INTERNET TELEPHONY: Voicing VoIP

The

Voice-over-IP (VoIP) or Internet/IP telephony enables voice

calls and fax transmission over data–predominantly IP–networks.

Beginning with hobbyists, who used Internet to make cheap long

distance calls, IP telephony has slowly grown and created a

revolution–or storm–in the telecom world. Most countries

faced with the prospect of unchecked mushrooming of VoIP

operators have preferred to legalize it by suitable licensing

process. And that includes Asian countries like China, Japan,

Singapore, etc.

The revenue generated

through IP telephony traffic is expected to reach $10 billion by

2001, accounting for almost 25 percent (presently believed to be

around 5 percent) of international calls. Another indicator of

this growth is the world-wide market for IP telephony gateways,

which has increased from $250 million in 1998 to $500 million in

1999, and is expected to reach $2 billion in 2001 (as reported

by Frost & Sullivan). The aggressiveness of the players is

apparent from the fact that carrier class H.323 VoIP gateways

were the give-aways at Telecom’99 at Geneva to ISPs and other

competitive carriers. The aim was to make them jump-start and

encourage usage and drive the market. Of course, it was believed

to come with a commitment of wholesale purchase of about

2,50,000 minutes per gateway per month.

Need to

Differentiate



Initially, many considered VoIP as a dubious service. In the
connectionless packet-switched world of IP*–as against the

traditional circuit-switched networks–the packetization breaks

a conversation into packets of data and sends them over many

routes (a best-effort delivery vehicle provided by IP) for

reassembling at the other end. This obviously does not work

perfectly due to problems like delay, jitter between packets and

even loss of packets. And hence, the voice quality suffers.

Despite the limitations, the world-wide market is booming as

this technology is being capitalized upon more and more due to

the falling prices. IP networks being far more bandwidth

efficient, the commoditization of bandwidth has further helped

the process.

However, VoIP, with poorer

voice quality compared to that of Public Switched Telephone

Network (PSTN), requires to be positioned differently in the

marketplace. VoIP marketing has many challenges–not only

setting up the necessary all-digital networks, but also putting

resellers in place.

IP

Wholesaling: A Golden Opportunity



A new breed is now emerging on the horizon–wholesalers dealing
in Internet telephony minutes. They may also facilitate traffic

over the public Internet network or private data networks among

affiliates who may form a network of IP telephony gateways–some

being called originators and some terminators, or both. The

wholesaler sells them minutes at wholesale prices purchasing

unutilized minutes–mostly during off-peak hours–from

carriers at attractive prices. According to Phillips Tarifica,

"IP wholesaling will be bigger in Asia than possibly

anywhere else in the world. Although the opportunity will play a

role in the short term, it is the sheer volume of traffic,

combined with creeping liberalization, that is making the Asia

Pacific region a very attractive place to do business." It

appears to offer, by all accounts, a golden opportunity.

Fresh Look at

Business Plans



IP telephony is roaring and is threatening the domestic and
international revenue bases of incumbent carriers as well as new

service providers. The big operators are expected to lose

hundreds of millions of dollars every year. Their responses have

been varied from doing nothing to embracing IP telephony and

having a fresh look at their business plans as traditional

models for costing/pricing and international accounting rates

may not work anymore. Networks using IP platforms cost much less

and are believed to be less cumbersome to maintain. It is

easier, cheaper, and faster to enter a new marketplace.

As billions of dollars

worth of circuit-switched networks are at stake, strategic

decisions are required before another billions are invested in

packet-switched networks including for access and call

completion between networks. Regulations need to be rewritten.

Business processes need to be reengineered to meet the new

scenario.

As the amount of data

traffic has caught up with, and is even surpassing, voice (see

graph), it makes all the sense for voice to travel on the

high-speed, high-bandwidth multimedia transport networks rather

than pushing data into conventional networks.

Many

Challenges Ahead



Besides improving voice quality, various conventional

value-added services like call transfer, call forward, and ISDN

services need to be replicated over data networks too. And then

there is the issue of rapidly catching Intelligent Network (IN)

services. New applications may be created and marketed. The

billing systems for the packetized world also need to be

different. They could be even simpler than for the conventional

voice systems. Instead of adopting the conventional method of

billing by minutes, the new paradigm will require billing by

packets. Systems will require granularity into network elements

that can extract, collect, and consolidate information about

various services. As IP networks become more intelligent, it

will be possible to guarantee end-to-end Quality of Service (QoS)

for IP traffic, besides guaranteed bandwidth.

India Likely

to Move



The usual barriers to introduction of newer technologies
generally cannot stop the technology. Ultimately, people do

understand the benefits of technology and embrace it. India too,

is finally serious about introducing this latest technological

marvel. And why not? It is the consumer who is ultimately going

to benefit. 

*

additional reading: "Business of Telecommunication" by

the author 



(published by Tata McGraw-Hill).