3/98 Strategic Networks. Voice and Data Worlds Collide [ASND references]
by Susan Almeida, VP of Consulting Services, Strategic Networks
snci.com
As we hurdle through the information age, we're at the beginning of a once-in-a-century tectonic shift. For the first time, data is about to eclipse traditional voice traffic. As the data snowball barrels forward, voice calls will become a
minuscule piece of the information traffic streams coursing
around the world. Simply put: networks will be designed for
data, and traditional voice calls will piggyback along the
cheapest path. Also for the first time, voice is taking on a
strategic role -- clever voice/IP applications that will radically
transform business, much like call centers, Web sites, and e-mail already have. What is the enabling technology?
Packetized voice, i.e., techniques that chop voice up into
bite-sized pieces for network transport, including Voice over IP
(VoIP), Voice over Frame Relay (VoFR), and Voice over ATM
(VoATM).
These two trends -- explosive data growth and strategic
voice/IP applications -- are nothing short of monumental: they
are fundamentally altering the global telecom infrastructure.
The shift from traditional circuit-switched networks to
data-centric networks is more fundamental than the last great
transition in the global telecom infrastructure: the move from
analog to digital. That shift created economic activity
measuring billions of dollars through new central office
switches and transport services. Today's sea change from
circuit-switched to packet-switched nets will make that
transition look like child's play. In the wake of this great
re-buildout, some very big players too slow to move will be
shunted to walking-dead status; others with the innovation and
courage to act will be catapulted to the head of the race.
Let's explore the impact on infrastructure and operational
efficiencies first, then the role of strategic voice/IP
applications.
Follow the Dollars
For the last century, circuit-based voice traffic loomed
monolithic; data always the second cousin trying to elbow its
way through infrastructures optimized for carrying phone
conversations: skinny, rigid telephony pipes. But if we zoom
forward, traditional phone calls will be but a tiny sliver of the
pie. By various accounts, the swing will be between the year
2000 and 2010. In some U.S. regions, like Silicon Valley, the
pendulum has already swung.
As the center of gravity shifts to data (specifically, IP), there's a
huge sucking sound as investment dollars follow the traffic.
Until now, the lion's share of funding has funneled into a
telephony-centric infrastructure. This is why most Internet traffic
today, including voice over the Internet, actually runs over
telephony nets.
But the days of telephony-centric circuit switching are
numbered. Why? Because service providers and enterprises
alike are now pouring their investments into the high-growth
area: data. Why waste precious dollars funding infrastructure
optimized for the slow-growth phone call market? With the bulk
of capital dollars and senior management attention flowing to
packet-switching nets optimized for data, it becomes ever
more expensive and cumbersome to maintain a separate
voice infrastructure. Network planners don't like to run multiple
nets when fewer will do. It is massively expensive and
inefficient to maintain over the long run. The natural proclivity is
to consolidate infrastructures wherever feasible. And
integrating voice and data is a time-honored recipe for saving
costs -- higher volume and complimentary traffic patterns
means better dollar-for-dollar use of the fixed infrastructure
investment. The new wave of innovation in packetized voice
has service providers and end users alike itching to once
again integrate data and voice. But unlike the 1980s
integration over TDB networks, this time it will be over
data-centric infrastructures.
The itch to integrate is not lost on the equipment vendors. If you
take the pulse of the equipment vendors you'll find massive
brainpower and engineering dollars being pumped into
packetized voice. It is inevitable that technical barriers will drop
-- and voice will be an integrated stream flowing through the
global packet-switched infrastructure. Service providers and
enterprise users will be able to collapse their half-dozen
separate data and voice infrastructures into a souped-up,
IP-centric, packet-switched infrastructure. Separate
telephony-centric, circuit-switched infrastructures will eventually
shrivel up and die.
Why Packet Switching?
Simple: it's the architecture that works best for data and it's
also the technology that squeezes the most out of underlying
bandwidth. Some argue that with fiber build-out, Wave Division
Multiplexing (WDM) and switching advances, bandwidth will
soon be free and bandwidth optimization mute. The reality:
demand will continue to outstrip supply in many parts of both
public and enterprise nets. For most net planners, then,
bandwidth remains a scarce and expensive resource to be
optimized, at least for portions of their nets. While traditional
circuit-switched nets designed with telephony in mind rely on
fixed, nailed-up connections; packet-switched nets -- whether
cell (ATM), frame relay, or IP -- offer fluid, elastic connectivity
that squeezes the most out of expensive pipes. And with the
data market innovating at "Internet speed," packet-switching
costs are driving down faster than was ever conceivable in the
traditional telephony switch world. Packet-switching equipment
has nose-dived from $60/packet/sec in the '80s to one tenth of
a cent per packet/sec with today's high-end routers and ATM
switches. The blazing innovation from the data world is not only
driving down equipment costs, it's also making
packet-switching acceptable for carrying voice. Further, it's
pushing bandwidth efficiencies to new heights via advanced
voice compression and silence suppression (silence is up to
60% of the average phone conversation). Perhaps one of the
most powerful arguments for why packet-switching will be the
next infrastructure is that the cost of carrying a voice call is
about to drop an order of magnitude.
Let's take a look at what's pumping into the marketplace for
packetized voice. The key technologies are: digitization and
packetization of analog voice traffic, voice compression and
tight control over delay and loss. To get good voice quality you
need minimal delay, predictable delay and consistent
performance. Natural sounding speech needs more: echo
cancellation, background noise regeneration and low loss.
Loss is even more critical with packetized voice because a
dropped compressed packet is far more noticeable than noise
on a traditional phone call.
We've already seen quantum leaps in all of these areas -- and
the advances show no signs of abating. Take voice
compression: while used for 20 years to squeeze the most
voice into fixed leased lines, now the dramatic gains are being
made in packetized voice. Today's voice compression
algorithms already achieve up to 10:1 gains versus traditional
64kbps voice circuits. With 2kbps voice compression now on
the drawing boards we will soon achieve near 30:1 gains over
a traditional circuit-switched net! Voice quality is subjective so
delay benchmarks are tricky, but on the low-end of the
traditional telephony delay scale, a satellite phone call takes
about 250ms to transmit.
Let's look at how packetized voice performs within the major
data-centric networking models: ATM, frame relay, and IP
packet switching. You can think of these packetized voice
technologies as falling into two categories: packetized Voice
Over Transport Services (VOTS), which includes VoFR and
VoATM; and VoIP.
VOTS
The VoFR and VoATM approaches are similar: analog voice
calls from a CO switch, PBX, key-system, or handset are
passed to a frame or ATM switch. The voice traffic is then
digitized, packetized (into frames or ATM cells), compressed,
and otherwise conditioned; then switched over a frame relay or
ATM transport net to the destination switch, where the process
is then reversed.
Voice over ATM. There are two main applications for VoATM:
enterprise nets and as transport within service provider nets.
For enterprise nets, you connect traditional telephony
equipment (i.e., PBX) to your ATM switch, which then converts
and packetizes the voice stream. The packetized voice stream
is then carried over a private or public ATM network. Many
service providers are already using ATM as a multi-service
platform to provide frame, ATM, and IP services to users;
carrying voice streams moves infrastructure convergence one
step closer.
ATM was designed from the start to handle voice as well as
data and video streams. VoATM has been available in ATM
switches since last year, pioneered by vendors like GDC
(Middlebury, CT) and Nortel (Brampton, Ontario). The ATM
solutions include compression, echo cancellation, and very
tight control over delay through built-in ATM Quality of Service
(QoS) mechanisms. Another important development: applying
a voice edge/core architecture similar to data nets. The
concept: move processing-intense voice routing functions to
the edge; and perform high-speed voice switching in the ATM
core. The advantage: it cuts delay and improves sound quality
by eliminating multiple conversions/compressions that would
normally occur if the traffic threaded its way through
intermediate tandem switches or PBXs. With key Voice and
Telephony over ATM (VTOA) standards now finalized, we'll be
able to make broader use of these approaches.
Voice over Frame. Frame relay has come a long way since its
data-only roots. VoFR works analogously to the ATM example.
But, in the case of frame, the main application is for the
enterprise. And since there are so few private enterprise frame
relay nets, the transport is a public frame relay net. Leading
frame relay access device (FRAD) vendors like Hypercom
(Phoenix, AZ), Nuera Communications (San Diego, CA), and
Motorola (Schaumburg, IL), have supported voice/frame for the
last two to three years. Most FRADs today provide some level
of VoFR support, again, including digitization and
packetization, compression, echo cancellation, and bandwidth
management/traffic optimization. Initially, these were all
proprietary, but the VoFR standard FRF.11, covering coding
and frame conversion, compression and silence suppression,
was ratified in May of 1997. The latest innovations include
voice switching in the frame switches themselves. This
provides similar quality and delay benefits as the ATM-based
voice switching discussed above; while expanding the FRAD's
voice calling capabilities beyond branch office-to-regional
office point-to-point calls. In terms of delay control, frame relay
is not as deterministic as ATM, but again, the frame market
has not stood still here. Simple prioritized frame relay has
been implemented and is now offered by several major service
providers like US West !NTERPRISE (Englewood, CO), MCI
(Atlanta, GA) and Sprint (Westwood, KS). US West
!NTERPRISE, for example, guarantees 50ms nationwide for
its prioritized frame relay service. And the recent ratification of
FRF.12 provides a standard way to segment long frames into
shorter frames so voice frames are not stuck behind large data
frames.
Voice over IP. Among the packetized voice choices, the
industry darling in terms of hype and investment is VoIP. And
with good reason: VoIP shares the cost advantages of its
VoFR and VoATM cousins, but, more strategically, adds
tremendous value via new voice/IP applications. Here, we're
not referring to audio streams or audio clips on Web sites.
Rather, we're referring to the new class of applications that
merge Internet capabilities with telephony functions. This
strategic value is what's going to tie the bow on V/IP. IP has
already won the protocol wars as the native data networking
protocol for enterprise and public data nets -- next on the
agenda is packetized voice.
Again, focusing on the operational efficiencies side of the
equation first, let's look at VoIP. VoIP works similarly to
"VOTS" services, but instead of converting to frames or cells,
the voice traffic is converted to IP packets. One of the key
enablers of VoIP is the "VoIP gateway" which digitizes,
compresses and packetizes voice for transport over IP nets,
such as internets, intranets or extranets. Various market
researchers have pegged the VoIP gateway market in the
$1.8B range by 2001 while the dial equipment market is sized
at $7.5B in the same time frame. Nearly every major network
vendor has delivered or announced some form of VoIP
product. For VoIP gateways, VocalTec Communications
(Herzliya, Israel) and Nortel's Micom Communications (Simi
Valley, CA) were early leaders. Lucent Technologies (Murray
Hill, NJ) offers its Internet Telephony Server, Newbridge
Networks funded Vienna Systems Corporation (Kanata,
Ontario), and Cisco Systems (San Jose, CA) has its 3600 and
2600 series routers. The momentum can also be seen in
100-plus companies that participate in the Voice over IP
Forum.
You may say, "Well, this is great, but the quality of voice over
the Internet is terrible." This may be true today, but the quality is
improving daily. In a VoIP system, delays are introduced by the
VoIP gateway (one on each end) as well as by the end-to-end
delay across the wide area network(s). Today's gateways
introduce delays as high as 400-600ms. Multiply this by two
(since there is a gateway at both origination and destination)
and you've got serious delay. But Digital Signal Processing
(DSP) advancements are slashing this down to the 100ms
level. Motorola is a leader in this area -- with claims of VoIP
processing speeds estimated at the 40ms level.
At the wide-area IP network level, performance issues are
being addressed on several fronts. At the raw bandwidth front,
advances continue to be made in high-speed access and
backbone routing, switching, and transmission capabilities.
This is the year where high-speed access networks get real. In
the U.S., xDSL and cable modems are expected to move from
tens of thousands of subscriber lines to hundreds of
thousands; hitting the million mark in 1999. Faster dialup,
ISDN, T3 frame relay and ATM access continue to rollout. At
the physical and transmission level, WDM and SONET
deployments are bumping raw transport by orders of
magnitude without service providers having to bankroll
time-consuming fiber installations. The routing and switching
fabrics are cranking up with next generation ATM switches and
a new range of multiple-gigabit routers from companies such
as Avici Systems, Inc., (Chelmsford, MA), GigaPacket
Networks Inc. (Littleton, MA), NeoNet LLC (Westboro, MA),
Torrent Networking Technologies Inc. (Landover, MD),
Berkeley Networks Inc. (San Jose, CA), Juniper Networks
(Santa Clara, CA), Ascend Communications (Alameda, CA)
and Cisco. All of this is adding up to high-performing public IP
nets. MCI, for example, is guaranteeing less than 95ms delay
across its Internet backbone; Concentric Network Corp.
(Cupertino, CA), a new entrant, offers serious credits if it
doesn't hit its 125ms guarantee. In practice, these IP nets are
performing at levels which are quickly closing the gap with the
VOTS nets (at 50-70ms). Layered on top of this raw
forwarding power in the IP nets is the rapid implementation of
H.323 standards -- protocols for transmission of video, voice
and data over an IP network -- and more control over quality of
service via QoS, Class of Service (CoS), and Quality of
Access (QoA) techniques.
As gateway and network latencies continue to fall, VoIP
performance will soon surpass that of conventional satellite
phone calls. And, once voice is digitized, it can be
manipulated in many ways -- for example, to produce
CD-quality voice. At some point, packetized voice will become
the new "toll-quality" standard that traditional telephony calls
aspire to reach.
So, What's the Delay?
Despite the clear march towards packetized voice, the switch
will not flip overnight. The worldwide data infrastructure has
quantum leaps to make in capacity, reliability, QoS, billing and
calling features like call routing. In essence, the data world has
a lot to learn from the telephony world, and we expect a lot of
leadership from the traditional telephony/transmission vendors,
like Lucent and Nortel, masters of these techniques who are
now very serious about IP nets.
VoFR has the installed-base edge in the enterprise, but will be
increasingly encroached at the low end by VoIP and at the high
end by VoATM. Both VoIP and VoATM have critical
dependencies that could stall their adoption and boost the life
of frame (remember ATM to the desktop?). For IP, it will be the
expected leap in performance and latency controls. And
today's first generation VoIP products and standards are far
from complete. With some exceptions, most of today's VoIP
gateways are PC-based, with low port counts, virtually no
built-in reliability, large footprints, and are voice-centric, with
little in the way of advanced telephony features. The next
generation hitting the market is bringing carrier-class scale
and reliability, SS7 integration, and integrated voice+fax+data
support. There's virtually no interoperability today, but
standards bodies are furiously tackling inter-gateway
signaling, call control, address translation between IP
addresses and telephone numbers, security and billing.
In the meantime, vendors from all corners of the
internetworking world, the telephony/transmission world, and
startups, are jockeying for position. Hold onto your hats as we
face architectural upheaval during yet another round of
piranha-like integration -- this time, of VoIP capabilities into
every imaginable network product. VoIP gateways have
already made their way into FRADs from Hypercom, Nuera
and Motorola. Prime examples of integrated products in the
pipeline are integrated remote access servers, from vendors
like Ascend, Lucent, 3Com Corp. (Santa Clara, CA), and
Cisco, adding VoIP and SS7 capabilities; and VoIP modules
being added to PBXs and COs from companies like Lucent
and Nortel.
For VoATM, possible stallers include technical issues around
converging on a scaleable approach to map IP QoS to ATM,
as well as market issues. For enterprise nets, public ATM
services have been caught in a chicken-and-egg mode:
enterprise users won't sign up unless the service is ubiquitous,
service providers have been waiting for enterprise demand.
Recently, this is starting to break open. As for VoATM as a
means to carry CO-switch voice traffic inside of service
provider nets, the question is whether this will scale enough to
move from trials to production.
The Real Power of Voice/IP
So far, we've discussed the operational efficiencies of using
packetized voice. But in the case of VoIP, don't miss the real
power. V/IP is not just a cheap way to run phone calls. It is
ushering in a whole new range of voice services that add
tremendous value to an enterprise. Many of the V/IP start-ups
are focusing on the application side of this market -- this is the
stuff that will drive a boom in all manner of new
business-transforming applications. There are endless
possibilities, but three very real, already-on-the-shelves
applications highlight the power of this nascent market.
The first is use of voice/IP applications to spur e-commerce.
The key example is voice-enabled Web pages. How it works:
a consumer browsing your web site is interested in buying your
product. Rather than disconnecting the PC connection; then
dialing your 800 number to get more info. The consumer clicks
on your customer service web icon ... a VoIP connection is
made to your agent who can talk directly with the customer ...
push more Web pages or order forms to the customer ... and
close the deal on the spot. Add a video camera, and you're
interacting near face-to-face as well. Bottom line: more touch
equals more sales. Lucent's Internet Call Center is a prime
example of this application.
The second class of applications address operational efficiencies. Workgroup collaboration and unified messaging are two already available that can completely transform workplace productivity. These become as mainstream a part of the business day as cell phones, e-mail, and
audio-conferences today. Microsoft's (Redmond, WA)
Netmeeting and Lucent's MMCX point the way to
next-generation workgroup collaboration. Here, you combine
the power of phone calls, video conferencing, electronic
whiteboarding and collaborative editing in one platform. With
unified messaging now a reality (like Lucent's INTUITY Internet
Messaging), a user gains full portability. Listen to voicemail
while surfing the web ... have e-mails read over the phone
while on the road ... have faxes automatically routed to the
hotel or email ... etc. These applications address what's
needed for a businessperson to successfully work in today's
hyper-speed business world: mobility and 7x24 convenience.
Cashing in on Convergence
So as we move to this new converged world where the Internet
meets telephony, what is the best way to navigate through the
next few years?
For the enterprise user, it boils down to finding the cheapest
way to carry fully-featured voice at near-toll-quality while still
tracking usage and costs and minimizing management. And,
more importantly, leveraging the next wave in strategic
business-transforming applications so your company is not left
in the dust. Service providers face equally daunting decisions:
which type of telephony and converged V/IP services to offer
and what is the best internal infrastructure to run them over?
Hello! It's your wake-up call. Hundreds of billions of dollars are
on the line.
# # #
Note: Stay tuned for next month's Strategic Networks On... to
gain insights into what service providers and enterprise users
are doing in response to this new converged world, and more
importantly, what they should be doing.
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