By Ben Charny Staff Writer, CNET News.com January 27, 2003, 4:00 AM PT

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A group of telecommunications giants is quietly pushing a proposal that could create hang-ups for up-and-coming Internet-telephone rivals.

At stake are rules used to divvy up the 5.2 billion unassigned phone numbers set aside for use in North America, one of the biggest potential markets for Internet, or voice over IP (VoIP), telephone services.

VoIP technology allows people to make phones calls that travel over the Internet rather than solely across wires owned by long-distance phone companies. Such calls can be made from telephone systems that tap into the Internet, and from PCs.

The cost of making such calls is significantly less than that of basic long-distance service because the calls bypass the phone companies’ lines. As a result, many large corporations and tech-savvy consumers are using VoIP to make long-distance calls.

Net telephony providers such as Vonage and Net2Phone enjoy an unfettered stream of new numbers passed down from other carriers, which they can hand out to customers as they wish. Now, Verizon Communications, BellSouth and Qwest Communications International want federal regulators to tell the newcomers to heel.

Verizon and the others raised their concerns most recently at a meeting Wednesday of the North American Numbering Council (NANC). The industry group is chartered by the Federal Communications Commission and is charged with developing policies on how to distribute telephone numbers.

If successful, some observers warn, the lobbying push could dampen the market for Internet-telephone service in the United States.

“The results could choke off the industry before it really gets going,” according to a source familiar with the ongoing debate.

The looming fight over phone number allocations comes amid a supply crunch , just as VoIP services are shaping up as a significant new challenge to both local and long-distance carriers.

Once denigrated for spotty reception more similar to that of a CB radio than that of a phone, Internet calling has improved in quality to the point where analysts expect the industry to soar over the next few years. TeleGeography , a phone industry analysis firm, estimates that there were 18 billion minutes of VoIP phone calls in 2002, or about 10 percent of all the calls made.

As VoIP makes up a bigger proportion of the overall phone market, it is poised to join a growing field of competitors that are vying for an increasingly limited phone-number pool.

Your number’s up U.S. government reports estimate that the United States, Canada, Guam, Bermuda and Trinidad will run out of 10-digit numbers by the year 2025, driven by demand for cell phones, faxes and other devices. The coming crunch has led at least one industry organization to draw up a plan for a 12-digit future that could add some 640 billion new numbers to the pool.

In the meantime, the FCC composed two conservation measures, both opposed by the phone carriers. One, “number portability,” would let people keep their phone numbers even if they switch carriers. The second would force carriers to be assigned a smaller amount of telephone numbers at a time.

Against this backdrop, some carriers said they are concerned about what they see as unorthodox number allocation practices among VoIP providers.

At the Jan. 22 NANC meeting, proponents of VoIP phone number regulation said they want agencies including the FCC to examine the Internet-phone industry’s use of “designer numbers,” among other things. Because of the nature of the Web, computer phone providers can offer customers a choice of different area codes, regardless of where they live.

“The idea is not to choke this thing off, but to explore the issues and reach some agreements so we can go forward,” said Randy Sanders, BellSouth’s director of regulatory and external affairs.

NANC members were interested enough in the problems to order a subcommittee to come up with some of the possible technical problems involved with telephone numbers and VoIP.

Others, however, have dismissed the concerns as overblown for an industry that is barely getting its legs in North America.

In a white paper called “Much Ado About Nothing,” AT&T recently argued that Internet phone providers aren’t attracting enough customers now to even pose a possible problem to be addressed.

“The sky is not falling,” AT&T wrote to the NANC in a follow-up to the white paper.

Worldwide, there were around 2.93 million cable telephony subscribers in 2001, more than the 2.5 million most analysts were predicting, according to a study last year by Allied Business Intelligence, an Oyster Bay, N.Y.-based research firm. That number was expected to almost double by the end of 2002, reaching 5.2 million subscribers, the study predicted.

By contrast, only a handful of companies sell computer telephone service in the United States, with fewer than 100,000 people now using broadband connections to make phone calls. The leading computer phone provider is Vonage, which has about 10,000 customers.

NANC and the North America Numbering Plan Administrator (NANPA) distribute phone numbers in blocks to so-called incumbent local exchange carriers (ILECs), which then transfer some of those numbers to competitive local exchange carriers, or CLECs, that ride on their lines.

Vonage representative Brooke Shultz said the company gets its telephone numbers from CLECs, although she declined to name the suppliers or the terms of the transfer deals.

Shultz dismissed the lobbying effort as a competitive tactic.

“This is really the first sort of tactic to get us regulated,” said Shultz. “We’re not misusing numbers.”

Industrywide makeover Regardless of where the industry stands now, there is no doubt of the momentum behind a new way of delivering voice communications at a fraction of the cost of traditional phone networks.

VoIP providers generally require two things–a broadband connection and either an adapter for a landline phone or a microphone and speaker device for computers.

The calls travel mostly over the Web, avoiding the toll roads that are traditional phone lines. As a result, computer phone services can offer plans with unlimited dialing and no long-distance charges. The average monthly price is $40.

VoIP’s efficiencies come through its use of packet-switching technology, which breaks up communications into small bits that are dispersed to find the fastest path across the network and recombined at the end point. Traditional telephony, by contrast, is “circuit-switched,” creating a dedicated channel for the duration of the call.

Analysts have cautioned that traditional phone companies could get squeezed out of VoIP technology. Responding to the threat, big carriers, including Verizon and Qwest, have been inking billion-dollar deals with equipment makers such as Nortel Networks, to add packet-switching capabilities. Sprint began adding packet switching to its network in 2002, after a $1.1 billion deal with Nortel. Qwest has also announced that it will adopt packet-switching technology.

Norm Bogen, a communications infrastructure and services analyst with Cahners In-Stat, expects the sale of media gateways, the equipment needed to install VoIP systems, to increase from $883 million in 2003 to $2.74 billion in 2006.

Even as the big carriers race to get into this area, however, Bogen tipped the advantage to the upstart VoIP providers.

“They are replacing the local phone company,” Bogen said.

Will Wi-Fi overwhelm satellite radio? By Ben Charny Staff Writer, CNET News.com April 8, 2002, 4:00 AM PT

Satellite radio stations aren’t too happy rubbing bandwidth shoulders with Wi-Fi wireless networks.

The two wireless industries broadcast their signals on radio waves separated by only a small buffer. So far, that buffer has kept the millions of Wi-Fi networks from interfering with radio broadcasts by Sirius Satellite Radio or XM Satellite Radio.

But the radio companies don’t think the relative calm will last, so they are asking the U.S. Federal Communications Commission to step in. Within a few years, they say, interference from the huge number of people using Wi-Fi’s signal will bleed through that buffer and snarl their signals, blasting listeners with the kind of hissing, pops and humming that overwhelms a radio receiver placed too close to a cell phone.

“The objective is to get it so people can use (Wi-Fi) and listen to satellite radio at the same time. What we’re trying to do is head off a future problem,” said Sirius Satellite Radio co-founder Robert Briskman.

It’s a fact of life that radio signals can’t be as tightly controlled as a signal traveling through a wire. Bits of signals are always straying, and as more people hook up Wi-Fi networks, there will be more of these “spurious” signals, enough to breach the buffer between the two, Briskman said.

To keep that from happening, Sirius and XM have asked the FCC to consider imposing more regulations on Wi-Fi makers, including forcing them to put some controls on these spurious signals. The FCC is not required to act upon their request.

“There is no problem right now. As (Wi-Fi) proliferates, there could be one–and a serious one–and we’re trying to head that off,” said Briskman, adding that the companies have developed a filter that Wi-Fi makers could use to control their signals.

“No basis” for concern But Wi-Fi proponents, including gear makers and network operators, don’t believe there will ever be an interference problem, so they shouldn’t have to face more regulations or add something to their equipment that could increase the cost.

“There are surveys that show you can pick up (Wi-Fi) access points continuously through some major urban areas, and we’re not causing any problems,” said Jim Zyren, director of strategic marketing for Intersil, which makes most of the world’s Wi-Fi chips. “There’s no basis for their request.”

People who are setting up the networks are even more vehement.

“It’s just absurd,” said David Sifry, chief technology officer for Sputnik, a Wi-Fi network now in the building stages. He says the request is equivalent to asking them to “break the laws of physics” since it would require them to keep the stray emissions at a level equal to the amount of radiation emitted when water evaporates in sunlight. “It’s that level of insanity you can’t legislate.”

The number of Wi-Fi networks, an inexpensive and increasingly popular form of wireless networking, is expected to double in the next 18 months.

Short for “wireless fidelity,” Wi-Fi is predicated on the technical standard 802.11, which requires the installation of a small radio tower connected to the Internet via a high-speed phone line or digital subscriber line connection. The radio, about the size of a can of beer, extends the wire line and connects with any mobile devices equipped with mini-radios in PC cards.

Setting up a network is relatively inexpensive, costing $500 to $1,000 to set up a system that allows wireless access in a 300-foot radius. It’s already in about 1.4 million U.S. homes and is catching on in restaurants, hotels, airports, workplaces and conference centers. By 2005, analysts believe, Wi-Fi will exist in about 27 million homes and 28 million offices with these networks.

In the airwaves, the upper end of satellite radio transmissions travel at 2,345MHz, while the lower range of the 802.11b Wi-Fi standard operates at 2,400MHz. A blank buffer sits in between the transmissions.

Who would pay? The satellite radio stations insist they are not trying to end the Wi-Fi industry; they’re just trying to reach a peaceful coexistence. But the makers of Wi-Fi chips and equipment would likely have to bear the brunt of the cost if federal regulations were imposed.

Adding new equipment and materials into the manufacturing process could add about 30 percent to the cost, according to Intersil’s Zyren.

Added Andrew Weinreich, chairman of Joltage, which also sells Wi-Fi Internet access: “The fix is just as easy on their side–their antennas can better distinguish their signal.”

In a few years, just when satellite radio stations are anticipating an interference problem, the issue might be moot, because Wi-Fi has been evolving–and moving into a different radio spectrum.

The majority of Wi-Fi networks use the 802.11b standard. But there is another kind of Wi-Fi network that uses the 802.11a standard, which operates in a different radio spectrum and, thus, wouldn’t be an issue for the satellite radio stations. If 802.11a becomes the more popular standard, which is likely since it is considered safer and faster than 802.11b, the problem simply goes away.

The first generations of 802.11a chips, from companies such as Proxim, are just now hitting store shelves.

And there is a chance the FCC may choose to act even if it doesn’t have to. The commission has a history of treating the satellite radio companies kindly, said Robert A. Saunders, an analyst with consulting firm Eastern Management Group. In a dead heat, Wi-Fi might lose out, he said.

“The FCC has taken a very protective approach–make sure they have enough room to breathe,” Saunders said. “It treats XM and Sirius like babies, hatched this industry, carved out spectrum, made sure there were two companies so there was competition. They will act to make sure their spectrum remains pretty clean.”