Why Is VoIP so Cheap?
The normal perception is that VoIP costs hardly anything because most things are cheap on the internet. There’s high competition, and a fraction of the overheads etc. However you need to take into account the history of the telcos and their relationship with computer networks, and the way data actually travels around the Internet. An knowledge of this is needed to fully comprehend the mystery behind the VoIP vs. POTS pricing structure.
In the days before computer networks were pre-eminent telephone companies were using digital communication. In the beginning the very first digital voice circuit was used in Chicago in 1962 although ARPANET, the predecessor to today’s Internet, wasn’t in operation 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 they continue to use them for this purpose today.
Voice communication has a few special characteristics. For one thing, it’s intrinsically real-time. You’d get annoyed if phone calls consisted of long periods of silence followed by several seconds of high-speed playback to catch up with the conversation on the other end. To keep this from occurring digital voice circuits provide guaranteed Quality of Service (QoS). Once a connection is made, you’ll always get exactly the amount of bandwidth you need. It’s not just bandwidth though; jitter is also carefully controlled by using small, fixed sized data packets. The point is these networks were specially designed to facilitate voice communication.
When computer networks began emerging in the late 1980s) the {telecommunication companies wanted in. They already had the 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 fundamentally 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 designed to provide more efficient delivery. Telecoms 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 created as a compromise technology that could carry both voice and data. However it’s much less efficient than a pure data network. The overhead for data transfers on ATM is more than 10link, compared to about one percent for an Ethernet running full-throttle.
