Voice Over Internet Protocol Sparks
Growth of New Phone Technology
By MARK HEINZL
Staff Reporter of THE WALL STREET JOURNAL
When Houston City Official Denny Piper wants to know who has phoned him, he checks his e-mail.
"I can see, oh, somebody left me a voicemail message, double click on it and it plays back the message," says Mr. Piper, the city's chief information officer.
To phone others, he can click on names on his laptop's contact list or dial by clicking on a phonelike image on the computer screen and "just talk to the microphone on the PC." His BlackBerry wireless e-mail device also lets him know who has called. "It's really neat stuff," Mr. Piper says.
Joining a small but growing number of organizations, Mr. Piper is leading the city of Houston's leap into the so-called next generation of voice technology. The city hired Cisco Systems Inc. to transform its functional but technologically disparate traditional phone network, including 43 separate voicemail systems, into a network that converges voice and data communication and will link the city's 400 facilities with 25,000 new phones.
Nortel Networks' virtual telephone, or "softphone," and Mitel Networks' "Web set" both use voice over Internet protocol, which transmits phone calls the same way Web pages and e-mails are sent.
Not any old phones, mind you. Organizations adopting converged networks are buying fancy gadgets called "IP phones," "Web sets," or ones without any handsets called "softphones," which turn a computer screen into a virtual phone and voicemail system. It is part of a broad trend where networking giant Cisco and its competitors such as Nortel Networks Corp., Lucent Technologies Inc., Siemens AG and others are pushing corporations and telecom carriers to install equipment that transmits phone calls the way Web pages and e-mails are sent.
At the heart of the proliferating new services is technology called voice over Internet protocol, or VOIP. Internet protocol technology sends information in digital packets and is usually associated with data transmission. But it is slowly catching on as a means to cost-effectively and flexibly transmit voice communication within corporate networks and in telecom carrier networks.
With such gear, these companies promise, corporate network users can conduct instant desktop video-conferencing sessions, turn their laptops into portable offices, or surf scaled-down Web pages on phones with displays that access the Internet, among other jazzy features.
Networking equipment makers, many running big losses, are sorely in need of a hit product. But they face many obstacles in marketing their new phone gear, such as the many overlaps with existing phone and Internet functions.
"We do our banking and stuff like that" on a Web set, a phone with a 4-square-inch display that accesses a mainly text version of the Internet, says Rudi Asseer, who recently installed Mitel Networks Corp. voice technology in his Ottawa scuba-diving shop, Dolphinos. Mr. Asseer says he has uploaded the office computers' contact information onto the phones, and eventually will be able to access his voicemail simply by speaking to the phone.
In a demonstration at Nortel's Brampton, Ontario, headquarters near Toronto, employees talk to colleagues -- who appear in a window on a video screen -- in another Nortel facility 200 miles away. While talking, colleagues at each end of the line can view the same Web page, watch or work on a Powerpoint presentation together, exchange text messages, or play a game of chess on the side.
On a business trip to Australia, Nortel marketing executive Dan Mangelsdorf says he dialed his laptop into Nortel's corporate network, and used a softphone with a headset to make calls, check his e-mails and voicemails, and receive any calls made to his business line in North Carolina. Certain callers can be let through, while others are prompted to leave a message.
Though many companies are "considering" adopting VOIP technology, only 13% of 693 companies surveyed recently are using or installing it, a Forrester Research study earlier this year found.
The current adoption rate is slow because existing corporate and telecom carrier networks, though often complex, are installed and operable. The smorgasbord of existing communication gizmos and phone features already allows calls to be forwarded to other numbers; calls to be screened with caller ID; and computer users to talk with and see one another at little or no cost through the Internet, though the connection can be poor.
Recent technology advances have vastly improved VOIP call clarity, but quality and reliability are "still not as good as the existing circuit-switch network" which carries the vast majority of phone calls, according to Forrester analyst Maribel Dolinov.
Some organizations installing VOIP technology say they aren't exactly sure what new applications they plan to provide with the new gear.
Resort real-estate concern Intrawest Corp. is installing a Cisco Systems converged network at its Squaw Valley hotel development partly to cater to the tech-savvy clientele from the San Francisco Bay area and provide high-speed Internet ports in each room. Still, the rooms' new-age IP phones, with large display screens and many buttons, provide "a challenge to keep it simple," Intrawest Vice President Tom Jacobson says. So the phones for now provide basic phone service, and the company plans eventually to roll out other phone-display features, which may include ski-condition reports and restaurant menus.
"We believe voice applications are going to be a significant killer app in the future," for consumers at home, and part of the much-ballyhooed convergence of home electronics, says Charles Salameh, a vice president with Bell Canada, controlled by Montreal telecom firm BCE Inc.
For example, he says, one day you could be on the couch watching baseball when a picture of your grandmother pops up on the television, and "you can decide" whether to take the call.
Write to Mark Heinzl at mark.heinzl@wsj.com
Updated May 16, 2002
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