Cut the cord! on The Telephone (part 2)

By: kent

12 Jul 2011

Last week, I discussed cutting the cord cable television and switching over completely to the internet. In this article, I talk about doing the same for the old telephone.

The Current Context

Remember back when long distance rates were sky-high? Well, I barely do, but I do remember they were high. Really high. Rates were a few dollars for a phone call lasting only a few minutes, even within Canada.

The reason? Largely, because the CRTC permitted only a single company to serve each area in Canada. These high rates are what happens in a monopoly market.

Granted, there were legitimate reasons for the monopolies. The infrastructure cost of creating a telephone network was enormous. But this is all history. In 1992, we got deregulation. The CRTC took down the walls and started allowing competition in the long distance market. Sure enough, long distance rates took a steep plunge.

Unfortunately, phone bills remained high! The Big Seven incumbent phone companies simply raised their local calling rates to compensate. The CRTC hadn't deregulated local phone plans, so the major phone companies were able to continue raking in revenues after a period of "rate rebalancing" in favour of higher local rates.

Finally, the CRTC did deregulate the local market in the late 1990's. Unfortunately, the local rates have still remained high, as the infrastructure cost of setting up local services has remained enormous. This fact has been true until recently -- that is, until the advent of high-quality VOIP (voice-over-IP internet phones).

With the help of the internet, it's finally time to take down the last barriers keeping the monopolies of the telecom era intact. Voice over the internet means zero infrastructure other than what's already there for the internet, leaving the market open for competition...right?

Right. Just about. There are still some regulations that are slowing VOIP uptake in Canada. For example, Skype blames these regulations for the lack of Skype-in in Canada. Canadians can make calls with Skype, but cannot get a local Skype phone number to receive calls.

Overall, I think Canadian VOIP services are merely slowed, but not halted. Other companies are taking the leap to comply with the CRTC regulations. Unlike the largely paternalistic regulation of the Broadcasting Act (thou-shalt-watch-Canadian-TV), I also actually have few qualms about these remaining VOIP regulations. Most of them are minimal and necessary. We're talking about essential services such as 911, and consumer protection measures such as requiring phone number portability.

The Solution

Excellent solutions to cutting your phone cord are already here. First, the cheapest way to take advantage is of VOIP is to make internet-to-internet calls. Both Google and Skype allow you to do this for free. The rates for this in Canada are as cheap as anywhere else. In fact, there is not even the possibility for any regulation to increase rates in Canada, as the Telecommunications Act only applies to a "transmission facility". This is the wires between any two points, but not the points themselves. The internet calls of Skype and Google only operate to connect people, but the companies own only servers to accomplish this task and no phone lines.

However, internet calls probably isn't enough for most people. As handy as it is to be able to call someone from my GMail sidebar, there's a lot of people that I'm never going to see there. A phone number is necessity.

Fortunately, there has recently been a small explosion of companies offering local phone numbers. I use Vbuzzer, paying all of $5 for my Ottawa phone number and an additional $15 for absolutely unlimited calling to anywhere in 32 countries. This is just the service I happen to use -- there are other similar services available.

Most of these VOIP services use the SIP protocol. You can get an app for an Android phone called CSimpleSIP that works seamlessly to receive and dial out phone calls. I have WIFI at home and at work, so can make calls at these locations for free, avoiding costly cellphone charges in addition to already avoiding the cost of a land line.

<Snip>, coaxial cable. <Snip>, telephone cord. It's all just internet now.