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Voice over Internet Protocol VoIP

In the eyes of most, all packets are created equal. One of the most active areas of telecommunications today is in the area of Voice over Internet Protocol (VoIP). The logic behind this trend makes perfect sense. If we have invested heavily in an Internet Protocol (IP) network, why can’t we make full use of it? This is a question posed by many managers and Information Technology (IT) professionals in a wide range of businesses. Many businesses would prefer to have one network in and out of their business for reasons ranging from cost effectiveness to manageability. IP telephony offers a promise of consolidation.

This will allow an enterprise to converge its traditional phone system and newer data network for greater efficiency. Arieh Dranger, president of neXTel Systems LLC says, “I don’t think it’s a question of whether we need VoIP, but when it will come together, because it represents a natural progress of integrating data—period. The IP protocol is probably the most efficient at combining a universal communications network. ” Basically, IP telephony is taking the telecom world by storm. It has evolved from a little known and used application in 1995 to an application that is poised for global adoption.

But as with all technology, there is a price to be paid, and several entities vying for a piece of the pie. To put it simply, VoIP means Voice over Internet Protocol. It’s a technology that allows network managers to route phone call over the network they use for data transmission. A voice travels over a corporate Intranet or the Internet instead of the public telephone system. Special gateways installed at both the sending and receiving end of a communications channel converts voice to IP packets and back again to voice.

This process must take place in a time frame of less than 100 milliseconds to sustain the Quality of Service (QoS) that users are accustomed to from the Public Switched Telephone Network (PSTN). Now let’s take a walk on the more detailed side of what VoIP is and how it works. First and foremost, VoIP is an emerging technology still in the early stages. A personal computer (PC) must capture an analog voice and convert it to a digital signal, compress the audio with a compression-decompression (codec) device and then move it into the IP protocol stack.

The codecs are at the heart of any IP telephony software. It is an algorithm that transforms analogue signals into digital ones and vice versa. The next step is to access the network, which is the premise modem connected to the PSTN and channeled to the Internet Service Provider (ISP) modem. The next link in the chain of events is the IP network itself or the Internet. The current structure of the Internet can make it an unstable and unpredictable carrier. Finally, the voice packet must transition back from the IP network to the PSTN, to the receivers’ modem for conversion back into analog.

Each of these steps adds more delay to the voice packets. A delay approximately of over 550 milliseconds, which is 400 msecs over the QoS acceptable limit, is found to occur. These delays and other issues are just some of the challenges facing the future of VoIP. Between 1994 and 1997 ISP revenue grew from about $189 million to over $4. 75 billion dollars, making it the telecommunications success story of the nineties. This extraordinary growth, coupled with relatively inexpensive connectivity for the typical user has helped drive the emergence of VoIP.

To the typical personal user, this technology will mean nothing more than the ability to make “free” long distance phone calls. However, to the business world, this technology holds some very profound promises. It’s the ability to avoid long distance phone charges that has many scrambling to control the future of VoIP. Companies ranging from the traditional common carriers to the newer next generation telcos are all scrapping for a share of this lucrative market.

The VoIP portion of this emerging market is expected to grow at a rate of 149 percent annually through 2001 to about $1. billion dollars with high estimates of $9. 4 billion by 2002. With this much money and revenue at stake, local and state governments, which derive millions of dollars from taxing voice carriers, are also taking notice of this emerging, unregulated threat. Another issue of this technology is the fact that there has yet to be a standardized set of protocols for the manufacturers and vendors. This is leading to proprietary hardware and software, which all leads to incompatibility and increased expense. As with all technologies and advances, the bottom line is the dollar.

These are just a few of the many issues facing global adoption of VoIP. To follow this technology and understand its implications, one should be aware of the players involved in the game and know each ones motivation. The Big Three. The Big Three players are AT&T, MCI WorldCom, and Sprint. They perhaps have the most to lose and the trickiest balancing act to perform. They must take special precautions to ensure they do not cannibalize their very lucrative PSTN. The traditional phone system is over an $100 billion a year business. In terms of market share, VoIP is barely a blip on the Big Three’s radar screens.

However, these big carriers have not let this technology go unnoticed. AT&T offers a calling card that allows its user VoIP for as low as 3. 5 cents a minute. AT&T has recognized this new threat and is aggressively doing something about it. They have hired new talent and leadership; acquired a new facilities-based business company in TCG; bought a facilities-based consumer company in Tele-Communications Inc. (TCI); began a global venture with BT; bought the IBM global services network for IP; and expanded its wireless reach with Vanguard Cellular.

Also in February of this year AT&T announced a joint venture with Time Warner Inc. at allows it to enter the local-service market via cable in 33 states. AT&T is also experiencing a metamorphosis of its corporate culture which is allowing more free flow thinking from all employees. MCI WorldCom sells a click and talk Web-based voice service for enterprises with e-commerce sites which allows customer service reps to talk to buyers over the IP connection while shopping online. MCI WorldCom has also been on the mergers and acquisitions path in order to meet this new challenge. The Big Three have aggressively been working on this new market and the outcome has yet to be seen.

With lower barriers to entry than in the traditional communications networks, they face many new entrants in this battle. Regional Bell Companies (RBOC’s): The regional Bell Companies have a vested interest in this area as the Internet replaces the private networks in which they have such heavy investments. It takes nearly 8 years for PSTN capacity to double. The Internet doubles capacity every 18 months. This is strong motivation for the regional Bells to preserve their investments. The smart regional Bell companies are already putting new strategies in place. US West is relying on its nationwide XDSL rollout.

This program will combine US West’s voice and data customers by replacing a $30 dollar a month voice customer with a $60 dollar a month high speed Internet and voice customer. It treats voice as an Internet service. Bell Atlantic is also working on its’ plans. It is looking to provide services similar to that of US West. These regional carriers are however limited to their own calling territories as per FCC regulations until they can show that they have local competitors. Many cable companies are following this approach. To protect revenues, US West, Bell Atlantic, and Southwestern Bell have provided for tariffing and will tax a VoIP call.

Service providers are also positioning themselves as next-gen telcos by adding to their Internet service offerings. Qwest is planning and implementing a high capacity, IP based fiber optic network. Its mission is to allow customers to seamlessly exchange multimedia content images, data, and voice as easily as traditional telephone networks enable voice communications. Qwest’s OC-48, IP over Sonet backbone, spanning 130 countries, is nearly complete. The Denver based company will offer an IP based integration service for business.

It will be capable of taking out multiple private lines and do multiple applications over a single IP service pipe. Level 3 is another player in the Pure VoIP field. Level 3 doesn’t use compression on its network for voice calls. That allows a packet to travel from one end of the country to the other in less than 90 msec. , which matches PSTN quality. Along with companies like Qwest, Level 3 is pouring billions of dollars into developing and deploying cutting edge backbones for offering IP based voice, data, and video services. Another player to this game is of course the Government, Government at every level.

Many questions are arising in their eyes. What defines an Internet call? How will local governments react to losing a large source of revenue that was being generated from local telephone calls? Some foreign governments are already taking a stand against VoIP. Pakistan’s Ministry of Posts and Telecommunications, due to losing revenue to VoIP, has banned voice over the Net. The Government players will ultimately have the most profound effect on how this technology plays out. This player needs to be closely watched.

There are numerous advantages cited for VoIP. They are as far reaching as they re controversial. Some of the advantages to the business user included: Cost reduction, simplification, consolidation, advanced applications, backward compatibility, new revenue streams, and more efficient infrastructures. Cost reduction will be seen across the board from cheaper to “free” long distance calling to less investment in hardware and software. This will be extremely beneficial to those companies with international markets. It will be more cost effective for a business to maintain one network than two separate ones. Standardization of a voice/data network will reduce total equipment costs as well.

Network managers will have to assume the role of managing voice packets and protocol as well as data. VoIP is backward compatible with video conferencing and other applications already in place in many organizations and it supports multimedia applications and multiservice applications, something the traditional phone service cannot compete with. There are several obstacles that VoIP must overcome. Latency is one of the largest obstacles facing this technology. Latency is the delay or time between packets that have the same destination and compose the same message.

If there is latency between voice packets this will cause the conversation to be choppy and unintelligible. VoIP expends and average of 40 to 60 msecs of delay per gateway. That kind of overhead gets noticed pretty quickly, especially when you are traversing multiple gateways. Interoperability is another key issue. The best way to date for voice traffic to travel from an IP network to PSTN is Media Gateway Control Protocol (MGCP). This protocol allows an ISP’s switch server to manage and control SS7 switches on a PSTN, and the gateways on an IP network.

Security, reliability, and training are also drawbacks too fully integrating VoIP within an organization. Security is an issue with the H. 323 protocol. H. 323 is a protocol used for voice over Internet protocol. Compared to more mature services such as FTP, Telnet, and HTTP, H. 323 is relatively new, thus many proxy servers do not support it. Users making calls on this protocol must be placed outside of the corporate firewall. Many people have become accustomed to their phone with all its fancy features. Call waiting, holding, transferring or redirecting calls are options not available with todays software.

Finally, reliability remains a major obstacle. When it comes time to have to reboot the computer after it locks up, that lost call was hopefully not an important client. As with all technologies, new products and systems are emerging everyday to help alleviate some or all the disadvantages of incorporating VoIP. New protocols are emerging as well. Session Initiation Protocol (SIP), Media Gateway Control Protocol (MGCP), and Simple Gateway Control Protocol (SGCP) are protocols designed as alternatives to H. 323.

They are designed to reduce bandwidth overhead, security issues, and time sensitivities not covered by H. 3. Level 3 and a group of other next-gen telcos has developed a protocol called Internet Protocol Device Control (IPDC). This protocol was designed for use between centralized switches and IP-based gateways, providing management and integration on a very large scale. By working on the problems of latency, security, reliability and manageability, VoIP will be more poised than ever to begin its global roll out. The VoIP market is turbulent and characterized by a variety of approaches. These approaches range from the desktop to the carrier switch to the Internet.

The players are as equally far flung, from the traditional cornerstones of the Plain Old Telephone System (POTS) to the new generation startups, to the steps of local, state, and federal governmental agencies. Such dynamism makes it difficult for IT managers to filter the flood of information and assess how VoIP might fit into their networks. Unless PSTN undergoes some massive restructuring, its long-term existence in its current form is in serious doubt. Emerging Internet technologies will be the low cost solution for managers looking for mixed traffic connectivity.

Only in the end, after all the smoke has cleared will we know which business models survived the shake down in this lucrative market. Other problems are bound to arise in the arenas of technology and regulation. At this point there is significant progress to be made in the area of VoIP to achieve the quality we enjoy today with the PSTN. The only sure thing from this technology or any other that will always be consistent, reliable and never become outdated is that the Government WILL find a way to ensure their revenue stream… after all “There’s no such thing as a free lunch. ”

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