How Is VoIP so Cheap?
The usual perception is that VoIP is so cheap because everything’s cheaper on the World Wide Web. There’s fierce competition, and very low overheads etc. However you need to acknowledge the history of the telecommunication companies and their relationship with computer networks, and the way data actually travels around the web. An knowledge of this is necessary to fully comprehend the confusion behind the VoIP vs. POTS pricing riddle.
Long before computer networks became important telephone companies were using digital communication. At the start the original digital voice circuit was used in Chicago in 1962 although ARPANET, the predecessor to today’s Internet, wasn’t up and running until 1969. The telecommunication companies used these digital circuits to make lots of voice connections over long distances something that analogue circuits were unable to do and to this day still use them for this purpose.
Voice communication have several unique characteristics. For one thing, it’s inherently real-time. You’d get annoyed if conversations consisted of long periods of silence followed by a burst of fast conversation to catch up with the conversation on the other end. To prevent this from occurring digital voice circuits provide guaranteed Quality of Service (QoS). Once a connection is made, you will always get all the bandwidth you need. It’s not just bandwidth though; jitter is also carefully controlled by using small, fixed sized data packets. Essentially the infrastructure was specially designed to facilitate voice communication.
When computer networks began popping up in the 1980s companies wanted in. They already had a lot of infrastructure in place so they began looking at how they could send data over their existing trunk lines. They came up with numerous technologies with different levels of success. But there was (and still is) an issue: data networks are essentially different than voice networks.
Data is transferred in packets, which can arrive out of order long after they’re requested, without causing any issues. Internet Protocol (IP) was created to provide best effort delivery. Telecommunication companies had an expensive network in place, so there was a lot of incentive to use it. After some trial and error Asynchronous Transfer Mode (ATM) was designed as a compromise technology that could carry both voice and data. However it’s much less efficient than a pure data network. The costs for data transfers on ATM is more than 10connection, compared to about one percent for an Ethernet running full-throttle.
