Post-deregulation: Phone carrier interoperability

I title this piece, Post-deregulation: Phone carrier interoperability. But I could just as easily have called it Telco message units: Come back to haunt us

Alexander Graham Bell

Gave wings to voice

In the early days of telephone, when Alexander Graham Bell was still the major stakeholder in the Bell System, some towns had two or three phone companies. Often, subscribers to one company could not call subscribers of another company. In part, this could be attributed to market rivalry, but it was also a result of network architecture and rapid growth. Shortly after that famous first call (and the first public demonstration along a 2 mile wire strung between Kilby Street in Boston and Cambridge Massachusetts), competing entrepreneurs set up their own central exchanges in towns across the world. In the United States, there were 150,000 subscribers in just the first year! Each company had a wire connecting only their subscribers to Myrtle, a friendly voice situated at a central switchboard.*

Myrtle knows everyone in town

Myrtle knows everyone in town

Along with market expansion came regulation. Eventually, anyone in the world could call anyone else in the world—ultimately, without an operator. And consider this: All of this predates what we know as the Internet by 100 years! Of course, Myrtle’s skill was relegated to the junk heap of history. She become an anachronism, along with the elevator operator and that guy in the caboose who shovels coal. Who knows what job is next? With self-driving cars, you may be met at the airport by a driverless taxi.

I am the furthest thing from a socialist that you will encounter. But I also understand that even free markets must put their faith in regulated monopolies for vital services, or for services where a free-for-all cannot overcome a capital hump tied to real wold infrastructure or deployment. Our military, our schools and our town sanitation are all examples of regulated monopolies.

Telephone monopolies have ended. Now we are back to a free-for-all, but with certain rules that make interoperability possible. This wasn’t an easy process. In fact, it began 5 years prior to the famous AT&T breakup and US District Judge, Harold H. Greene. And the whole thing still echos with glitches. Today, we ruminate on one of the glitches…

I have partnered with free market visionary, Frank Urro, on several past ventures. Now, Frank hosts a popular Twitter feed and was founder the former Respect101 Blog. He sits on boards and is highly sought by companies ranging from power utilities to food retailers.

Frank Urro

Frank, was a charter user of Grand Central. Even before Vonage and Magic Jack, they offered a hybrid IP/POTS telephone forwarding service with an array of enhanced features that were dazzling in their time. In 2007, as Vonage piled on new subscribers and other IP services added foreign dialing at a small premium, Google purchased Grand Central and renamed it Google Voice. Google shook up the market by completely eliminating the basic fee—from $25/month to Zilch.

Frank was puzzled to find that he was blocked from some conference call services when attempting to join in from his Google Talk account. The account uses a standard 10 digit phone number (North American area code + 7 digits), so it seemed reasonable that he could call any other number—at least within North America. Until recently, it hadn’t occurred to him that the problem was related to his choice of carrier. In fact, the call was not intercepted with a 3-pitch error whistle, or fast-busy reorder tone. It simply failed to connect. But this morning, Frank wrote to me:

Researching why I cannot connect to many conference calls from my Google Voice account, I have finally discovered that Google blocks these calls by design and without explanation or feedback to the caller.

I am incredulous! The world is a twisted place. Play in the sandbox – or get buried.

Apparently, these free” conference systems make money by using numbers that demand an inter-carrier surcharge. Carriers servicing callers with free or unlimited calling plans must eat the B2B fee. Due to the surcharge and typical call length, many carriers will block these numbers.

A Wild Duck Opinion

Bell System LogoCarriers: Work it out! As I see it, the fault lies with the inbound conference call carrier…

I am all for deregulation and free market economics, but in the long run, I certainly hope that these same market forces prompt anyone distributing or servicing 10-digit, North American phone numbers to guarantee interoperability. Fragmentation (especially, without  an explanation to the caller)  constitutes one disastrous reality of post-deregulation telco.

Here are three other subtle cost-battles that interfere with telephone dialing interoperability:

  1. For at least a while (and perhaps even now), some pay phones could not place free calls to 800 numbers. That’s because the independent phone operator had no way to be compensated.
  2. Users of “Free” IP phone services such as Magic Jack and Vonage are now being harassed by their local 911 response center to pay $10, $20 or more per year for emergency services. I have not yet received a notice for my own home phone service (through Broadvoice.com), but my wife’s father uses Magic Jack. He has received two bills (passed along by Magic Jack). The wording from the regional 911 authority makes it clear that the fee is mandatory. Yet, the accompanying letter from Magic Jack hints that few subscribers pay the fee, and that their is no enforcement or penalty mechanism. (This seems suggest that the fee is optional). [Another letter]
  3. Some phone companies charge more for calling a mobile phone on a foreign carrier than they do a land line. That’s because many foreign carriers will only connect a mobile phone call that embeds payment authorization within the call set up.

I no longer consider this last issue to be a problem because:

  • Mobile phones in these countries are distinguished by area code or exchange. It’s a hassle—but callers or carriers could block or flag these calls as they are set up.
  • A concerned mobile callee (those that are overseas), can forward a home or office phone to their mobile phone and thereby pay the fee without bothering the caller.
  • Growth in smart phones and apps like Skype and IP call services will render this issue moot. More often these days, calls are simply passed along for free or billed to both subscribers as part of a data plan.

What’s the uptake on all this? None. Tag this “Ellery’s call to action”: If your free or fixed price phone service blocks calls to certain numbers, don’t blame them. After all, if we want voice calls to flow like water (or at least, like water used to be, before it started to cost more than your mortgage), then get your dander up over the recipient’s choice of a conference call provider. Tell him that someone is playing him as a stooge. By demanding an unorthodox or unreasonable inter-carrier tariff, they are using subscribers to act as a covert gang of marketers, but without compensation and without honor. Tell them that you favor businesses that do not push you or your carrier through a hidden free structure to exclude popular phone services, such as Google Talk.

Whether user-to-user or carrier-to-carrier, the era of charging for message units is over. It has been replaced by data plans or, at the least, by fixed-price pipes. Let’s drive a stake in this one, once and for all: Don’t let anyone charge you or your carrier for voice on a per-call, per minute basis. Ding Dong! The witch it dead!

_____________

* More about Myrtle: Manual Call Setup

In Myrtle’s day, there were no dials or buttons on phones. Callers cranked a hand-powered generator next to their phone, causing current to flow to a light or buzzer at a central switchboard. An ‘operator’ answered and began the process of call setup. The caller either asked to speak with a specific person, a business or simply explained the problem at hand. From a table console, Myrtle pulled a weighted cord that corresponded to the caller—and plugged it into any one of hundreds sockets on a vertical panel. The socket corresponded to the designated recipient. The operator pressed a button that caused another electric current to ring a bell-box next to the phone of the desired party. The call was answered and an analogue circuit was completed. In this manner, the caller was connected to the general store, the Sheriff or the local fire house. In big cities, the plug panel lined a 50 meter hall. Operators moved back and forth on roller skates.

The grandmother of a close friend was a long distance operator in the early days of telephony. She was stationed in Alaska at the head of the only undersea cable to China. It supported only two calls at a time from North America. For me, she was a source of endless awe and fascination.

Incidentally, it was not uncommon for Myrtle to listen in to conversations. In fact, callers came to expect it. I am a child of the digital revolution. Yet, as a youngster—long after direct-dial and even touch-tones—I recall that we could get the attention of a Bell Telephone operator simply by calling out the word “Operator!”  in mid-conversation. We did this to request a credit during periods of static or to reestablish a dropped call. The Myrtles of the AT&T/Bell system knew everyone’s personal business. Telephone operators were a primary source for journalists and gossiping housewives. They knew when babies were born, who was cheating on whom, and even sensitive issues of business/vendor relationships.

Verizon Wireless: Trouble with honesty & fairness

In the market for mobile phones, a time span of 7 years represents a different era altogether. At least 4 generations of hardware feature phones have come and gone. Seven years ago, there was no iPhone and no Android. Palm was king of PDAs, a class that was still separate from phones and browsers. Feature phones offered Symbian at best. (Who remembers Windows CE?).

Way back in 2004, Verizon crippled Bluetooth in the Motorola v710, the first mobile phone to support short range wireless technology. The carrier supported Bluetooth for connecting a headset and for voice dialing, but they blocked Bluetooth from transferring photos and music between a phone and the user’s own PC. More alarmingly, they displayed a Bluetooth logo on the outside of custom Verizon packaging, even though the logo licensing stipulated that all logical and resident Bluetooth “profiles” are supported.

(Disclosure: I was a plaintiff in a class action that resulted in free phones for users affected by the deception. I am not a ‘Verizon basher’. I have been a faithful client since early cell phones and I recently defended Verizon’s right to charge for off-device tethering.)

Can you hear me now?

Why would Verizon cripple a popular feature that helps to differentiate and sell equipment? That’s an easy one. It forced users to transfer photos and music over the carrier network rather than exchange files directly with a PC. The carrier sells more minutes or costly data plans.

With the same motive, Verizon restricted feature phone apps to their Get it Now store, limiting music, games and ringtones to their own pipeline. Heck–Why not? It’s their ball park! Users can take their business to other carriers. Right? Well perhaps—but mobile service is built upon licensed spectrum, a regulated and limited commodity. Although carriers are not a monopoly in the strict sense (there are three or four carriers in populated regions), they are licensed stewards of an effective market duopoly.

Perhaps the longest lived vestige of Verizon’s stodgy funk (and the most depressing) was their insistence on stripping pre-smart phones of the manufacturer’s user GUI and foisting users to navigate a bland set of carrier-centric screens and commands. Often, I would sit next to someone on an international flight who had the same model Motorola, Samsung or Nokia phone. And guess what? His carrier didn’t interfere with fascinating user features. Why did Verizon force their own screens on unsuspecting Americans? It meant that I could not set my phone to vibrate first and then ring with increasing volume over the next few seconds. What a great feature on my Moto i810! But it was stripped from subsequent models, because it wasn’t spec’d by the boys in Verizon’s “retrofit and bastardize” lab.

With the exception of the class action on the Bluetooth features, no legislation was needed to get Verizon to unlock phone features. Eventually a free market mechanism forced them to rethink their ivory tower greed. With AT&Ts market success selling iPhones, Verizon eventually capitulated so that they could become the Android market leader. The new strategy worked for both consumers and for Verizon. Even before they began selling iPhones in 2011, Verizon reasserted their position as the carrier of choice and fully justified their cost premium through excellent coverage and quality service.

Hey, Verizon! Can you hear us now?!

But now, the company that I have learned to hate, love, and then curse, is at it again! They are about to introduce the Samsung Galaxy Nexus. It is only the 2nd Google branded Android (you can’t get closer to a pure Android experience!). But wait! News Flash: They are going to cripple a native Android feature. Just as with the Bluetooth debacle, Verizon claims that it is for the protection and safety of their own users. (Stop me, Mommy! I’m about to access a 3rd party service!).

Why doesn’t Verizon get it? Why can’t they see value in being the #1 carrier and base profit strategy on exceptional build out and service? Sure, I support their right to offer apps, music, ringtones, photo sharing, navigation, child tracking, mobile television, and even home control. These are great niches that can boost revenue. But remember that you are first and foremost a carrier. Just because you plan to enter one of these markets is no reason to cut off your own users from content and service options.

Think of this issue as your subscribers see it: Cutting off users from the Android wallet, because you plan to offer a payment mechanism of your own is no different than a phone service blocking calls to Bank of America because they are tied in with Citibank. If that metaphor doesn’t cut it, how about a simple truth? It’s been 22 years since Judge Harold Greene deregulated the telecommunications monopoly. Your company is both legacy and chief beneficiary of that landmark decision. But success is transient to those who use market penetration to restrict choice. And this time, it won’t require anti-monopoly legislation. The market will push back hard and share recovery will be slow.

I’m taking my phone and going home!

Android is open. Get it? You have flourished recently, because you chose to embrace an open system that builds on its own popularity. You have contributed to its swift ascent, and likewise, Google and your users who like Android have contributed to your success. Why spit on your users now? What did we do to deserve this?

C’mon Verizon. Stop seizing your ball and threatening to close the ball park. We love you. Get it right for once and stop dicking with us. Our patience is wearing thin!