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Why I had to sue the FCC – VoIP granddaddy Dan Berninger

It's life or death, says guru unhappy with net neutrality regulations

By Andrew Orlowski, 16 Feb 2017

Interview One of the grandaddies of VoIP is taking America's comms watchdog, the FCC, to the US Supreme Court over net neutrality – and he's told us why.

It’s life or death, says Dan Berninger, whose startup works on high quality voice services, and could be killed by the regulator at a stroke.

Berninger led the Bell Labs team that first assessed VoIP, and his career took him to NASA, Verizon, HP and a string of startups - helping get Vonage off the ground. In 2012, Berninger founded the nonprofit Voice Communication Exchange, modeled on TV’s Grand Alliance, which works on moving the world to all-IP HD voice.

For a decade, he has battled Big Telco as the large incumbents sought to make voice over IP go away to protect their revenue streams. Having failed to kill Vonage through technology or regulation, Verizon sued Vonage over alleged patent infringement – a sign of the intensity of the battle.

'Our voice quality is 1934 voice quality'

Today, it’s the FCC’s Title II reclassification that poses a mortal threat, he told us, not just to entrepreneurs like him, and other wideband audio services, but to anyone prepared to risk anything new.

“Our voice quality is 1934 voice quality,” Berninger says. We should be turning off the POTS (plain old telephone service) telephone network, instead of being stuck between the two, he added. The customer pays not only real cost to keep the legacy phone networks alive, but through uncertainty too, he argues.

“The IP transition has come to a screeching halt. It’s extremely expensive to maintain the old network. Even in the US, just the electric power required to keep of the old network [going] is $25bn a year. So you’re throwing in the trash can $25bn that could be invested elsewhere just to keep the lights on, on the telephone network."

So how did a sole entrepreneur find himself suing the FCC, which is normally the job of aggressive corporate lawyers representing Big Telco clients like Verizon?

Berninger may disappoint ideologues. In 2001, the communications architect wrote that the idea that the internet prospers when the free market is left to its own devices as a "myth". What’s needed is careful and enlightened regulation, not the clumsy sledgehammer of throwing laws designed for Bell’s phone network in the 1930s at the internet just to score points, he insisted.

The lawsuit is all about the regulator's Title II shakeup of internet services (and even mobile networks) using these old Bell laws designed to shackle the private phone monopoly.

Congress decreed in the 1996 Telecommunications Act that the old laws shouldn’t apply to internet services.

For almost a decade, the FCC regulated concerns about net neutrality just fine, stomping on an early attempt by an ISP to block a VoIP provider, and obliging Comcast to be clear about Torrent throttling. But that didn’t account for two subsequent events.

In 2014, Verizon’s bulldog lawyers got the FCC’s code struck down. Then former US president Barack Obama took charge. Via a YouTube video, Obama challenged the FCC to apply the 1934 laws.

That’s exactly how you should not deal with net neutrality, argues Berninger.

What is Title II?

“As an entrepreneur, Title II hurts in two places," he says. "My efforts to pursue a business model, and how the potential funders view people like myself. Title II wipes out both.

“My new service is putting voice behind websites. It looks a bit like a conferencing service. Currently Title II says telcos have to pay 20 per cent from the top line to the Government to pay for Universal Broadband. Well, that’s game over. I have no company there.

“Also, no funder wants anything to do with a regulated industry. There’s no investment in infrastructure innovation. In the areas I work in, there’s no investment at all. Title II reclassification dried up investment funding. Say I have $1m and I want to invest it somewhere. I need to asses my prospects for success. These will be a function of the rules I’m facing. If the FCC is in there, then it’s game over. I don’t know what the rules are.”

Hate your ISP?

As someone who fought the telcos for so long, Berninger sympathizes with Americans who feel they don’t have a great competitive choice. But we forget the massive advances ISPs have been obliged to make.

“I’m not saying there aren’t issues but people aren’t watching what’s really happening. We’ve had an 8,000-fold increase in capacity in 20 years. In the old world, the telephone network had a fixed service. It literally didn’t do anything different or new from 1934 to 1996, when the internet came along - there was no important new service. It didn’t add new value.

“It’s a different scenario in the case of the internet, where the infrastructure actually improves in capacity. When the term net neutrality was coined in 2002, 20 per cent of the population had speeds of 1Mbit/s or faster.

“People have a lot of anxiety about their telephone companies. We forget that the telcos have delivered a lot of expansion and communication capacity. When all this started in 1996, this call [he’s calling London from DC] was $3 a minute. For me now, this is probably a 4c call. The value proposition that the telco has delivered has expanded probably one thousand fold. Your typical LTE connection phone would have cost $10,000 a month.

"But ironically the public’s anxiety level went way, way up. So it went up like a toaster. Combine it with pretty lousy service and you get a super high bar of anxiety. People who have an ideological interest in regulating the internet can take advantage of that.”

He adds: “But you have to ask - what value are these regulations adding? The answer is none, but we know from the past that the regulator created the monopolist.

“The pitch for net neutrality was a very standard pitch: ‘Wouldn’t it be great if we were all equal? We’re going to apply this pitch to bits.’ That makes sense to people: people are all for fairness and justice, But it’s nonsense in the sense that bits can [or can't] be equal. In reality nobody is sitting around meshing their ringers about equal bits, they want their streaming and voice to be better.”

Net neutrality is the Sasquatch

“Net neutrality has the beauty of not existing - it’s like fighting Big Foot. It’s never been seen in the wild and we only have wild and blurry pictures. It’s hard because you can’t prove a negative.

“From 1995 to 2005, telcos wanted the internet regulated by Title II. They gave up fighting in 2005: Boom! We won. Then they woke up and realized it’s taking over in every way and anyway, it’s a better business than the static voice business they were in. So they switched sides. Telcos became anti-Title II and the activists said we’re against the telcos whatever they do.

”And in 2015 we lost.

“The way they did it was particularly ugly. They declared that an IP address and a telephone number are the same thing. ‘Hey, we have a regulator called the FCC. It regulates phone numbers. They’re kind of equivalent. So we’re going to declare them the same thing. And declare the internet a subset of the telephone network.’”

“If you’re regulating horses and you’re going to jump to regulating cars, well, that’s a pretty big leap. For decades it was literally illegal to attach something to the network - there were no telephony entrepreneurs."

Does he acknowledge that concerns about the ISPs' gatekeeper role are real? “Look at Intel, a monopolist in chips. Why did Intel not keep the chip fixed? The answer is it’s more profitable to expand the capacity of the chip - you can, thanks to Moore’s Law - and each incremental increase in capacity expands the services it can support."

Is he optimistic of the Supremes being receptive to his argument? For Berninger the "all packets are equal" idea is the killer. It’s a First Amendment issue, and now the internet is hugely important to our lives.

“Title II imposition is prior restraint against the first amendment. That covers, religion, speech, press assembly and petition," he says. "All those things are what the internet is today. It’s how people organize. It’s the go-forward platform for those things. With Title II they’re turning a right into a privilege and I need to ask them for permission to do these things.”

Case history

Legal geeks among us can get stuck into the action by following case 15-1128 going through the United States Court of Appeals for District of Columbia Circuit. In 2015, Berninger asked the court [PDF] to authorize a review of the FCC's net neutrality orders. In 2016, that petition was denied [PDF]. Since then, ISPs and telcos have piled in with their support of a review [PDF]. According to Berninger, he's on track to take this to the Supreme Court, with confirmation expected around April. ®

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