With the success and good reviews being gobbled up by Vonage; and Microsoft sniffing around SIPS VoIP technology, the cable industry has sped up their sluggish foray into internet telephony. Meanwhile, the early bird gets the legal battles as the VoIP industry and the FCC try to actually define where internet telephony falls in terms of regulation and privacy.

As usual, it's the little guys that pioneer and refine a technology before the larger fish arrive for feeding time. In VoIP's case, the latest little guys are outfits like Free World Dial-Up and Jeffery Citron's Vonage (though outfits like Net2Phone have done equally well). They've been dealing with the FCC, the FBI, and the harsh economic winds while larger providers have casually dipped their toes in the water; returning to their lounge chairs to await the arrival of more temperate, still, and less shark infested waters.

Free World Dial-Up, though an 'exclusive' club in which only members can call other members via Cisco SIP telephones, has managed to sign up over 20,000 people in the last six months. They've also been the organization that has had the most fun with the law, trying to define where exactly VoIP services fall in the spectrum of telecommunications legislation.

Jeff Pulver, who occasionally stops by our VoIP forum to answer questions and smoke cigars with the boys (and girls?), has been busy lately with the FCC, arguing that FWD is not subject to the same legal guidelines faced by telcos. He's requested (pdf copy) a "declaratory ruling" that Free World Dial-Up be considered outside the FCC's jurisdiction entirely, comparing it to the wide variety of instant messenger programs on the market.

Of course that puts quite a stick in the spokes of both the FBI and telco bicycles. The FBI is afraid that VoIP could become a communications safe-haven for terrorists and other undesirables; the telcos are worried that yet another competitor could enter the market free of the regulatory baggage that they say hampers their expansion and success.

It's only the very tip of the mountain of privacy, competitive, and legislative issues that have been begging for answers for years and will only grow louder. In 1999, the Internet Engineering Task Force thought they had won a civil victory by making no decision on wiretapping next generation networks (see Wired, October 1999). Several years later and the industry is twice as confused, but now the technology has actually arrived.

To cover their backside, the FBI has since been working closely with hardware manufacturers like Cisco and Metaswitch to include backdoors and other assorted surveillance tools in case VoIP becomes the pony express of scoundrels and enemies of the state.

Vonage's entry into the market has been much less dramatic. Though the company's CEO, Jeffery Citron, has a somewhat sleazy past and was barred from day trading by the SEC, his new company, apprarantly free of white collar crime, has fared considerably well. Though some in our forums have complained about customer service issues such as double billing and questionable rate increases, the company has been getting good reviews and recently struck a deal to resell the service via Earthlink.

So what have the big boys been doing?

Cable companies such as Cox have been providing the service quietly to select customers for quite some time; those customers giving the service fairly high marks. While the cable companies aren't moving quickly, they are moving. By the end of of 2002, Comcast had roughly 1.4 million telephony subscribers. Cox Communications served 718,420 while Cablevision laid claim to 12,240 telephony customers (Jupiter Research, Internet News, May 2003). Equipment costs and initial technical headaches were blamed by most cable executives for their reluctance to dive in head first.

While Vonage and Free World Dial-Up have been offering VoIP via session initiation protocol (SIP) technology, many MSO's have been working on their large-scale IP telephony service deployments using PacketCable technology. Whereas with SIP the user end device does all the work, PacketCable technology requires the network to be intelligent (See Cable Datacom News, May 2003). Some analysts suggest Microsoft's recent interest in SIP technology may have further motivated everyone interested in playing in the VoIP pool.

According to this report over at CNet news, Time Warner cable is the latest to begin testing out VoIP technology in select markets. The service will cost $40 a month for unlimited calls, and will be available only in the Portland, Maine region at first. The company will then migrate the service to larger markets like New York.

Meanwhile the satellite industry begs not to be forgotten. Net2Phone Inc. and Hughes Network Systems struck a deal to bring VoIP services to Direcway broadband satellite customers. While the company's press release indicates that the service "allocates prioritization to voice packets over Internet data", it's not clear how the companies plan to offer quality VoIP service when satellite broadband is so high latency. Things may look up for Hughes with the eventual launch of their Spaceway satellites.

What have the telcos been doing?

Worrying.