By Jeffrey Krauss,
IP Professor
and President of Telecommunications and Technology Policy
I use AOL Instant Messenger (AIM) service, and it's free. But AIM is limited to text messages because of the FCC decision allowing the merger of AOL and Time Warner. (See "Stifling New Technology," CED, April 2001, p. 130.) The FCC prohibited AIM from evolving into a voice or video service. But someone else has begun a kind of voice instant messaging, a service called Free World Dialup (FWD) by

FWD works exactly like AIM. You register with FWD, and you are assigned an ID number that functions like an AIM screen name. Like AOL, maintains a presence database that knows at any point in time which members are online, and their current IP address. Like AIM, you don't buy or lease separate transmission facilities; you use whatever Internet access is available. But one major difference is that you are not limited to a computer or Palm Pilot for input–you can use a telephone.

Well, you can't use just any telephone, you have to use one that understands the Internet Session Initiation Protocol (SIP). There are a small handful of those devices on the market (made, for example, by Cisco). Or, you can use your computer, with a microphone headset. In that case, you need software that understands SIP, such as Microsoft Windows Messenger.

There are some interesting controversies that have begun to arise out of this new service. They generally center around the question of whether it should be regulated like other long distance telephone services. In particular, calls over FWD avoid paying access charges to the local phone companies. When you use your regular dialup phone service to make long distance calls, part of your long distance bill goes to the local phone company, partly to pay for the use of its wires, partly to subsidize local phone users in more expensive areas, and partly to subsidize telecommunications installations in schools and libraries. You don't pay these charges when you use FWD.

In order to forestall the expected attacks by the phone companies, has asked the FCC for a ruling that FWD is neither telecommunications nor a telecommunications service. They argue that FWD has no transmission element, because that is arranged individually by each user with his Internet service provider. And FWD isn't a service, because it is provided for free. It is merely an Internet application, and should not be regulated. The FCC hasn't made a decision yet, and probably won't for six to nine months.

For now, of course, there are only a handful of FWD users (8,000 in February, according to's FCC petition), so it isn't yet a threat to the local phone companies. And SIP phones are pretty expensive, selling for $150 to $200 or more. And anyway, it only allows connections between registered members.

But that's today. Think of the SIP phone as not merely a terminal, but also a bridge–a bridge between the Internet and the public switched telephone network (PSTN). My home phone line sits idle most of the time, and local calls are free. Suppose FWD initiates a higher tier of service, whereby I use the Internet to get to a distant city, then use some other FWD member's local phone line to complete my call into the PSTN. I can use this service so long as I allow other FWD members to use my local phone line to dial into my local phone service area. No tolls are incurred; no money changes hands; the FWD presence data simply becomes a little more complicated. In addition to knowing which users are currently online, it also knows which ones participate in the higher tier of service and allow their phone lines to be used for local calling. It matches up the called phone number with a member who has free calls into that area, and tells you to route your call through his network bridge.

Are you put off by the notion of allowing strangers to use your telephone resources? Then you obviously haven't tried KaZaa, the software package for downloading music and videos. In return for the ability to download music and videos from other participants' hard drives, you give them the right to download it from yours. Yes, it increases the load on your computer. You simply weigh the costs against the benefits.

I am also reminded of MCI Execunet service. Up until 1975, AT&T had an absolute monopoly on switched long distance, and MCI was allowed under FCC rules to compete only for the leased line business. Traditionally, this meant a customer would lease a full-time voice circuit between an office in one city and an office in another city, and only that customer would have access to that circuit. Then MCI introduced the concept of a shared private line. From your phone, you dialed a seven-digit local phone number to get to the MCI switch in your city, then a six-digit customer ID, then the ten-digit number of the phone you were calling. Your call went over the shared MCI network, and at the distant city, MCI dumped your call into the local phone network for connection to the called party. When AT&T challenged this service, the FCC ruled that MCI had no authority to provide switched service, but this ruling was overturned by a court decision that said that the FCC authorization to MCI had never specifically prohibited switched service. Execunet led to competition in long distance phone service. Who knows where FWD will lead?

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