Big Telco VoIP : Is It for Real?
newtelephony.com
The torrent of announcements of IP voice deployments by large telcos in the United States and Europe in the last 10 days produced the impression that most of the large incumbents are moving to IP voice.
Certainly the intent of the announcements, timed to coincide with end-of-the-year reports to the financial community, was to give the impression that these companies are ahead of the curve on voice over IP.
While the reality may lag the perception these companies are trying to create, there are real projects behind the announcements, says experts. All likely are moving toward IP voice deployments in the next year, if they have not done so already. While IP voice is not an unqualified blessing for large incumbent service providers, there are enough benefits for them to move forward, and some are already well advanced with their strategies.
Are They for Real?
Although some of the big telco voice-over-IP announcements lacked detail, there is still every reason to think these companies intend to offer IP voice services, experts say.
For example, although the SBC IP Centrex announcement is mostly a reseller agreement with Level 3 Communications, "they are also in the process of trying to create that capability in house," says Danny Klein, communications network infrastructure analyst, Yankee Group.
Klein sees the reseller agreement as good strategy. "They see the customer demand and realize their own limitations. With this they can meet long-term goals, provide service to customers at competitive price points, and customers believe it is from SBC. And in the long run it will be from SBC." He adds, "I think that more RBOCs should approach it that way, including Qwest."
The announcements by Qwest and AT&T of plans for consumer services were much less fleshed out than others. "The AT&T announcement had more beef than the Qwest announcement," Klein says. "AT&T actually has [IP] offerings in place that are commercially available."
"Though there was not a lot of substance" in the Qwest announcement, Klein's "gut feeling" is "they are working at the goal, and I'm somewhat confident that they can have an offering in place by the first half of 2004."
Time Warner Pushing out
"I think the Time Warner [Cable] deployment is a lot more real [than others]," says Christine Hartman, voice-over-IP analyst, Probe Group. "Also the cable guys are playing the CLEC game, being pure CLECs, and they have been paying the fees. So they are not doing a Vonage play."
The Time Warner deployment, announced in October, was highlighted by an announcement last week of interconnection agreements with MCI and Sprint Corp. Time Warner plans to roll out the service to its entire service area within a year.
Time Warner's alliances with MCI and Sprint for call termination, as well as to augment its 911 and CALEA services, provides some interesting challenges to incumbents. "It would be interesting to overlay Time Warner's coverage with the RBOCs," says Hartman. Early research at Probe indicates that "BellSouth, SBC and Verizon are all very much affected. Qwest is the least affected."
An interesting facet of the Time Warner deployment, Hartman says, is the company's recent announcement that it is working with Logica, which offers, not only voice messaging but also video messaging, a service that could tie into Sprint's PCS video.
Hartman sees the Qwest announcement as also something of a challenge to the FCC. "Qwest is saying 'You are not doing anything about Vonage. So we are going to join them and force the FCC to do something.'"
It's the Services
Some see the recent announcements as something of a watershed, not in technology so much as in how telcos think about services.
"I think we have finally turned the point where people care about the top line," says David Fraley, principal analyst, Gartner Group. Incumbents have slashed costs for the last three years. Now there is the realization that "they can't just sell bandwidth, and they are getting into applications." For IP voice, this means it is seen as a source of "new services that could have some value and drive totally incremental revenue."
Today, Fraley believes, "if you ask the top 10 service providers in the [United States] what is their No. 1 product, they would probably say T-1, at least the line-side carriers the LECs." That T1 is usually connection to a PBX or, worse, an IP PBX "that they do not own or operate. If they could take that T1 and put IP centrex on it and some Web access, they could go from $300 to $400 a month [in revenue] to a couple of thousand a month."
IP centrex has been a hot topic but is problematic because it cannibalizes existing centrex sales. Nevertheless, Fraley sees potential in "turning vendor equipment into service-provider services. Companies used to buy PBXs and now they are going to lease an IP centrex service."
Whether the current round of deployments is significant or not also depends on your point of view. "A year ago the Sylantros, LongBoards VocalDatas and BroadSofts were all trying to figure out how to get into the ILECs," Fraley points out. "Now they are making it. So this is progress, from their side."
Not Voice Alone
New voice services are a good move, but in the new IP world, voice services alone won't be enough. "Assume the regulatory issues are all resolved to the benefit of everyone," says Hartman. "If you have all these guys competing on voice, they are going to end up in a price war, which is what happened in long distance years ago, and it drove all the companies into the ground. What has to happen is that they have to go beyond voice. The wireless side is trying to do that." One way wireless is trying to broaden its services, she adds, is to tie wireless into wireline.
Another way is to link services such as voice, video, mobile and instant messaging. "Suppose you can send an IM to say, 'Do you have time talk?', or you can escalate to a phone call and even show something on video," says Hartman. "When you can do this all seamlessly, it has value."
Cost and Complexity
Another reason for slow going is that these deployments do cost money and are complex projects, despite what is said about the cost-savings and ease of management of IP voice.
"There is a lot of discussion that voice over IP is less costly. I'm not a big believer in that," says Fraley. "Yes it has cost savings but look at the potential for long- term costs or network upgrades. Carrier grade is still carrier grande. We're not putting in [Windows] NT boxes here."
Even the SBC resale deployment took time to bring to something that could be offered as a commercial service. Klein first heard about SBC's deployment of the Sylantro server in June. "They were using it in selective regions and cities prior to Supercomm," he says. That was over half a year before they made an announcement."
The issues are not only technical. Because this is the first time these service providers have offered enhanced IP services they are going to take their time. "They want to be sure they can do it properly," says Klein. "They don't want to fall into a hole where their own people can't support their own service and products. So it's a matter of training people internally: customer service, technicians, customer premises rollout, qualifications, all the things they need to do. Aside from deploying it in the network, there are a series of other events that need to happen and be streamlined before any formal announcement is made." |
