now, [Internet telephony offers] no quality guarantees. That’s one reason why it’s so cheap..."

Nothing worthwhile is free, of course; even the air we breathe was purchased at the price of foregoing cheap fossil fuels for more costly alternatives. One of the solutions MIT envisions is different classes of Internet service, so that the cost of a text-only connection would be less than a wide-bandwidth connection suitable for video or telephony.

In my opinion, the practical solution will be the combination of your telephone, television and Internet connection (and additional interactive channels not yet conceived) from one cable, with either a flat rate or a pay-per-use plan. Hopefully, there will be free-market competition to keep the price down.

For the present, don’t give up your long-distance provider. It’s still the best way to reach out and contact someone, and the rates are relatively lower today, thanks to free-market competition.