Blocking VOIP

Telecommunication carriers in the Caribbean such as Digicel and LIME have very recently decided to start blocking selected OTT(Over-The-Top) VOIP(Voice Over IP) applications such as Viber and Nimbuzz from freely operating on their network. So far restrictions have been put in place in Haiti and Jamaica with other countries likely to be added to the list if the trend continues. The arguments from the operators are two fold, one based in economics and the second legal. My guess would be that this is just the start and the other likely app targets for blocking would be Whatsapp and its ilk as it threatens to do and indeed is already doing the same to SMS as outlined by McKinsey. In the future if this action is left unchallenged any other application for that matter that can act as a substitute to the core mobile network functions of calling and texting using only a phone number or the technical term MSISDN(Mobile Subscriber Integrated Services Digital Network(ISDN) Number) will likely face similar interference and network access revocation.

The economic justification made by the operators of the mobile networks essentially accuses the creators behind these applications of freeloading because they are able to benefit by running on the network without paying for the privilege. Basically in its pure form this line of reasoning doesn't make any sense. While I acknowledge that it is true that the application vendors do not pay the operators the whole economic model of the internet is built on the premise of network neutrality and hence it is not expected that the operators should be paid for carrying any specific traffic as all traffic is expected to be treated the same and routed equally with no preferential treatment. VOIP is therefore just another packet made up of bits floating on the network. In fact it is this network effect i.e the plethora of easily accessible services over the network that increases the value of the network in the first place. Without these very services the data plans being sold would be worthless as they would add little in value added outside of the basic calling and texting function already provided by the existing radio access and signal networks.

Currently OTT applications are blamed for causing congestion and quality issues for the network operators and this probably is indeed true but it may also highlight the same operators' lack of investment in their own infrastructure juxtaposed against their aggressive market push to increase the number of subscribers. This disproportionate increase in subscribers versus under investment in the underlying network would mean that they caused the problem on themselves. Ofcourse, this is a simplistic perspective and there are fair agruments both ways. In reality the intersection and interaction between the network and the subscribers is complex. It is not always possible to provide reasonable justification that would stand up to financial scrutiny to forecast the need for hardware investment well in advance of the subscribers actually arriving and using the services. However, it is this overuse of the services which will cause quality issues such as network crashes and or call drops. In any event it takes man hours to rollout these system upgrade so there may always be this quality gap periodically.

No one would benefit from the networks over investing and building up debt and running themselves into bankruptcy by purchasing infrastructure before it is needed but neither are consumers benefitting when the value of the network is eroded by selectively blocking applications while prices are arbitrary inflated for servies that could be provided more cheaply. What the networks are advocating is some sort of peering agreements to be in place between themselves and the application vendors that would share the profits. This is similar to how networks currently share arrangements for call and SMS traffic with their counterparts overseas. Traffic is generally allowed freely without restriction but over a certain volume both parties pay each other for termination rights. Given, that the networks are impacted this may be reasonable and within their rights as operators to now apply these same terms to the data/internet services being provided. This would be similar to the battles being raged in the USA between Netflix and the American network operators Comcast, Verizon, At&T, etc to name a few.

What is being advocated is arrangements similar to here, and here. My personal opinion on this point is that networks should prove that they are being unfairly impacted by these particular applications versus there simply being operational and quality issues on the network end. We cannot take their word for it and providing simple usage percentages would not suffice either as proof as they would need to demonstrate a clear correlation between adverse network performance and a particular application service provider. Besides, if the providers of these applications agree to pay and the network is not correspondingly upgraded wouldn't service still be bad? Also they need to be transparent about at which point the traffic volume would trigger the need for a peering arrangement and it must the be same requirement for all vendors. 50%, 20%, 10% at what point does a application vendor need to pay up? Some application vendors should not get pricing discounts in a non transparent manner. The playing field needs to be level. What we would not want is unfair competition and censorship for profit which could be just as bad as censorship and control for political gain.

Now for the second argument which relies on the legal framework. I officially must state that I have no legal training so I am not an expert on this one by any means. While I feel that the arguments are dubious at best and cynical because they are only now being selectively applied for a profit motive there may indeed be some basis for debate. This debate should be tempered by the fact that laws are by design or nature whichever you prefer always behind technological change. Laws are reactionary by nature. They are created after changes happen in the environment and rarely preempt them. Nevertheless, in this argument I think that they (the operators) will actually find simpathy with the legislature on this point due only to the fact that the Government in Jamaica and I assume the rest of the region make significant revenue by levying taxes on call termination especially to overseas numbers. Given, the current economic bind and general lack of financial resources the governments are keen to protect sources of taxation and it is likely they will not interfere solely on this basis alone. My reasoning is that if this were taken to the court the operators would use two things to defend themselves. The first is the clause in the signup contract that allows them the right to block access to anything on the network for whatever reason they deem fit with very few limitations and the second would be that because the services use numbers and do not require signup they are in effect networks just like the mobile networks but instead they do not have a license. These virtual networks would be robbing the country of tax revenue and allowing them on the network breaks the law and facilitates tax evasion which as corporate citizens the network operators could surely not facilitate as it would be akin to facilitating a crime for which they themselves would be liable :).

What do you think? Should this be allowed or should people protest and demand that the regulators intervene to protect their interest? Especially because, in the Caribbean region, people only have one or two networks to chose from and increasingly all the network owners seem to favour stopping these kinds of new innovation in their tracks early to protect against any threats to their sources of income.