Voice
Over IP: Challenge and Promise
First
Appeared in The Bandwidth Desk, June 29 - July 27, 2001
If you have
dismissed voice over IP as an X or Y generation 's pipedream, you
're the one with your head in the clouds. The message streaming
from next generation network(NGN)suppliers and competitive local
exchange carriers (CLECs) at telecom conferences this year has been
that voiceover the Internet protocol (VoIP),has taken firm hold
domestically and internationally and will grow at an increasing
rate over the next several years. That message has been muted in
recent months with the bludgeoning of dot-com startups and IT companies
in the market and the international telecom industry slowdown.
But the shift
to VoIP and next-generation networks is under way. It is happening
for three big reasons: First, telecom and information services providers
and their customers have struggled for decades with separate systems
for voice and data, which do not work together and often conflict.
Second, these separate systems deny customers more advanced, efficient
and productive services, which a single system can provide. Third,
current technology is generally for more costly than VoIP.
In Western Europe,
Latin America, the United States and nations around the world, many
thousands of voice conversations already have shifted from the old
Public Switched Telephone Network (PSTN), which we have known and
mostly loved for generations, to a new "network of networks,"
with the Internet at its core. Before the end of the decade, a voice
telephone call will no longer enjoy the secure but expensive luxury
of a dedicated circuit path on the PSTN. Instead, it will be chopped
into tiny bits and sprinkled almost unnoticed among billions of
data bits that travel in tiny "packets " over myriad Internet
routes, to rejoin (harmoniously, we hope) at the listener 's ear.
Don 't fret. IP telephony, which includes voice over packet in any
form including voice over the Internet, will offer far more useful
services than anything PSTN has to offer.
Assessing
the Market
Skeptics may say that there is no demand for VoIP or other next-generation
services from the cities or the heartland --no real evidence that
customers are ready to trade the familiar, tried and true system
for one that is still not proven and may be unreliable. And there
are technical problems that must still be addressed in the provisioning
of high-quality VoIP services so that they will operate fully and
transparently with existing networks and systems at high speeds
and under peak traffic loads. The impact of the economic slowdown
in the U.S. and elsewhere is a widespread concern. Many telecom
and IT providers and suppliers overbuilt or overstocked to prepare
for customer demands which have slackened and which may not pick
up again for a year or more. With revenues off, venture capital
firms want no part of funding further new offerings such as VoIP
from CLECs or resellers who do not have their own networks. The
cash shortage has hit not just startups and smaller companies, but
leading suppliers and service providers. We are witnessing significant,
wrenching consolidation in telecoms and IT.
Still, larger
CLECs, incumbent local exchange carriers (ILECs), equipment and
systems suppliers and industry experts have little doubt that the
telecommunications industry will come out of the current slump.
In their view, VoIP and related broadband Internet services are
the technologies of the future. In the opinion of experts, this
technology will prove to be every bit as disruptive as digital technology
and fiber optics, and will open the door to a broad array of interactive
services, far-reaching competition and the wholesale restructuring
of the industry worldwide. Numerous experts we consulted believe
that remaining technical difficulties are now being resolved. They
say that after the economic slowdown, a more sober and consolidated
industry will see the efficiency and relatively low costs of VoIP
services as increasingly advantageous.
Interactive
Multimedia Broadband
This is not just about voice. It is about high-speed, broadband
interactive multimedia IP services, which enable customers with
offices and employees dispersed at locations throughout the world
to work collaboratively and just as effectively as if they were
all physically together in one room. VoIP means that voice conversation
and interactive multimedia will be integral parts of our ordinary
communication in a few years, enabling us to draw upon the knowledge
and expertise of colleagues wherever they are, and to act quickly
and decisively with up-to-the-minute information. To some extent
this takes place on the PSTN now, but it is expensive. In next-generation
networks, it will be more functional, easier to use and less expensive.
That is what customers will need and want.
VoIP Advantages
VoIP services have two powerful cost advantages over traditional
services. First, instead of constructing their own complete networks
or leasing high-priced capacity from incumbent carriers, VoIP providers
utilize advanced, extensive and low-priced Internet facilities,
which are constantly being improved and expanded. Second, the packet-switching
technology at the core of VoIP services derives many times more
capacity from capital-intensive network resources than is possible
in a traditional circuit-switched network. Resulting cost reductions
will open the enormous potential for telecom and IT for business,
government, universities, research laboratories and individuals.
Today, the PSTN
is overburdened by sharply rising demands for local access. Explosive
growth of the Internet has clogged telephone circuits and switching
facilities with repeated bursts of data that designers of the PSTN
never imagined. Increasingly, local telephone facilities are tied
up in e-mail and data transmissions that average 40 minutes and
often continue for hours at a time. These facilities, designed to
handle many calls of short duration, are ill equipped for spasmodic
traffic jams, which require all the capacity they have and more,
so that they are unavailable for the voice calls they were intended
to carry. Assigning new area codes and installing more local exchanges
and access lines is perhaps as effective as building new streets
and installing more traffic lights in an area where the population
is growing rapidly and the number of heavy trucks coming into the
area continues to increase.
Suppliers see
clearly emerging trends that together will revolutionize the telecom
industry from the infrastructure to the customer. Digital loop carriers
will continue their growth," says David Broecker, vice president
of systems development at NEC America," because application
developers are now designing applications specific to the service.
New video streaming programs will have a major impact on the traffic
within the network, causing needs for continued growth in the backbone."
To some extent, xDSL alleviates stress on local facilities by digitizing
the signal within the home or office, allowing a single access line
to handle more than one message, voice or data, at a given time.
Customers with multiple lines typically terminate
the service
on one or more of their lines when they subscribe to DSL. VoIP technology,
however, not only digitizes but also packetizes the voice signals
and can do so both in long-distance and local networks. Packetizing
voice vastly expands the capacity of transmission and switching
facilities and is far more economical than circuit switching. Dedicating
a circuit to a single telephone call, as is done in today 's PSTN,
is an expensive squandering of scarce network resources.
Established
service providers with high-capacity networks in place know that
traditional network and switching systems are highly reliable and
they want to optimize and maintain their networks to the extent
that it is practical to do so. At the same time, providers know
that traditional networks cost far more to build and maintain than
IP facilities and they face increasing competition from CLECs who
are putting IP networks in place, hoping to attract customers with
more advanced services at lower prices.
Quality of
Service
In the PSTN environment, service providers and customers take high-quality
service for granted.With some serious exceptions in wireless, we
are used to telecommunications networks that are so consistently
reliable that we feel perplexed and rather helpless when they are
down. We use telephones of all kinds and our calls go through more
than 90 percent of the time. Our conversations are so clear that
we often say, "It sounds like you 're just a few feet away."
Corporations and other group customers know precisely which telephone
station has been used to make or receive calls and which station
is not functioning normally. This information facilitates detailed
call records and billing; service-order changes; maintenance and
repair; and overall management. We also take for granted a wide
range of features that allow us to use secure codes to obtain personal
records, transfer funds in our bank accounts, make payments, etc.
The VoIP
Difference
In the Internet environment, however, we must pay attention to the
type of equipment, the modem and the software we are using. URLs
and e-mail addresses are irrational, complicated and difficult to
remember. If we add a new software program to our computer, our
system chokes up. We are accustomed to dial-up failures, transmission
delays and interruptions.
For long-distance
transmission, and particularly on international routes between countries
served by advanced Internet facilities, more and more traditional
PSTN service providers shift their voice calls and other traffic
to an IP carrier, because it is far less costly and the quality
is not discernibly different.
Taking IP voice
through high-capacity and high-speed routers and switching systems
presents further challenge. PSTN advanced switching systems --PBXs,Centrex,#5ESS
and #4 tandem ESS --handle heavy traffic with high reliability.
Lucent 's #5ESS,for example, can serve a quarter-million subscriber
lines and a hundred thousand trunk lines, linking them with more
than 130 million lines and 100 million trunks that are laced through
5,000 switching systems in countries around the world. Yet the Lucent
#5ESS has average downtime of less than 10 seconds per year. At
a PSTN primary switching center, typically a #5ESS, a unique circuit
is set up for each telephone call by an out-of-band signaling system
known generally as SS7,which sets up a dedicated circuit for each
telephone call and maintains the circuit for the duration of the
call.
VoIP systems,
however, establish no such dedicated path. Instead, as with e-mail
and other data transmitted over the Internet, in VoIP the voice
signal from each person communicating is broken up into innumerable
tiny packets, each containing a minuscule segment of the spoken
message plus an address code for its final destination. These packets
travel separately within a huge stream of other voice and data packets,
each finding its own best way back and forth across the vast network
of networks between the people on the call. This capability to use
switching, routing and transmission networks so efficiently presents
the major challenge to VoIP today, but it is also its incomparable
strength. We may be just months away from communications applications
more advanced and sophisticated than most of us have thought possible.
Our goal must be not to design and build IP routers and switches
that will mimic the capabilities of today 's BXs, Centrex, or even
the #5ESS;the goal must be to design and build systems that will
be as versatile as the Internet itself, as adaptable as customers
need them to be.
Not all types
of service require the same level of quality, reliability or adaptability.
In many data transmissions, some packets may be delayed or lost
without much harm, because a brief delay in their arrival or the
loss of a few packets usually has little impact. In speech transmission,
the packets must arrive at their destination intact and in immediate
and proper succession. Corruption, delay or loss of packets often
results in gaps or loss of the voice signal, breaking up, cracking,
static, jitter, etc.
Voice over ATM
and other hybrid approaches, including voice over frame relay, are
sometimes used to distinguish service types, typically relying on
the differentiated services (DiffServ) protocol or the multiprotocol
label switching (MPLS)approach to do so. Ultimately, in a network
that handles various classes of service, from voice to high speed,
interactive multimedia broadband, the software programs must be
sophisticated enough to give top priority to the voice services
inherent in these communications while preserving the quality of
the accompanying services.
Standards
Incomplete and conflicting standards now prevent software programs
and systems from working well together. There are several sets of
standards currently in use, none of which meets the needs of either
VoIP or next-generation networks or has broad acceptance throughout
the industry. The widely used H.323,developed by the International
Telecommunications Union 's telecommunications group, is not generally
regarded as satisfactory and is further encumbered by various inconsistent
versions. Other standards include H.248,the Media Gateway Control
Protocol (MGCP)and the Session Initiation Protocol (SIP). Although
opinions are mixed, many observers think that the great majority
of systems could be interoperable in a year or so.
Perhaps the
greatest challenge before VoIP and broadband Internet hardware and
software technicians is to develop technologies that will assure
a full range of advanced services and features now available on
the PSTN, with the same quality that is common and expected in the
high-volume, high-speed circuit-switched environment. More than
that, the technology must integrate PSTN, VoIP and other next-generation
network services seamlessly and transparently.
Considerable
effort is being made to reconfigure PBX, Centrex, nd Class 4 and
Class 5 PSTN switches but, in the opinion of several leading service
providers, progress on the #4ESS and Centrex systems is often overstated
and no VoIP system currently provides features comparable to the
#5ESS. One difficulty is reconverting the digital signal into analog
form and carrying it through to the receiving party ."The #5ESS
is highly sophisticated and tough to duplicate," says one industry
expert. "Today 's IP technologies cannot yet perform at a level
comparable to the #5,but it will happen."
Vendors suggest
that the market for VoIP products and systems will pick up as the
industry and the economy come out of the present trough. The current
market for VoIP products and systems is approaching $200 million,
in their view, but should exceed a billion dollars in another three
years.
Dr.Richard Thayer
is founder and president of Telecommunications &Technologies
International, Inc.(TTI) www.ttinetwork.com,a telecom/IT consulting
firm, located in Chevy Chase, MD. He can be reached at rthayer.tti@verizon.net
or at 877/913-2883.
The
Case for VoIP, Part II
We 're Pleased
to Present Part Two of our series taking an in-depth look at the
market for Voice Over IP (VoIP). This original market analysis comes
to us from Dr. Richard Thayer, founder and president of Telecommunications
& Technologies International, Inc.(TTI).
Part I of the
series ended with a discussion on standards. Incomplete and conflicting
standards now prevent software programs and systems from working
well together. There are several sets of standards currently in
use, none of which meets the needs of either VoIP or next-generation
networks or has broad acceptance throughout the industry. Though
a significant issue, it's not exactly the only hindrance to VoIP.
Regulatory
Forbearance
VoIP providers and proponents have had reason to be pleased by the
rather hands-off view toward virtually all Internet services that
has been taken by regulators, the FCC in particular. The courts
have not intervened to require Internet-based services to be regulated,
although at least one court has ruled that VoIP providers must pay
access fees to local carriers. A lenient regulatory approach to
Internet-based services and even non-regulation in many cases appear
to be common both in the U.S. and in other countries.
Aileen Pisciotta,
a partner at Kelley, Drye & Warren in Washington, DC, describes
the FCC's approach to the regulatory treatment of Internet services
as "shoebox unregulation." For some years now, she points
out, the commission has avoided imposing on the Internet or Internet-based
services any of the same rules and regulations that apply to traditional
telecommunications services, although the commission's own rulings
have suggested that the rules apply in some instances. The FCC has
chosen to treat all Internet or IP-related services with this undifferentiated
unregulation approach, sort of like putting any service carrying
the Internet "label" in a metaphorical "shoebox"
in the back of the closet, where these services are out of sight
and out of mind.
More broadly,
however, the FCC's present laissez faire approach to telecommunications
has strengthened the position of the Bell companies and other ILECs
and made it even more difficult than it has been for CLECs of virtually
all stripes to carve out viable markets in the ILEC territories,
which, of course, is the entire United States.
Powerful members
of the Energy and Commerce Committee in the U.S. House of Representatives
have weighed in for relaxing regulation as well, but a current bill
designed to advance Internet and broadband services could have less
positive effects. Legislation sponsored by Rep. W.J. "Billy"
Tauzin, the Republican chairman of the committee, and co-sponsored
by John D. Dingell, the committee's ranking Democrat and co-sponsored
by many other committee members, would go even further than the
FCC in deregulating the Bell companies. Legislation the committee
is now considering would allow the Bell companies to immediately
offer long-distance services, bypassing the current requirement
that they first open their markets to competition. Together, the
FCC and congressional actions could make life considerably more
difficult and uncertain for new, would-be entrants to the telecommunications
industry and could further discourage investment in the new services
these entrants propose, including, prominently, VoIP.
VoIP CLECs
RCN Corp., a CLEC with sound financial backing, is not waiting for
an economic turnaround to begin its next venture in VoIP. Since
1999, RCN has bundled together local and long distance telephone,
cable TV and high-speed Internet services for homes in many of the
top residential markets in the United States. With a goal of being
the dominant provider of residential communications services over
its own network in the nation's major market areas, RCN has delivered
broadband Internet services for service providers, resellers and
enterprise companies, and serves more than 200,000 homes in these
key markets.
RCN is perhaps
the only CLEC whose market plan is to give consumers an alternative
to the incumbent local telephone and cable TV providers, by offering
them a package of local phone, cable TV and broadband Internet services.
RCN has recently announced that in addition to carrying VoIP for
other service providers, it will soon offer its own VoIP services,
entering the market as a wholesaler in the near future.
ITXC, an international
Internet-based carrier with corporate headquarters in Princeton,
NJ, directly counters the view that the quality of VoIP service
is inferior to voice on the PSTN. The company describes its voice
service as consistently high quality and states that "...by
2010 all interactive voice communication will be transported on
the public Internet," including both what we know as "phone
calls" and "e-calls," which it says are better than
traditional phone communications.
ITXC says that
it is the world's largest global network for voice on the Internet,
with 466 or more IP points of presence in 96 countries. Since it
began operations in 1998, ITXC has carried more than a billion minutes
of wholesale traffic, including millions of minutes of billable
traffic everyday now, making ITXC one of the country's largest providers
of international switched resale services. Keep those facts in mind
when you hear someone say that if you make calls internationally
you are likely using VoIP whether you know it or not, because your
carrier is using VoIP.
ISI in Fort
Lauderdale, FL, appears to be doing well as a wholesale carrier
providing VoIP services to several U.S. metropolitan areas and several
countries in Latin America. Its revenues are up more than 10% so
far this year to more than a million dollars per month currently.
Other CLECs, do well by combining wholesale and retail RCN, such
as FOCAL Communications, headquartered in Chicago, offers broadband
services to large corporations, ISPs, ASPs, VARs and content providers
in major metropolitan areas across the United States and offers
VoIP services directly to customers in the New York metropolitan
area.
Next Issue:
Established Service Providers. Perhaps one of the clearest indications
that VoIP is the technology of the future is that the Bell companies
and other established service providers are responding to the CLECs'
VoIP competitive challenge by operating as CLECs themselves outside
their traditional serving areas and, more than that, by transitioning
to the Internet protocol for voice and broadband services provisioning
in their own serving areas.
The author of
this piece, Dr. Richard Thayer is founder and president of Telecommunications
& Technologies International, Inc. (TTI) http://www.ttinetwork.com,
a telecom/IT consulting firm, located in Chevy Chase, MD. He can
be reached at rthayer.tti@verizon.net or at 877/913-2883.
The
Case for VoIP, Part III
We 're pleased
to present the third of our multi-part series taking an in-depth
look at the market for Voice Over IP (VoIP). This original market
analysis comes to us from Dr. Richard Thayer, founder and president
of Telecommunications &Technologies International, Inc.(TTI).
Part II of the series ended with a discussion on VoIP CLECs.
This week: Established
Service Providers. By Dr. Richard Thayer, Telecommunications &
Technologies International, Inc.
Perhaps one
of the clearest indications that VoIP is the technology of the future
is that the Bell companies and other established service providers
are responding to the CLECs' VoIP competitive challenge by operating
as CLECs themselves outside their traditional serving areas and,
more than that, by transitioning to the Internet protocol for voice
and broadband services provisioning in their own serving areas.
Qwest Communications
International, Inc. was among the first international service providers
to move aggressively into broadband Internet-based communications,
addressing customers' requests for integrated voice, data and multimedia
services. Qwest's strategy is simply to expand upon its extensive
network resources with high-speed Internet access and Web hosting,
private networks and wireless communications, to provide managed
solutions and advanced applications to business customers and an
increasing range of new services to residential customers as well.
Qwest maintains
an aggressive schedule for deploying VoIP and broadband, competing
with CLECs who are offering these services in Qwest's territory.
It is determined to provide customers the services they want at
fully competitive prices.
In January 1998,
Qwest introduced its Phone-to-Phone IP Voice long-distance services
for consumers and small businesses in nine US cities, and expanded
the services to customers in 25 cities later that same year. In
March, 2001, Qwest announced its CyberVoice Interconnect offering,
a wholesale VoIP terminating service which, it says, enables carriers,
IP telephony service providers, ISPs and Web portals to deliver
clear, reliable voice calls over Qwest's nationwide broadband Internet
network. ITXC was announced as the first customer.
BellSouth currently
provides VoIP services to several hundred thousand residential and
business customers in its region and expects to have close to a
million VoIP customers within a year. In this instance also, competition
is an important factor as demand for sophisticated new services
at lower cost drives customers away from circuit switching to VoIP
and Internet broadband. Like other service providers, Bell South
is responding to customers, large and small businesses alike, who
believe that by integrating voice with other services on the Internet,
they can open up tremendous resources within their companies and
vastly expand their market potential.
In October 2000,
SBC announced plans to introduce a range of business service offerings
based on IP, including. distributed IP PBX and Centrex services,
with links between existing switched voice networks and IP-based
data networks. IP telephony is intended to promote integrated voice,
video and data services, broadband service, and unified messaging.
SBC's further goals for VoIP are to improve network manageability
and reduce support costs.
BT Spain, a
subsidiary established by BT more than seven years ago to address
the market in Spain, now has a national multi-service IP network
in place in Spain, with the capacity to transmit five million calls
and 32,000 TV channels simultaneously. BT received its first license
to operate in Spain in April 1994, and was allowed to provide telecommunications
service over its own facilities beginning in December 1998, which
effectively authorized BT Spain to provide services throughout the
country.
BT Spain has
built a carrier-class network that some consider not only advanced
but even unique and has been providing VoIP and some multimedia
IP services to customers since the end of 1999. BT Spain offers
an increasing range of IP-based services, from simple voice, data
and virtual private networks to value-added multimedia. The company's
complete line of services will include IP videoconferencing, virtual
private networks, freephone (800 service), unified messaging and
more. BT operates in all major cities in Spain, including Madrid,
Barcelona, Valencia, Seville and Málaga, and serves more
than 350,000 customers throughout the nation.
BT's network
in Spain is linked with its pan-European network, Europe's largest
multimedia communications network, which serves hundreds of cities
on the Continent, and also interconnects with the BT-AT&T jointly
owned Concert network. BT is investing hundreds of millions of dollars
in Spain toward a goal of becoming the standard for next generation
IP/multimedia networks.
We are in for
an exhilarating ride as we move to a new mode of advanced and interactive
voice and broadband multimedia communications. The International
Telecommunications Union, not known for exaggeration, recently stated,
"A fundamental paradigm shift has been underway in the telecommunications
industry - a shift that has arguably brought about as dramatic a
change in personal communications as the telephone did compared
to the telegram. That change is a shift from traditional PSTN circuit-switched
voice networks to packet-switched data networks, using Internet
Protocol (IP) technology." When was the last time you sent
a telegram?
Richard
Thayer is President & CEO of Telecommunications & Technologies,
International, Inc. www.ttinetwork.com,
a telecom and IT consulting firm
located in Chevy Chase, MD. Contact by email: rthayer.tti@verizon.net,
or phone: 877.913.2883
Copyright
2001, Richard Thayer and Scudder Publishing Group, LLC. www.scudderpublishing.com.
Reprinted
with the permission of the publisher.
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