View Full Version : Greedy telcos? Ancient regulations?

27-04-2006, 02:20:27

April 26, 2006
Dialup Shutdown in Massachusetts
By Alex Goldman

Today, a billing dispute is cutting off customers of alternative ISPs as Verizon uses a billing dispute to cut off its competition.

We reached one of the ISPs affected, Matthew Crocker of the CLEC Crocker Communications.

"We had less than 24 hours notice," Crocker told us. "At first, we thought it wouldn't happen, but then we started seeing our PRIs go dark."

Yesterday, the company posted an urgent notice to its dialup customers warning them that the company's dialup service would go down, but that the company would do everything it could to get service back up

The Luck of Crocker

Crocker's story will not be the usual story for local ISPs. Unlike many local ISPs, Crocker Communications is part of a larger company and has the resources to expand, building out new services.

The company had already invested a year's worth of time and a great deal of money in building a VoIP infrastructure that it will use to solve its current crisis. "We have our own phone switch," Crocker told us. "We were waiting for Verizon to program their switches with our local number portability code, and now that's rolling through our area code, coming online."

Then, Crocker Communications has to port the dialup numbers its customers know from GlobalNAPs. Once that's complete, customers will be able to use their dialup service as if nothing had happened. "We should be back up and running soon with a band aid approach, meaning customers have to dial a new phone number," Crocker explained. "By the end of the day, we should be fully connected and customers should be able to use their usual number."

The company's transition from GlobalNAPs to its own facilities will be eased by the fact that the company operates in one area code, 413, and therefore only has to deal with one modem bank.

But the implications of the court's decision, if it stands, go far beyond a temporary dialup outage.

The Complicated Law

The dialup economy is a multi-tier system where the main provider (Verizon) provides access to a wholesaler or backbone provider (such as GlobalNAPs). The wholesaler provides access to the retail ISP.

Verizon builds the wires, but a company like GlobalNAPs builds modem banks across the nation. In order to ensure that every dialup call is a local call, GlobalNAPs likes to be able to assign more than one phone number to a modem bank. This allows one Point of Presence (POP) to serve more than one local calling area.

However, on April 11, 2006, Verizon won a case against GlobalNAPs in the state of California, saying that GlobalNAPs was avoiding per-minute charges with this scheme.

The court admitted that the scheme is common:

Under the traditional system for rating calls, whether a call is "local" or "interexchange" depends on geographically defined local calling areas. The DTE established the existing geographic local calling area structure for Massachusetts after a generic proceeding "in which all interested Parties had the opportunity to comment." Verizon implements this system by comparing the "NXX" numbers (the "NXX" is the middle three digits of a ten-digit phone number) of the caller and the recipient. The "NXX" has generally been associated with a particular "switch" (that is, the equipment that routes phone calls to their destination) physically located within a local calling area; NXXs have thus served as proxies for geographic location. This means that if the NXX numbers of the caller and the recipient were within the same local calling area, one could assume that the caller and recipient were actually physically within the same calling area and bill the call as a local call.

Global NAPs has the ability to assign its customers "virtual" NXXs (VNXX), so that a Global NAPs customer can be given VNXX numbers that are different than those that would normally be assigned to him based on his physical location. This allows a party to call what appears to be a "local" number, although behind the scenes that call is actually routed to a different local calling area. When the party making such a call is a Verizon customer, the call is transmitted outside the local calling area by Verizon.

Many of Global NAPs' ISP customers use VNXX arrangements, and many of these ISPs' end-user customers use Verizon for local phone service. To access the Internet, the end-user dials in to a VNXX number assigned to his or her own local calling area. Then, Verizon transports the call across local calling areas to Global NAPs' point of interconnection with the Verizon network. Global NAPs and Verizon agree that "[u]nder VNXX arrangements, the Verizon end user's call to the ISP's server is toll-free [to the end user] whether or not the ISP's server is located in the same local exchange area in which the end-user originates the call."

The issue is further complicated by the reciprocal compensation regime, set up to regulate phone calls, in which the company originating a phone call pays the company completing the call. The court noted:

The treatment of intercarrier compensation for ISP-bound traffic has been a matter of considerable debate in recent years. Calls to ISPs tend to be long, and generally go exclusively from the ISP customer to the ISP. This has created opportunities for regulatory arbitrage. For example, in the context of reciprocal compensation, since reciprocal compensation flows from the LEC whose customer makes the phone call to the LEC whose customer receives the phone call, an LEC with a high proportion of ISP customers—as Global NAPs has—stands to gain a windfall in a reciprocal compensation scheme which includes traffic to an ISP.

"This has been a very long dispute in which both the DTE and the courts have repeatedly ruled in Verizon's favor," said Verizon in a statement. "Global has been well aware for some time that termination of its service would result if it continued to ignore its substantial financial obligation to Verizon.

"To date, this financial obligation exceeds $60 million. Verizon regrets having to take this action, but the responsibility for its impact rests solely with Global's management."

Spokespeople for GlobalNAPs did not immediately return our calls.

If Verizon succeeds in charging GlobalNAPs long distance fees for dialup phone calls, those fees will be paid by the customer. The future of dialup in the United States looks like a choice between the monopoly offering service at a flat rate and the "competition" offering services priced per minute.

The case could shut off the internet in large parts of the rural United States. It seems to us that it represents a failure to understand how the internet works. Perhaps the U.S. will continue to lose the internet race until those who grew up with the internet, those who actually understand it, are old enough to be judges.

Alex Goldman is managing editor of ISP-planet.

So what I think this says is that on one hand, the virtual NXX bypasses the scheme where certain numbers (even within the same 3-digit prefix) are charged as long distance. Verizon wants GlobalNAP to pay them the money they'd otherwise be charging their subscribers. On the other hand, telcos that originate calls pay telcos that receive calls. I'm not sure exactly if GlobalNAP is a telco, but the article leads me to believe that GlobalNAP could charge Verizon for calls from Verizon subscribers to GlobalNAP's network. I suppose that Verizon doesn't just want a peering agreement because they must feel that the money they owe is less than the money owed to them.

According to a website dedicated to the history of the Bell System, LD was created by some 1930s telecom laws in order to "soak the rich" and provide a discount to the average residential customer. But nowadays, lots of average people get hit with LD charges for calls between points within the same area code. Why not flatten rates? Since residential rates depend on public utilities commissions, it's politically difficult to raise local rates. Meanwhile, money is being lost to VOIP and competing carriers.

Who knows what a cornered RBOC (regional Bell operating company) will do to survive? If they can't keep up, then they're likely to try to slow everybody else down.

27-04-2006, 08:31:55
Too much to work out what's going on. Pictures would have helped.

Seems to me that if a company transports a call within a local area then it's a local call regardless of numbers. (Because it doesn't hit the trunk network.) If it's outside the local area then it's not local. Any different arrangement (based on pseudo numbers or whatever) should be agreed in a seperate contract between the 2 parties.

Or one can decide not to rely on subcontracting vital parts of your business to a single supplier :)

27-04-2006, 20:21:14
What's going on is:

Dial up calls his ISP.
At Dial up, the phone provider is Verizon
Verizon routes the call "long distance" to the ISP.
ISP is GlobalNAP.
GlobalNAP then completes the transaction by putting the info onto Verizon.

At least, that's what the article says!

The fight is over how much local provider department Verizon can charge, and that since the routing is "long distance" (past the same local phone bank) that Verizon wants it to be billable as "long distance" so they can get more money out of GlobalNAPs.

GlobalNAPs is trying to hide behind the standard "we-pay you-pay" of the telecom industry as it doesn't actually ever send calls out from itself to other phone banks. So it is soaking Verizon, as Verizon local has to pay GlobalNAPs for the trouble of "completing" the call to the final destination (itself).

The Bells got the laws of "we-pay you-pay" changed so that ISPs and other services that are primarily terminations don't go on the old system (so the Bells stopped paying them to effectively stay in business).

Verizon is wanting to make sure its routing is treated "properly" as a long distance call (which falls under other arrangements, and have a different billing rate), and wants to squeeze GlobalNAPs to pay the going rate (rather then the extremem cheap rates that they agreed to long before the dot com rush).

At least, that's whats been going on in the industry.

It's all moot if you don't do dial-up. Which you aren't supposed to be doing in under-developed rural areas, as the universal access was supposed to have had you wired for broadband by 2003 (2004 in the most remote locations). Guess where all that money went! Well, no one knows. Congress "re-appropriated" it, even though they made it a mandatory tax on every phone call placed, regardless of it its a land-line or cell-phone.

That's all a bit IIRC (and I probably don't). It's been a while since this particular fight was the main feature of Net news. The legal fighting is still going on but the Net community stopped caring as they are now primarily broadband, and DSL and cable go under different regs and policies.

27-04-2006, 23:51:20
I can see Verizon's side as far as termination-only things like modem banks go. I can also see GlobalNAP's side regarding Verizon's renegotiating the rates for interexchange calls to ISPs.

Politicians. If they'll reappropriate (misappropriate) money to reinforce a dam protecting a major city, then I guess nothing is safe, including telecommunications to rural areas.

Phasing out dialup internet is probably the best thing to do. No telling how long it'll take, though. Cost and availability are issues. I guess the first thing to tackle is availability. If you can't buy something at all, then it doesn't matter how much it costs. What's the easiest thing to get out to the countryside? Satellite? Digital cellular networks?

28-04-2006, 20:55:41
Dial up will be around for a long time. At least as an alternative support method for when your faster access is down.

As for the rural areas, it depends on the area in question. For some, it's satellite. Only Satellite is still dial up. It's dial up to send, satellite to recieve. For others, it might be cells, or it might be wi-fi or wi-max (popular alternatives). Still others have nothing but old telephone wires. Some places don't even have that. Particularly in Louisana, where the local and state politicians took the money they were provided to build telephone infrastructure and re-puposed it for other things. (Notice a trend here?)