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Technology Stocks : Voice-on-the-net (VON), VoIP, Internet (IP) Telephony

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To: Ron Kory who wrote (165)11/20/1997 11:19:00 AM
From: Frank A. Coluccio  Read Replies (2) of 3178
 
Ron, you bring up some excellent points concerning voice mail, store and forward and faxing.

Regarding real time VoIP issues, though, many of the QoS issues will be resolved over time, perhaps based on different offerings than those which exist today, probably tier- or class-of-service- selectable on a call by call basis. More than likely this will happen in a Darwinian fashion, nevertheless, it will get resolved, and probably at a higher price than what is currently perceived to be the case, namely free, where quality is the issue.

As to whether or not businesses would at this time use VoIP, that's largely up for debate, and the first inclinations that I have gotten from my clients is that "it will depend." Intuitively, I would imagine that for low profit margin enterprises, or where financially distressed organizations are concerned, the answer would tend to be in the affirmative.

For others, on the surface it would "appear" that this would depend largely on financial incentives, primarily, but there's more beneath the surface.

Even where pricing is the sole criterion, it's difficult to say that these incentives would be as appreciable, domestically, as they are internationally. I tend to think that the descending costs of regular PSTN calls resulting from deregulation and stepped up competition, and more efficient switched-circuit technologies, may prove to be an inhibitor, or a "disincentive," by those whose primary calling patterns are domestic as opposed to international. International calling is another story, where financial incentives are high enough to allow one to live with the tradeoffs of degraded performance.

(Here, in the international sector, degradation is not only a function of inherent VoIP constraints. Rather, it is primarily due to the paltry nature of the Global Internet Infrastructure in many parts of the world. There are still many nations where T-1 links in the Internet backbone are considered a rarity, for example, and where the preponderance of "High Speed" routes are still served by 64 kbps lines. In comparison, in the US there are OC-3 and OC-12 Internet backbone routes equivalent to 336 T-1s per carrier, (or 8,064 64 kbps lines), and some of these routes are slated to become parallel OC-48 routes over the next year.)

But I've only addressed the pricing aspect and ignored the future "enabling" attributes that VoIP allows where application convergence is concerned and where infrastructure will permit, e.g., call center and other collaborative environments which call for multimedia presentation and discourse.

You cite the risk of losing calls as an example. I see other less tangible issues taking hold here for the moment, until QoS measures can be relied on, such as making a first impression with a decision maker at a high-profile client organization, and the inevitable long lasting effects that those first impressions carry.

When I am placing my first call to a prospect, the last things I want to have take place are echoes, collisions, stomping on one another, and having to acclimatize to the nature and character of the call facility. [Read: Come to terms through unspoken negotiation with each other on who will lead the conversation. These are things that are done instinctively during a call and rely a lot on the psychology of the call. Notwithstanding, they affect the call's outcome, since someone (probably the person placing the call, out of a sense of responsibility) has to yield ground on the basis of deference and courtesy. While these effects may be very slight, depending on the actual call, they still exist.]

The savings on inter-machine (PBX) virtual tie lines, if deployed on an organization's intranet or private IP backbone, can be HUGE. I can't overstate this point. And if designed properly, without over-utilizing the available transmission capacity, the quality could be almost on a par with the best the PSTN has to offer. When echo cancellation-like features which allow for "truer" full duplex capabilities are released, they will be even closer to par.

But in the toll call arena, from what I've seen of the already published pricing structures that do exist for normal POTS-equivalent phone calls "domestically," the savings for these are nothing to write home about right now, and may not be sufficient to sacrifice the clarity of a 64 kbps channel, if the caller has a decent pricing arrangement with their carrier. Here I am referring to the PSTN pre-subscribed 1+ call in the truest meaning of the term, and not private enterprise facilities through a PBX, or over VPN lines.

On the other hand, if callers are placing calls over an ISP's facilities for a slight premium over the all-you-can-eat structure, then they may want to use VoIP simply to save money where quality and reliability are not the major driving forces. E.g., certain back office functions, and "Honey I'll be getting home around 9ish" calls.

What this will invariably lead to in the interim term in the enterprise sector, where PBXs and numbering plans exist, is the option for callers to, say, dial 5 for high quality <switched> connections, with the default otherwise set to VoIP <routed> channels, where those routes are _available_. Which brings up another point about how certain iterations of this technology are unfolding: the fact that universal reach and feature translations are still unachievable with what's in the market place today. But that too will change over time. Probably very rapidly...

Frank
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