Interesting patterns are emerging in the telecom world as a result of changes in the use of voice on the Internet. The term currently used is Voice Over Internet Protocol: VOIP. I won't go into the technicalities (even if I could).
Right now anyone can download software that allows good voice connection with anyone else who has the same software. You also need a headset connected to the computer plus a broadband connection. Yahoo offers the service on its site. Most of these program-to-program voice on the Internet services are free.
You can also pay for a device that connects your phone to your broadband line. With the device you can call any other standard phone. Such devices and the service plans that go with them are about to become standard consumer appliances. Vonage offers the service at $35 a month and AT&T is about to offer it too. This service offers unlimited global calling for a fixed monthly fee.
In the past year, the quality of voice on the Internet has significantly improved. Because it is free, globally, the majority of major corporations are already using it internally to replace the use of the standard phone connections.
There is emerging a ferocious political battle on this issue before the national regulatory agency, the FCC, and before many state regulators. There are many sides in this battle. Again, the details and positions are too complex to summarize here.
The two main poles of the fight are over (1) whether there should be regulation at all and (2) over fees that are now paid for access to local phone lines and access fees for connection to national and international infrastructures.
Part of the political complexity arises because there are no pure corporate players. Every company has some combination of local lines, wireless services and infrastructure connections. There are also companies, such a Microsoft, that has the Xbox. Xbox allows for player-to -player talking over the Internet. No phone lines, no wireless connections.
The issue of regulation or no regulation arises because cable companies provide broadband service but aren't under federal or state regulation. Non-cable companies want the same freedom from regulation.
The other issue is that local broadband radio, such as WiFi, are being given away free (in a few cities) and WiFi type services are another evolving unregulated way to get around local regulated phone connections.
The regulated telecom industry is watching consumers and businesses migrate away from traditional phone lines. The change is very rapid.
One strategy to deal with these changes, such as SBC’s, is to buy into every form of telecom. Another is AT&T’s, to focus on owning only the main infrastructure with few phone lines.
The political hot potato is Universal Service. Universal Service is a fee collected from end users (us) and is passed along in access fees from infrastructure users to local phone companies.
The recipients of the Universal Service fee are local phone companies who pretend to use it for serving rural small farmers, 911 services, schools and low income lifeline customers.
The dozen farm state senators continue demanding subsidies for the rural small farmers. Such rural small farmers hardly exist (less than a half million people) and we would all be better off giving them $10,000 each to buy satellite service.
The urban poor are also part of a largely imaginary subsidy system because the cost of providing them service from lines that have been in place for decades is well below the $7 a month that they currently pay.
This corporate telecom drama is going to play-out at the regulatory level over the rest of this year and in the market over the next five years.