title: Billing for Voice over IP? Not that easy!

By: Scott Bradner

It is quite reasonable for a phone company to want to make a buck off of IP-based services but it is not necessarily going to be easy to do. The tried and true techniques from the phone world just may not fit all that well.

The first article in the August "Business Communications Review (BCR)", an old-line "phone-think" publication, is about "Call Accounting an Billing for IP Services." The lead in for the article predicts "Expect higher prices and more complicated bills when Window XP triggers new VOIP services and service providers roll out new IP billing systems." Sweet music to the ears of traditional telecommunications service providers indeed, too bad the tune will not be as pretty in the real world.

A basic assumption in the article is that voice over IP automatically means that a service provider can send bigger bills to their customers. But that assumption is fundamentally flawed.

If I'm sitting at a Windows XP machine at Harvard using the new VoIP applications I could be making one of two types of calls. I could be calling someone else on the Internet or I could be calling someone on the regular telephone system. The latter is much more likely since there are over a billion non-IP phones and only a few IP-phones. But in both cases there is no reason that my local ISP would know I'm doing anything with VoIP.

If I'm calling someone else on the Internet my PC can connect directly to their PC or their local proxy and all the ISP sees is packets. I would not expect any QoS issues on my end since the local net is not all that loaded and Harvard has a big connection to its ISP. There may be QoS issues on the other end but there is not much I, or the local ISP, can do about that any time soon.

If I'm calling someone on the phone network I need to go through an Internet-to-phone network gateway. But there is no requirement that the gateway be operated by the local ISP, or even an ISP at all. It could be operated by a company half way around the world. Again, no local ISP involvement and no opportunity to add fees to the bill. The company operating the gateway can send me a bill but not the ISP unless I'm using their gateway.

Only if the local ISP provides gateway or other VoIP services that are better or lower cost than my other options will I use them. This is the challenge they will have to meet if they expect to send those bigger bills.

disclaimer: "Harvard" and "better" fit together but "Harvard" and "lower cost"? In any case the above opinion is mine.