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Understanding VoIP Pricing

All VoIP phone services are not treated equally by our federal regulator, the CRTC. They have a historic policy that ensures affordable public switched telephone service (PSTN) in every corner of Canada. This means that you may be paying extra to subsidize rural phone service on your VoIP telephone bill where the company next door is not. Here’s why.

By Ellen Koskinen-Dodgson

Ellen Koskinen-Dodgson is an IT and Telecommunications Management Consultant, electrical engineer, author, speaker, media resource and Expert Witness. She is the President and Managing Partner of TMC IT and Telecom Consulting Inc.

VoIP Origins

The concept of transmitting voice over an IP network is not new. Many years ago, gaming systems developed a technology to encode voice into data packets that could be sent through the gaming server to other users—a voice chat channel.

Services like Skype grew from these beginnings to provide peer-to-peer voice communication over the internet. Bandwidth was low, so quality was variable and much worse that a phone call—however, it was ‘free’.

Phone services from VoIP companies next began offering better quality at a flat rate monthly charge. As VoIP technology developed, quality improved further and mainstream cable companies started offering phone service using VoIP in competition with the established Telcos.

Now the Telcos themselves are migrating to VoIP as a replacement for legacy PSTN.

All VoIP Is Not Equal

The CRTC rules say that there are 4 categories and 2 classifications of VoIP access:

  1. The original peer-to-peer service over the internet
  2. The addition of the ability to connect with other phone users
  3. Connections over dedicated (non-internet) IP networks
  4. Functional equivalence to business phone lines

Two access classifications are:

  1. Access-independent: where service is offered independently from the network (service only)
  2. Access-dependent: where the service includes the access network (turnkey solution)

So, early peer-to-peer service is 1/1. Phone services offered by competing carriers is 4/2.

Who Pays Subsidies?

The CRTC regards Category 3 and 4 as equivalent to traditional phone service, so providers must conform to the same rules as that PSTN-based service. This includes a contribution to subsidize rural PSTN services.

Category 1 is excluded from such rules because it has no connection with the phone network.

Category 2 is currently in active dispute. Providers argue that a 2/1 service is basically just a data application, even if it does offer users a phone number and connection to other phone systems. This includes many video calling services such as Zoom.

Who Doesn’t Pay (Yet)

If you have a 2/1 service, you’ll pay lower per-second fees than with a 4/2 service provided by a main carrier. You can have a 2/1 service from various companies including PhonePower and Microsoft’s (Teams) and just pay for the service, using your internet access and the internet.

If you have a SIP trunk service from a main telco, you can still save money. If you bypass the SIP trunk and route your phone call to a destination which also subscribes to a 2/1-type service, you can connect to them over the internet with no LD charges.

If you’d like to discuss VoIP issues, or to comment on this article, contact me at .

This article was published in the November 2023 edition of The TMC Advisor
- ISSN 2369-663X Volume:10 Issue:6

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