NBN will suffer due to telco's lack of vision

The videotelephone revolution has been a long time coming and if Australia's telecommunication networks are anything to go by we will be waiting for a long time before videotelephony becomes the norm. In Business Spectator the reasons why videotelephony is not mainstream are discussed and why this will have an impact on the National Broadband Network. Videotelephony is a measure of the telecommunication industries ability to provide 21st century telecommunications, and at this time the industry is not measuring up.

Read the full article here.

Modern Internet Communications Applications

Australia's telcos have held back videotelephony, and there's a risk the NBN is following suit. Source: freesoftwaretools.org.

The telecommunications industry’s failure to embrace the need for a radically new NBN with significantly increased capacity and gigabit speeds is a symptom of an industry with a lack of strategic vision and drive. 

If there is not a change of direction by the industry leaders Australia will continue to fall behind competitors in the global digital economy.

The problems with the telecommunications industry go far deeper than most of us realise. But how do we get an understanding of what is wrong with a telecommunications industry that does not involve complex economics and discussions about whether we should be using copper in the NBN?

Let us consider two exciting technologies that were set to revolutionise the world when they were introduced but have been stifled over the past thirty years due to an inability of the telecommunications industry to embrace an entrepreneurial start-up growth mindset.

The telecommunication industry has been around for more than 150 years, but the technology revolution that began in the 1970s and accelerated with the birth of the Internet in the 1990s means that the industry has seen rapid technology changes, new products and services and customer demand over recent decades that has far outstripped the industry’s want to provide.

A key reason is the lack of capacity and connection speeds available on our telecommunications networks. Customer data usage has skyrocketed as capacity and connection speeds have increased and this phenomenon has occurred for both fixed and mobile networks. High prices, poor quality postage stamp sized video, and barriers to innovation and effective competition have all meant video’s impact has been limited.

The short and tumultuous history of videotelephony

Consider the videophone and the marketing that occurred on its release that it would replace audio-only telephony in only a few short years. Today audio-only phone calls account for such a high proportion of call traffic that the Australian 4G mobile cellular networks, for example, don’t actually support 4G IP video calls. Why?

Videotelephony had its origins in the 1950s and ‘image phones’ were released onto the market that displayed still images that were refreshed after a few seconds.  Some of us remember watching Gerry Anderson’s Thunderbirds on television and were enthralled by the video calls and how we could look forward to this wonderful empowering technology becoming mainstream in the future. Thirty years later and we're still waiting.

Thunderbirds videophone

With the development of microprocessors and the video codec improvements in videotelephony were rapid and by the late 1990s videotelephony was common in enterprise markets, possibly because corporations would pay the rip-off prices demanded by the telecommunications industry.

But for residential and mobile cellular customers videotelephony has remained an expensive and elusive option as technology and corporate profits conspire against what should be a commonly used means of communication.

For fixed networks the low connection speeds, poor reliability, lack of traffic class management, lack of quality of service and the high cost of data allowances has meant that video telephony is only used by a very small percentage of customers.

A search of the Australian mobile cellular operator’s websites did not turn up technical specifications for the 3G or 4G video calls that could be made over their networks. This is something that the Australian Competition and Consumer Commission (ACCC) should do something about as the potential for bill shock is quite real for customers that unwittingly make a lot of video calls.

Remarkably, it took several days and discussions with engineers from several companies to identify exactly what was being offered or not in this case.

The telcos' dirty little secret

The reason is Australian “4G” mobile cellular networks largely continue to utilise circuit switched “3G” telephony and video calls, and it appears that one company has decided not to offer video calls at all even if customers have handsets that support video calls.

3G video calls carry the audio and video in circuit switched 64 kbps channels that are separate to the packet switched data connections used for IP traffic. The size and quality of the video is so poor that there is little reason why anyone would use a 3G video call and pay the high prices demanded by the telecommunications industry.

To advertise that our 4G networks are still using 3G technologies for key services such as video calls might not be a good thing? And what of our advertising standards and the need for a disclaimer saying that the Australian mobile cellular networks actually use a combination of 3G and 4G technologies?

The 4G IP Multimedia Subsystem (IMS) multimedia telephony service that was meant to replace 3G telephony and video calls has largely not been adopted by Australian telcos despite being available for more than five years. The cost of introduction, the need to maintain margins and - until very recently - the very small data allowances provided to customers all conspired against 4G IMS video calls.

But finally the shift away from 3G voice and video calls to an IP based telephony technology is likely to occur soon with OptusVodafone and Telstra carrying out trials of the new voice over LTE (VoLTE) technology.

But the likely introduction of VoLTE in 2016 does not guarantee that videotelephony will become the norm on our mobile cellular networks.

Mobile customers are steadily becoming familiar with over-the-top (OTT) video call providers such as Skype and Apple's Facetime. A Skype video call uses, according to Skype, between 24-128 kbps depending on call connection quality. What this means is that two hundred two minute high quality Skype calls would use about 750 MB of data (upstream and downstream).

Consider a typical mobile $65 per month plan that includes $500 worth of calls and 1.5 GB of data. A video call will cost about $1.40 for the first minute and the cost of a standard two minute video call is about $2.40 meaning that a customer can make about 200 two minute video calls before extra charges are incurred.

But the $65 plan data allowance is only sufficient to support the highly compressed poor quality postage stamp size video calls possible today with OTT providers such as Skype, so herein lies the problem. The use of higher quality video calls that use 300 kbps per second or higher would chew through a customer’s data allowance at an alarming rate.

The growth in mobile video calling has been steady with Juniper Research recently reporting that by 2017 there would be more than 160 million regular video callers which is a 400 per cent increase over the 40 million today.

But for Australians to enjoy regular video calling with high quality video there needs to be greater vision (pun intended) from the government and the telecommunications industry.

The NBN and mobile networks need to be built with greater capacity and the capability to support mass video calls because video calls should not remain in the realm of science fiction.

With improved video quality, network capacity and connection speeds more Australian’s will make video calls and the cost of a video call should become cheaper. The failure of the telecommunications industry to provide reasonable low cost access to video telephony are symptomatic of the industry’s underlying inability to provide Australians with 21st century telecommunications networks.