Science and technology | Difference engine

Freeing up the telephone

Long-distance telephone calls cost far too much

|LOS ANGELES


SEVERAL times a week, your correspondent makes a video call from California to relatives in Japan. He makes a similar number to friends and family in Britain. As, like himself, the recipients all have the Skype client software loaded on their mobile phones, tablets or computers, the lengthy video chats cost nothing. On the rare occasions he has to call an overseas house phone, Skype charges him 2.3 cents a minute.

This is a remarkable deal. Were he to make the same overseas calls from a conventional telephone, he would have to pay $3.10 a minute, plus a $4.95 monthly service charge. Making only 20 international telephone calls a month, each lasting just ten minutes, would add $620 to his monthly telephone bill. That would be an unimaginable luxury.

How come people can make countless calls to places half way around the world for free with services like Skype, yet have to pay hundreds of dollars to do the same using a telephone? The short answer is that one uses the internet to transmit calls, while the other relies on the public-switched telephone network (PSTN) to do the job. A more nuanced answer is that the two networks have evolved so differently that they are difficult to compare.

To make a phone call over the internet, the analogue sounds uttered are converted into digital form and chopped into packets of data, each around 1,000 to 1,500 bytes long. Each packet contains the address where it is heading and details of how it fits into the chain of packets that comprise the complete message. As the packets are transmitted, each takes the optimal route available as it passes through various routing computers on the way. At the other end, a computer collects the jumble of packets as they arrive via different routes, strings them together in the correct order, and then converts the resultant stream of zeros and ones back into the analogue voice message.

Some brave souls started using the internet to make computer-to-computer phone calls back in the dial-up days of the 1990s. The technicalities were daunting; the voice quality was awful; connections were plagued by constant hiccups in transmission; and calls were frequently dropped for no apparent reason. However, the falling cost of broadband connections—thanks to ever cheaper and more powerful processing chips—made internet telephony more widely available and user friendly.

Skype, which was developed in eastern Europe, was one of the first of the new breed of VoIP (Voice over Internet Protocol) telephone services to arrive. Its initial release, in 2003, provided a way of talking to another user for nothing. In due course, Skype added video to its voice and messaging service—and never looked back. Today, at any one moment, over 70m people around the globe are making Skype calls—the vast majority of them from one country to another. More than 500m people have Skype accounts. This free internet-based voice, video and messaging service accounts for 40% of all international telephone traffic these days.

In response, phone companies the world over have been forced to make a big, bold leap into the present. Starting with the break-up of America’s trusty old AT&T monopoly (“Ma Bell”) during the 1980s, the piecemeal deregulation of telephone networks everywhere has made them all more competitive. Even so, they remain on the defensive, as VoIP continues to snaffle more and more of their long-haul business.

Once upon a time, the high cost of making long-distance telephone calls could be justified by the amount of work involved. Before direct dialing was introduced in the 1950s, all long-distance calls were set up manually by operators who sat in front of switchboards in telephone exchanges (called central offices in America). In 1915, the first coast-to-coast call made in the United States required five operators along the 3,400-mile (5,500km) route to patch the connection together. The link, from New York to San Francisco, took 23 minutes to establish.

On receiving the name, number and location of the person being called, a local operator would open a connection to a long-distance exchange, where a second operator would patch the call through to a long-distance exchange at the far end. There, another operator would open a connection to a local exchange serving the recipient’s area, where yet another operator would then contact the person in question. The daisy chain of separate links would be torn down when the two people hung up.

The labour costs involved were not insignificant. Keeping records of the duration of the calls for billing purposes created other headaches. Much of that began to change when the manual switchboards in local exchanges were replaced by mechanical switches. While local calls could then be made directly by subscribers without the need for human intervention, long-distance calls (initiated usually by dialing “0”) still needed the help of operators.

The arrival of electronic telephone switches in the 1950s eliminated the need for long-distance operators as well. The first direct-dial call made from coast to coast in America occurred in 1951, taking only seconds to establish. Though the first international direct-dial call, from London to Paris, happened in 1963, operators were still required for transatlantic calls well into the 1970s. Today, long-distance operators have gone the way of the copper wires that once carried telephone calls across the country.

Several things happen when someone dials a long-distance number nowadays. The computerised switch in the local exchange interrogates a database containing all the local phone numbers connected to it, along with the code for the long-distance carrier each subscriber has signed up for. The local switch passes the call to the chosen carrier, which delivers it to the local exchange at the other end, which then completes the call. This all happens automatically within seconds.

On the surface, that may seem little more than a computerised version of the former long-distance system relying on telephone operators and switchboards. But the modern version of PSTN is different in two important respects. First, like VoIP, the analogue voice signals are digitised before being transmitted. Second, the copper wires in long-distance links that once carried just a single two-way conversation have mostly been replaced by fibre-optic cables that transport thousands of simultaneous voice messages. As a result, the cost of provisioning long-distance calls has plummeted.

In many ways, long-distance telephone networks have begun to look remarkably like internet services such as Skype, Vonage, RingCentral and Jive. While VoIP still cannot quite match the quality of a fixed telephone line with its “five nines” (ie, 99.999%) reliability, it is now at least as good as most mobile-phone services—and it is mobiles, not landlines, that are the benchmark today. So, how come telephone companies continue to offer long-distance telephone services that are only marginally better that VoIP in terms of quality, yet are vastly more expensive?

Good question. To be fair, long-distance telephone rates have come down steadily over the years, thanks as much to technology as to competition. Also, carriers are still paying for all the computerised switching and fibre-optic infrastructure they have had to install. Then there are the added costs of having to connect with foreign telephone networks, which (unlike the internet) often use different standards. Most of all, however, the telephone companies are still paying for the precedent they set years ago by offering dial-up access to the internet for a nominal monthly fee.

To help telephone calls travel long distances, carriers long ago learned to filter out all the frequencies in the human voice below 400 hertz (cycles per second) as well as those above 3,400 Hz. Doing so, however, left a huge chunk of a telephone line’s bandwidth unused. Back in the 1990s, telephone companies started to capitalise on this empty space. Soon, the most popular—often the only—way to access the internet was via a modem and an RJ11 cable plugged into a telephone socket in the wall. The connection to the telephone company, usually an asymmetric digital subscriber line (ADSL), used the large swath of frequencies in the upper part of the line’s bandwidth to carry digital signals to and from the modem, while the small chunk of lower frequencies was reserved for normal telephone calls.

Being essentially free, telephone companies could offer internet access that piggybacked on exisitng telephone lines to existing customers for a small additional fee—and make large windfall profits in the process. Thus, a tradition was created: henceforth, internet access would be based on a nominal monthly charge and usage would go unmetered. Only recently, with the introduction of data caps and tiered broadband pricing, has this business model begun to change.

There was a downside, however, to this internet bonanza. Dial-up access became so popular that telephone companies were forced eventually to put the brakes on the business, in order to preserve the stability of their long-distance telephone networks. Doing so, however, opened the door for rivals, especially cable-television operators. Thanks to their big, fat coaxial connections already wired into millions of homes, the cable companies quickly dominated the lucrative internet-access business. Ever since, the phone companies, with their slower ADSL connections, have continued to lose market share, while their network overheads have remained stubbornly high. Inevitably, the high cost of providing internet access to a dwindling number of ADSL users has had to be borne by the only other telephone customers not paying flat rates—ie, those who make international and certain other long-distance calls.

As is to be expected, the competitive forces the carriers face are taking their toll. Fixed-line operators everywhere are resigned to the loss of not just the internet-access market, but also the long-distance telephone business. Within the next few years, VoIP-based video chat and conferencing is set to become the dominant mode of communication. All the phone companies can do in the meantime is milk their long-distance services until they have to turn off the lights and shut the door.

That day is coming sooner than many might realise. A convergence is underway that spells the end of the telephone-like “single service over a dedicated network” and heralds the beginning of a “many services over a single network” approach to delivering information to the public. Expect to see video calling, social networking, content streaming and internet television, along with the inevitable merging of fixed and mobile telephony, all become part of a brave new communications world—with a single ultra-broadband network delivering everything to everyone, everywhere, all the time.

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