IP Impact
Carriers, pay attention! The protocol promises to bring voice and more to the
Internet, though you may have some time before the big explosion
By PAT BLAKE, Contributing Editor
With the unbridled passion for anything Internet, its operating protocol is barreling
down the fast track toward worldwide adoption. What started with a bunch of World
Wide Web pages and e-mail traffic is now augmented by telephony products that use
Internet protocol.
Putting voice on the Internet adds an intriguing dimension to the on-line experience. But
real-time voice over Internet protocol (VOIP) is not yet the demigod that some might
hope. It is still a mere mortal, saddled with hurdles that strain availability and, for now,
deliver less than toll quality voice. Even in five years' time, real-time VOIP is expected
to make up only 5% of all Internet traffic, according to Deloitte & Touche Consulting
Group.
Meanwhile, a wealth of other applications can stand in those real-time shoes until
VOIP is planted more firmly on its feet. These scene-stealers benefit from a
store-and-forward approach that decreases most problems associated with IP
telephony.
Distance learning, fax, video and voice all are part of the ¤9.3-billion on-line pot
waiting at the end of the global rainbow in 2003, estimates Killen & Associates. The
trick will be for Internet service providers (ISPs) and telephone companies alike to
survive the ensuing storm of IP telephony competition.
History in the making
Just a few years ago, IP telephony was the stuff of computer gurus. It took quite a
stretch of imagination to believe that the high-latency, garbled-audio application would
ever leave the realm of novelty.
But the worldwide embrace of the Internet fueled improvements in software integration
and spurred the emergence of gateways and gatekeepers. In the process, VOIP
moved from strictly communication between personal computers to PC-to-phone and
even phone-to-phone.
Now, nearly every day another IP phone or gateway solution is announced. Such a
flurry of activity gives the impression that the technology has reached a certain level of
maturity. Actually, these are still early days. Just one year ago, AT&T Jens reportedly
became the first carrier to launch commercial real-time VOIP service.
A venture between AT&T (the majority owner) and 25 Japanese companies, AT&T
Jens began in 1984 as a capacity reseller on a Japanese packet-switched network. In
1992, it became the country's first ISP, focusing solely on the corporate market.
As the business market chugged steadily along, the on-line consumer market enjoyed
an explosive growth; in 1996, AT&T Jens tapped in. In August 1997, it took another
plunge, unveiling the VOIP service. It started with outbound connections to 37
countries. Today that count is up to 130.
AT&T Jens' packet-switched network gave it an edge in running VOIP domestically
and internationally.
"Our strength is our backbone network," says Stan Aoyama, deputy general manager
for AT&T Jens. "We take a call from Japan over the PSTN. Then we pump it into our
45-Mb/s pipe, which is basically like a private line out to the United States. We do the
same thing within Japan. We have a huge, high-quality domestic pipe that we send
traffic through.
"The only difference is instead of compressing it through the telephone switched circuit,
you go into the IP technology where you have fair usage of the bandwidth and more
efficiencies."
Customers sign on for the service with a prepaid calling card dubbed AT&T @phone.
Residential users have quickly embraced it, garnering an estimated 80% savings over
conventional international calls when using the card service.
No such thing as 'free' speech
Dramatic savings on toll charges make an alluring business model for IP telephony. But
true cost-for-cost comparisons are difficult to come by. For instance, currently in the
United States, ISPs do not have to pay access charges to local telcos for terminating
traffic. The result is tremendous savings for ISPs, however short-lived. The U.S.
Federal Communications Commission is expected to rectify this situation so that ISPs
play by the same rules as other carriers.
The arbitrage game also differs from country to country. Residents of some nations that
have held competition at bay may still find significant savings with VOIP. But the
domino effect of deregulation eventually will tumble the artificially high rates of even the
most cloistered PTTs.
"The cost advantage [of VOIP] vs. the public switched network is one that will persist
at least for a while," says Richard Sewell, senior manager of Arthur Andersen's Global
Communications & Entertainment Group. "There is still a window of opportunity for
arbitrage with international IP telephony, but it is dwindling at a rapid rate."
An initial prime application of IP telephony, especially internationally, is fax, Sewell
says, citing estimates that it accounts for 30% to 50% of all international traffic.
"The beauty of using IP networks for fax is that the quality problems that still exist with
IP telephony do not affect fax traffic as they would voice," he notes. "If you're using a
store-and-forward approach, any delays that you might experience don't impact the
ultimate output."
Faxing is such a natural fit with IP technology that about one-third of the world's traffic
will eventually migrate to the protocol, says David Roddy, chief telecommunications
economist for Deloitte & Touche Consulting Group. Voice mail and distance learning
will follow suit and outstride real-time voice applications carried over the
packet-switched environment, he claims.
"I've used several Internet telephony services," Roddy reports. "We notice the buzz,
the hum, the difficult connections and congestion on the network," problems not usually
experienced with voice services over the circuit-switched network.
"The competitive marketplace is actually amazingly smart at figuring out which
applications to put on which technologies," Roddy adds. "So I think that they're going
to figure out that real-time services can use the circuit-switched network, and the
non-real-time services can use the packet-switched network."
Feature attractions
Cost as a marketing ploy for VOIP may be in its waning days, but IP being a
packet-based technology makes it inherently more efficient than taking the circuit route
in many cases.
"Today, most long-distance calls take 64 kb/s of backbone bandwidth, whereas the
average IP telephony [call] takes 8 kb/s," says Robert Gourley, senior scientist for
WorldCom Inc.'s Enterprise Networking Laboratory. "That's an 8-to-1 savings in
bandwidth."
One of the most aggressive carriers on the IP stage is Germany's Deutsche Telekom. It
is testing the muster of several IP telephony applications in five different trials. In one
test, the carrier links the Web page of Bank-24 to the bank's customer care center
using a voice feature known as Web, or icon, calling. From the bank's home page, the
customer simply clicks on an icon and jumps to a voice conversation with a
representative. Telekom is also trying out the same technology for its own customers.
The carrier's first commercial pilot for real-time VOIP kicked off in the United
Kingdom in late 1997, which allows customers within the designated trial area to call
each other. The objective is to see how well the technology works under actual
conditions.
"It's one thing to deal with a technical transportation of voice over IP," says Thomas
Mueller-Kassner, Telekom's director of marketing management for business unit
telephone network services. "But it's another to establish a billing system and a
customer care system and set up an organization with terms and conditions. You have
to do many more things other than only transporting voice over IP."
Australian carrier Telstra is not only adding new features to its network, it is upgrading
its entire network of some 5,500 switches to make the network more data-centric.
"The company is going through a process that it's calling a data mode of operation, to
move forward under a data paradigm with voice overlay," explains Tony Richardson,
Telstra manager enablist of Internet Access Products. "In the past, telcos have
traditionally overlaid data onto voice networks."
The carrier is dabbling in several IP applications, including icon calling and virtual
second line. Virtual second line allows subscribers to receive incoming voice calls on
their PC while browsing. Such a diverse bundle of products will help propel the VOIP
market forward.
"Features are the key," says Graham Howard, Siemens director of advanced
applications for its Internet solutions business unit. "Although IP voice started with
people looking for a cheap way to get long-distance, now they're doing things like
Web-enabled call centers. It's building those sorts of applications that actually is driving
a lot of the added value rather than just the lowest possible cost."
Transporting in harmony
IP telephony may be spreading like wildfire, but plenty of work still lies ahead before it
can flourish.
"Long-distance providers, local telcos and ISPs will all have to have some kind of
quality of service [QOS] or reservation system like RSVP [resource reservation
protocol] on their networks," Roddy says. "These are ways of assigning priorities to
certain kinds of traffic whether it's primarily a circuit-switched or packet-switched
network."
From a carrier's point of view, he says, a business executive willing to spend lots of
money to send video to 1,000 retail stores in real-time, for example, should be able to
pay more and reserve a certain quality of service to make that happen. Right now, that
executive would be "competing with kids who are downloading video games and
people who are sending huge documents that can be sent next week," according to
Roddy.
If said executive wants to pay more to get higher quality of service, "largely speaking,
there's no way to do that," Roddy maintains. "All of these carriers are going to have to
implement reservation mechanisms to help deal with that."
Service providers will not only have to ensure quality on their own networks. For
long-term survival, they must be interoperable as well.
A good indication of industry commitment to IP is the fervor in the standards arena.
Version 6 of the Internet protocol (IPv6) is under development. The Internet
Engineering Task Force is refining its session initiation protocol (SIP). The European
Telecommunications Standards Institute is crafting Tiphon specifications, which
complement H.323, the International Telecommunication Union standard that defines
how PCs interoperate when exchanging audio and video.
Like IP telephony itself, these standards are relatively new and leave some room for
improvement.
"The real key is going to be getting to interoperability between different vendor
solutions. Today, if two companies both want to deploy Internet telephony, and they
want to be able to connect to each other, they have to both deploy the same vendor
solution," says Jim Simester, product manager for Lucent's PacketStar ITS product
family.
"A large part of that is driven by the fact that the H.323 standard is not yet fully
mature," he says. "There are certain areas such as gatekeeper-to-gatekeeper
communication that are not yet addressed in the standard. So, it will take at least a
Version 3."
In many respects, young carriers such as Qwest or Level 3 have a decided advantage
over their more senior peers. These upstarts are not dealing with legacy systems that
must be augmented to carry newer types of traffic. They are building IP-friendly
networks from the ground up.
Meanwhile, established carriers aren't eager to turn their backs on their embedded
infrastructure investments just to compete in cyberspace. The good news is that they
don't have to.
"One of the interesting ways to look at this is to say, 'Well, if I have [an Advanced
Intelligent Network], why would I build a different network just because I'm using IP
as the transport mechanism instead of circuit-switched?'" Siemens' Howard explains.
"And the answer, of course, is you don't have to. You can continue to use your AIN
infrastructure and just use those services to drive an IP-based transport network. That
way, you can actually get some interesting service combinations very rapidly. You
effectively bridge the SS7 world and the IP world, which is important."
Contact Pat Blake. |
