The economics of emergency services

Opinion
May 2, 20053 mins

My recent column on the necessity of universal 911 services definitely hit a hot button. Many thanks to those who wrote to share their views.

A few clarifications: First, I provided some inaccurate information regarding Vonage‘s 911 capabilities. Per Vonage’s current Web site, users don’t have to pay extra for 911: Even the $14.99 basic rate includes 911 capabilities, though in all cases users must activate their 911 features themselves (it’s not built-in). My apologies for the error.

Second, it’s clear from the responses that there’s a lot of FUD around the issue of 911 and E911 services. Let’s cut to the chase: The real issue, as I noted in the previous column, is that enabling VoIP with E911 capabilities costs money – and nobody’s willing to belly up to the bar to pay. Or more precisely, nobody’s yet taken a hard look at how funding models for public services should evolve in a world where voice (not just VoIP) is virtually free.

One of the few organizations focused on the issue of 911-enabling VoIP is the 23-year-old National Emergency Number Association (www.nena9-1-1.org), which has an active standards body seeking to address the technical challenges of next-generation VoIP. To its credit, Vonage is a charter member of NENA’s VoIP committee, as is AT&T. Other key VoIP players, including AOL, have recently joined.

As former NENA president John Melcher testified to Congress a few weeks ago, 911 services have never been profitable. Simply maintaining the current infrastructure and services is expensive for the ILECs. Upgrading them to integrate with VoIP services is even more expensive. And building a new emergency infrastructure that doesn’t rely on the ILEC infrastructure, while a laudable goal, also is (you guessed it) expensive.

Moreover, the old methods of subsidizing 911 services no longer work because voice services (of whatever flavor) aren’t the profit-making engines they were in decades past. When the original 911 system was created, AT&T footed the bill in exchange for increased profits – easy to engineer in a government-regulated monopoly world. When cellular providers were required to support 911 services, they did so in exchange for the opportunity to offer high-margin wireless voice.

That opportunity no longer exists. In a world in which voice is a commodity, there’s no deep-pocketed sugar daddy who can foot the bill for emergency services in exchange for future higher profits or new markets. In a world where voice is free, people who sell nothing but voice services (whether Vonage or Verizon) face a future of razor-thin margins.

What to do? I can think of one solution: Create a pot, and ask anyone who wants to offer communications services – whether traditional or VoIP – to contribute (and base the amount of contribution on the number of customers served). That includes cable companies, wireless providers, ILECs, CLECs and the Vonages of the world. Use that money to fund the architecture, design and operations of 911 VoIP services.

Yes, that increases costs. But as I wrote in the previous column, 911’s not negotiable.