Over-the-top as it relates to telephone services

(Summary:  SIP telephone service is really neat and you should learn about it and use it if you want to be trendy, modern, and up-to-date.)

“Over-the-top” is a general term for the Schumpeterian sort of disruption that we see over and over again as various categories of commerce get disrupted by new distribution mechanisms (generally involving the Internet).  We see the traditional world of record labels, a world in which ten or twenty years ago a handful of companies had a stranglehold on the distribution of music.  A world in which I had no choice but to purchase a “record album” of maybe ten tracks to get the one or two tracks that I actually wanted to listen to.  That traditional world is now in the past, replaced by an over-the-top world in which the consumer can download the one or two tracks of interest by clicking around on the Internet at iTunes or Amazon.

We see the traditional world of video entertainment, a world in which ten years ago a handful of cable TV and satellite TV companies had a stranglehold on the distribution of things like HBO and sports event broadcasts as parts of bundles of dozens or hundreds of channels which the consumer was forced to buy to get the two or three or four channels that the consumer actually wanted to watch.  That world is likewise gradually receding into the past, with OTT mechanisms like HBO Now and Netflix and Hulu and CBS All Access.

I’ve recently encountered some aspects of modern telephone service that also count as over-the-top, new services called “SIP” that bypass the traditional landline telephone companies and that will likely be as disruptive in the telephone world as the OTT services have been for music and video.  I will tell you about some of the SIP services.

We sort of vaguely know that something rather OTT-like is going on in the world of telephone service, because we keep hearing about MagicJack, Vonage, and Ooma, each of which offers the dream of supposedly super-cheap monthly telephone service as compared with legacy landline telephone service.  I say “dream” because if you actually sign up for MagicJack you encounter its poor quality customer service.  If you sign up for Vonage to find out that it does not actually reduce your monthly telephone bill very much as compared with legacy landline service.  These services all permit you to “cut the cord” from your legacy landline telephone company, instead relying on a broadband Internet connection for service.

Having identified MagicJack, Vonage, and Ooma as OTT providers of telephone service, I must tell you that after some years of putting it off and putting it off, I finally realized I needed to try to understand “SIP” telephone service.  SIP stands for Session Initiation Protocol and it is a sort of common thread that runs through a variety of different OTT types of telephone service.  I will offer a brief introduction to SIP with a couple of examples.

I should mention at the outset that if you want to be trendy, modern, and up to date with SIP, you will need to purchase an Obihai box.  There’s just no choice about it, you might as well purchase it now because some day you will find it very handy.  This box permits you to play around with various SIP services and see how they work.  The main point of the Obihai box is that it is “open” and “unlocked”.  You can hook up any of a wide range of SIP services to it.  In contrast, the only way to get MagicJack service is to use a MagicJack box, and the MagicJack box cannot be used for any service other than MagicJack service.  The same is true for Vonage and Ooma.  With those companies, the box is locked to the service and vice versa.

What got me started on this was the fact that many years ago our firm used to have an office in Frisco, Colorado.  And oddly enough we had a telephone number in that office.  The telephone service was provided by a legacy landline telephone company.

So what did we do, years ago, when we moved that Frisco office to a different location in Colorado?  We realized that all sorts of clients and others had written down that telephone number and had put it in their address books and Rolodexes and cell phones.  We realized that countless business cards were even now floating around in peoples’ pockets and desk drawers, years after the fact, with that telephone number on the card.  So even though many years have come and gone since that office was there, we figure we had no choice but to keep that telephone number alive.  You never know when someone might dial the number and we would want the call to reach us.

So for years upon years we have been paying our legacy landline telephone company (Centurylink, formerly Qwest, formerly US West, formerly Mountain Bell) $25 per month to provide a so-called FX (foreign exchange) line.  If someone dials that old Frisco telephone number, it rings to some telco central office facility in Frisco and then gets passed to a long-distance carrier of our choice (in our case Sprint) that carries the number for 75 miles until it reaches our Westminster office.  So we pay a monthly bill to Centurylink and we pay a monthly bill and a per-minute bill to Sprint to keep that old telephone number working.

I feel a bit clueless about this since if I had been a bit smarter I could have ported that old telephone number many years ago to MagicJack or Vonage or Ooma and cut the monthly cost down substantially.  What’s more, with any of those providers, the per-minute fee paid to Sprint to transport the call along a distance of 75 miles would have disappeared.

What finally forced me to pay attention to this was that a letter showed up in the mail from Sprint, letting us know that Sprint was going to discontinue providing long-distance telephone service for our Frisco telephone number.  (So far as Sprint knew this was a landline — I expect Sprint had no idea that it was actually an FX line.)  So I realized I needed to get a clue about this.

This dropped me into the rabbit hole of SIP.  It is a fascinating rabbit hole, and it is a rabbit hole that leads to ways to save lots of money and gain functionality that would otherwise not be available.  But it is a rabbit hole.   (By the way if you are going to descend into this rabbit hole you will probably need to pick up a copy of this book.)

The first thing I found was that there are a large number of companies that provide so-called “DID” service.  DID stands for “direct inward dialing”, and the idea is that you can go to any one of these companies and sign up for a telephone number.  If a person dials that telephone number, the DID service provider company receives the incoming call and routes it (through the Internet, naturally) to wherever you want it to be routed.  You could send it to your Obihai box.  A moment later you could change your mind and send it to a SIP app that you had previously downloaded to your cell phone.  A moment later you could change your mind and send it to your SIP-based telephone system.  Importantly, there will likely be no per-minute charge for the incoming calls on your DID number.  Oh and here is the fun part.  The monthly cost for the DID number might be a mere $1.50 per month.

So recently I ported our firm’s old Frisco phone number from many years ago away from Centurylink to a DID line from a SIP provider.  This incurs a $1.50 monthly charge from the SIP provider.  But it eliminates the $25 monthly charge from Centurylink.  And it eliminates the monthly charge from Sprint as well as the per-minute charges from Sprint.

Oh and with the FX service from Centurylink, what would have happened if by some chance two people were to dial the number at the same time?  One person would get a busy signal.  Expanding the FX service to more than one “presence” (this is telcospeak for “more than one call can come in and not get a busy signal”) would add $25 per “presence”.   With this SIP DID line, in contrast, two calls can come in at the same time.  To make it so that three calls could come in at the same time would add only another $10 to the monthly cost, rather than $25.

So I program the SIP DID line to connect to my Obihai box, and I plug the Obihai box in to our telephone switch as if it were an ordinary line from a landline telco.  And it all works.

The range of ways that SIP can save money or add functionality or both doesn’t end there.  For example we recently ran into a situation where it would be very helpful if firm clients located in China could reach our Gotomeeting sessions by dialing a telephone number in China.  I was astonished to find that with a few mouse clicks I was able to sign up with a DID service company to get a China telephone number.  This is a telephone number in Beijing.  If the client dials that number, it gets answered by some physical facility in Beijing and then gets put onto a high-quality-of-service voice-over-IP data connection to a node in the US that connects to the ordinary Internet.  I am then able to configure that node in the US (it turns out it is located in New York City) to connect through to … to wherever I want.  I could connect it to my Obihai box, or to my mobile phone, or to our telephone switch in our Westminster office.

What is the cost for this Beijing telephone number?  It costs $9.25 per month.  That’s it.  No cost per minute.  Someone could call that telephone number day after day, for an hour at a time, and it would not make the phone bill any bigger.

These are but two examples of ways that SIP technology saves money or adds functionality or both.  In future columns I will describe other SIP services.