The shakeout over last week’s government ruling, which mandated a 120-day deadline for E911 service among all interconnected VoIP providers, remains to be seen. But a number of the smallest players — and there are many given the US is home to some 11,000 VoIP companies — must decide between lower profit margins and charging their customers more.
E911 gives VoIP users the same 911 emergency service access as traditional phone users. VoIP market leader Vonage Holdings Corp has been in legal hot water in recent months for allegedly not clearly stating E911 was an opt-in service (it switched tact and made E911 an opt-out service within weeks of being slapped with lawsuits.)
Most VoIP sellers did not previously enable E911 to all their customers, but a number that already did had the E911 service cost built in to a flat monthly fee.
Yet others, such as enterprise VoIP company 8×8 Inc, charged extra for E911. When it launched its business VoIP service in June last year, 8×8 charged $3 per month per line for E911, which it halved to $1.50 in January. We were making too much money from it, said Bryan Martin, CEO of the Santa Clara, California-based company.
Now that it must provide E911 to all its customers within four months, Martin has not yet decided whether 8×8 will bump up its prices or suck up the extra cost.
8×8, like many of its counterparts, pays monthly taxes and fees to access E911 from providers (8×8 does business with Level 3 Communications Inc). The costs vary from line to line, he said, and are aggregated for a flat customer fee. Everything that we pay is related to the costs of accessing the ILEC’s selective routers, Martin said.
If incumbent local exchange carriers opened their E911 networks directly to VoIP providers, it would be absolutely cheaper to provide E911 to customers, he said.
The US Federal Communications Commission should have gone the whole way and forced the ILECs to open their E911 networks, Martin said.
Martin and others support the ruling for making VoIP safer, but agree the FCC rushed its decision. Rumors that the FCC would rule began just a month ago and were chiefly the reponse to lawsuits filed against Vonage, he said.
I’ve never seen a start-to-finish ruling as quickly as this one did, Martin said.
Jeff Pulver, CEO of pulver.com and Vonage cofounder, said by not prohibiting port blocking and compelling direct access to ILEC-controlled emergency response infrastructure, the FCC missed a golden opportunity to take one positive step to promote IP-based communications.
Pulver also founded, among other companies, Free World Dialup, a peer-to-peer VoIP firm, the kind that was not included in the FCC’s ruling.
As it stands, unaffiliated VoIP providers are left to the mercy or goodwill of their retail rivals — the telecom carriers that control access to the emergency response network, Pulver said. The FCC has given lip-service to its desire to prohibit port blocking and has been looking for a vehicle to do so. A proceeding fell into its lap, and the FCC abdicated its responsibility on this issue.
Late last week, in London at an unveiling of Vonage’s official UK launch, Vonage CEO Jeffrey Citron said his company would spend around $10m to comply with FCC deadline. A company spokesperson said earlier in the week it would be tens of millions of dollars.
One of the issues around compliance with the ruling, Citron said, is that in the US there are around 480 providers of 911 services, not all of whom have necessarily wanted to give Vonage access to their systems. The company eventually appealed to the FCC to mandate access.
Citron said the situation would be easier in other parts of the world. He cited the UK where BT handles about 85% of all emergency traffic. Vonage MD for its UK operation said the company is part of a working group set up by the country’s telecoms regulator Ofcom to explore more advanced emergency services. We could, for instance, track the IP numbers.
Pulver said that, as a result of the FCC’s decision, instead of focusing on the US marketplace, VoIP entrepreneurs might instead choose to focus their business energies on countries that have a more forward-looking IP-based communications strategy.
Then again, the pending FCC rulemaking may finally be the shot in the arm the VoIP entrepreneurs need to come forward with communication services that are not using VoIP as simple replacement or substitute services, but rather use IP technology to launch new communication services and applications — something much truer to the vision of what an IP-enabled platform promises and not just copycat products or services, he said.
Martin and other VoIP providers told ComputerWire they were disappointed with companies that didn’t adequately market their E911 services in the first place.
Now we’re all going to pay the price for that and ultimately consumers will pay the price, Martin said. I don’t feel bitter about it, I think the industry brought it on itself.
Still, with VoIP customers comprising just 1.5% of all lines in the country, the industry has a lot of room left for growth.
