THE popular practice of making free or cheap phone calls through the Internet is under threat.

There is a move by telecommunications companies internationally to regulate the priority of internet traffic in a way that would give internet-initiated calls lower priority than their own internet traffic.

This would compromise the quality of calls made through popular voice over Internet protocol clients such as Skype, which offers free and heavily discounted calls around the world.

Queensland University of Technology assistant dean of information technology Bill Caelli said Australian telcos would not be able to resist this commercial push.

“Throughout the world those telcos that provide the basic infrastructure such as fibre optics are saying, ‘why should we give it off to someone else to use’?” he said.

Professor Caelli said the days of a free-for-all unregulated Internet were rapidly going.

The pressure for this change could hit Australia “like a big hammer”.

“This is happening throughout the world,” he said.

Internet experts say the Net could transform into a two-tiered or multi-tiered Internet where the company that owned the internet structure could give different priorities to different internet traffic in line with their commercial interests.

VoIP is touted as a likely casualty because the free phone calls are in direct competition with the phone services operated by the telcos who owned much of the internet structure.

Canadian internet law professor Michael Geist, in an interview last month with the BBC, said that in the USA internet service providers offering their own internet phone packages were giving priority to their services ahead of internet traffic generated by their competitors.

Professor Geist said a new two-tiered Internet had already taken shape in parts of the world.

He said Panama, Oman, the United Arab Emirates and Mexico had begun blocking internet telephony services to protect the incumbent phone companies.

He said in Germany Vodafone had begun blocking competitors’ internet-based phone traffic, treating Skype as “inappropriate content”.

In the US, AT&T Inc and BellSouth Corp were reported to be lobbying the Bush Administration for the right to create a two-tiered Internet.

The other area of conflict was movies on demand.

With broadband internet speeds set to increase by about 200 times, US entertainment corporations are gearing to do battle over a mooted plan by US telcos to deliver movies on demand at higher speeds than they could.

Professor Caelli predicted a “bunfight” between telcos, ISPs, entertainment providers and the likes of Google, which might seek to make itself an online video vendor.

“We’re seeing it already as companies jockey for a slice of this information revolution, and they’re going to be lobbying government like you wouldn’t believe,” he said.

“That lobbying has already reached fever pitch in the United States and it will reach fever pitch in Australia.”

A multi-tiered Internet is likely to mean new in-built premiums for users and companies seeking internet traffic priority.

They would either pay or find the speed of their downloads, internet phone calls and movies on demand given lower priority.

U.S. carrier adds its name to an array of retail devices available for home networking.

In an attempt to maximize its return on the billions it is spending on its network upgrade, Verizon Communications will lend its brand this spring to home-networking equipment, which will be sold in a number of nationwide retail outlets.

It will be the first time that Verizon, the second-largest telecommunications carrier in the United States, will actually sell networking devices under its own brand name. The company currently packages devices such as modems and routers with its DSL services but retains the original manufacturer’s brand.

In the spring, Verizon will begin selling networking devices such as wireless routers, network cards, and USB (universal serial bus) adapters from low-cost manufacturer Belkin, but for the first time the company will use the Verizon brand.

By choosing Belkin instead of a more expensive brand, Verizon is making it clear that it is looking to cast a wider net for broadband subscribers.

The New York City-based carrier is currently spending billions of dollars upgrading its network for high-end services such as video and business applications, including telecommuting. But it all begins with signing up subscribers for broadband services. Inexpensive home-networking devices can be a crucial part of that demand stimulation.

The carrier has pushed the monthly cost of its low-end DSL service down to $14.95, which matches some dial-up prices. Verizon has also marketed its low-end DSL very heavily in most of its markets (see Verizon’s ‘Street Fight’ Prices).

Shares of Verizon rose $0.60 to $30.98 in recent trading.

Growth of DSL

About 40.2 million households subscribe to broadband services, representing about a third of the addressable market. But the U.S. market has been warming to DSL in the last few months.

Together DSL providers added 1.42 million new subscribers in the third quarter of 2005, an all-time record for a single quarter, according to Leichtman Research. The total number of new subscribers for DSL service in the corresponding quarter in 2004 was 379,000 fewer.

Verizon added 389,000 new DSL subscribers in the third quarter of 2005—a feat second only to AT&T, which added 528,000 new subscribers, the most of any broadband provider. That includes cable operators such as Comcast and Time Warner (see Broadband by the Numbers).

“Putting Verizon-branded products on the shelves in front of consumers provides awareness of Verizon as a full-service provider of broadband and simplifies the decision making and buying process,” said Catherine Stanley, Verizon’s director of brand management. “And retailers know that with Verizon products, they are adding a quality brand name their shoppers can rely on.”

According to Ms. Stanley, Verizon-branded networking equipment will be competitively priced, and will come with a raft of in-store merchandising, including separate kiosks and displays. The program will also include rebates, coupons, and other special offers.

Belkin, based in Compton, California, also markets VoIP hardware, audio/video systems, computer peripherals, power protection, cabling, and home-networking devices.

Under the terms of its agreement with Verizon, Belkin will produce, ship, and provide technical and customer support for the broadband networking equipment.

Network-based Virtual Private Network (IP VPN) equipment revenue is poised to grow from $347 million in 2004 to a whopping $658 million in 2009 worldwide. These findings were recently published in a study titled The Equipment Options for Implementing Network-Based IP VPN Services, conducted by research firm In-Stat.

Analysts also found that network-based IP VPN services such as MPLS IP VPN, Virtual Router, and Network-Based IPSec services, move VPN intelligence to the edge of the network, as opposed to initiating tunneling at the CPE, as with CPE-based VPN services. “The number of end-users that are converging voice and video onto their IP VPN services continues to grow, and this convergence creates a greater demand for the use of different classes of service,” said Henry Goldberg, one of the firm’s analysts.

The study also revealed that service providers who include DSL access lines as part of their offering sell the service to small/midsized businesses and branch offices as a lower-cost alternative to traditional leased lines.

Surveyed parties revealed that end-users who use DSL access lines to connect to network-based IP VPN services require broadband subscriber management services, and some vendors offer such services on the same platform as their VPN services.

According to the firm’s news release, analysts concluded that “support for value-added security services, such as firewalls and intrusion prevention, enable service providers to generate substantial additional revenues beyond those for IP VPN connectivity services.”

The VoIP Minute Watch reported on multiple IP VPN deployment deals during 2005. The deployments involved giant telecoms and communications companies such as AT&T, SBC Companies, Verizon and Avaya. Medical organizations, banking and other financial firms, as well as multi-campus educational institutions have all benefited from partnering with these telecom providers to integrate their voice and data services as they converged to an all-IP network.

Judging by how popular IP VPN deployments were last year, it feels safe to predict that they will also mushroom during this New Year 2006. It is a great tool to integrate telecommunications within enterprises that have several offices within a few blocks, a few states over, or even across the nation.

For more info on the subject, be sure not to miss endless conference sessions at our Internet Telephony Conference & EXPO East taking place during the week of January 24th -27th, 2006 at the Fort Lauderdale Broward County Convention Center in Florida.