The usual perception is that VoIP is so cheap because everything costs less on the World Wide Web. There’s high competition, and very low overheads etc. However you need to understand the history of the telcos and their relationship with computer networks, and the way data actually gets around the web. An knowledge of this is necessary to fully comprehend the riddle behind the VoIP vs. POTS pricing riddle.
Long before computer networks became important telcos were using digital communication. At the start the very first digital voice circuit was used in Chicago in 1962 although ARPANET, the forerunner to today’s Internet, wasn’t up and running 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 unique characteristics. For one thing, it’s intrinsically real-time. You’d get frustrated 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 prevent this from happening digital voice circuits provide guaranteed Quality of Service (QoS). Once a connection is provisioned, you’ll always get exactly the amount of bandwidth you need. It’s not just bandwidth though; latency is also carefully controlled by using small, fixed sized data packets. The point is these networks were specially designed for voice communication.
When computer networks began emerging in the 1980s companies wanted in. They already had a lot of infrastructure there 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 essentially different from voice networks.
Data is transferred in packets, which can arrive in any order sometime after they have been requested, without causing any issues. Internet Protocol (IP) was designed to provide best effort delivery. Telecoms companies had an expensive network in place, so there was a lot of incentive to use it. After a few misses Asynchronous Transfer Mode (ATM) was created as a compromise technology that could carry both voice and data. But in reality it’s much less efficient than a network intended purely for data. The overhead for data transfers on ATM is more than 10link, compared to about one percent for an Ethernet running full-throttle.
