Phoning home takes a tantalising twist with voice over IP

If the network is the computer, what is the telephone? The computer, of course.

At least, that's what voice over IP equipment makers will have us believe.

The integration of voice and data traffic across public and private data networks is looming as one of the greatest challenges facing the IT industry in 1999. Mark Jones reports Voice over IP technology itself promises to dramatically reduce call costs and introduce a raft of powerful applications such as Internet telephony, unified voice, fax and data messaging, and desktop videoconferencing.

For all that is said of the benefits of this new age of 'convergence', however, users, analysts and the vendor community offer differing opinions about the best way forward.

While vendors are waking up to new market opportunities, some users can see potential telecommunications cost savings.

Shane Dickinson, network services supervisor at Honda Australia, believes the Internet will eventually carry all voice and data traffic across one network, an extension of what is already happening. Dickinson, for example, said he often holds voice conversations with friends using his home PC connected to the Internet while simultaneously playing multiplayer games.

However, early adopters are likely to experience some teething problems in the short term.

As reported in Computerworld, (January 22, p1), CCK Treasury Systems recently experienced, "four months of pain" attempting to gets its voice over IP strategy off the ground.

Kevin Shepherdson, CCK's manager of technical services, reported the two routers he bought were unable to handle the demand of integrated voice and data. While he could have tried another router from the same vendor, Shepherdson sought a solution from another company.

The example illustrates the difficulty of finding the right solution for individual needs.

The toughest issue for many users, however, is to understand the effect of adding an IP-based network to the existing public switched telephone network (PSTN).

Allan Horsley, managing director of the Australian Telecommunications User Group (Atug), said voice over IP networks may leave users confused about what network they are using.

In contrast, users calling mobile or '13' numbers understand the call diverts to a different network with typically higher tariffs.

"It's all about making sure the end users know what they are getting for their money," he said.

Horsley believes the carriers will be able to migrate the networks to cope with IP. His main concern is the interface between the IP and PSTN networks.

"I don't think the carriers have a PSTN to IP interface yet." As a result, he believes the PSTN and IP networks will co-exist for many years to come.

For many users, though, the 'plain old telephone service' (POTS) is still the most attractive alternative to what the telecommunications business calls PANS (Peculiar and New Services).

One of voice over IP's biggest challenges is the falling cost of long distance and local calls.

A senior telecommunications manager from a national manufacturing company -- who asked not to be named -- highlighted the real business concern: "It really comes down to a cost issue."

He reports his company is not currently investigating the integration of voice calls over its IP network.

Building a private network, or adding additional bandwidth capacity to your existing data network to handle voice, is too expensive, he argues.

Not only that, the introduction of e-mail to the corporate network has dramatically reduced the company's voice costs, but he found it difficult to quantify the exact dollar savings.

However, he concedes that if a public voice over IP network became available, it would be considered as an option.

But can carriers such as Telstra effectively adapt to the new voice over IP age?

According to Paul Budde, an independent telecommunications analyst, it is "absolutely impossible".

He said that converting Telstra's networks to cope with an IP-only world is not technically impossible. "But it will encounter some significant difficulties, such as catering for myriad individual customer needs," he said.

Budde believes an additional problem for Telstra is the effect the Internet, of which voice over IP is a driver, will have on its business.

He argues the industry is undergoing a radical shift away from centralised fixed networks, Telstra's core revenue source.

"The whole world is moving away from rigid systems," he said.

At Optus, Peter Wright, manager IP product development, business markets, believes there will be a mix of IP and PSTN.

"There's always going to be a mix," he said of the voice over IP and PSTN networks.

Optus views voice over IP as a way to achieve cost savings on nonprofitable international traffic routes using IP.

In addition, Wright said Optus believes it is yet another application it can offer to corporate customers.

"You want to be able to separate applications from the traditional access markets," he said.

Industry analysts such as IDC predict voice over IP has the potential to "trigger one of the largest transformations yet to come in both telecommunications and data communications".

For example, IDC predicts by the year 2002, voice over IP services will amount to $US24 billion in revenue worldwide.

Other analysts predict data will ultimately account for up to 80 per cent of existing fixed line networks.

According to one of the industry's biggest voice over IP advocates, Cisco Systems, the rot has already set in for the ultimate demise of traditional packet switched networks.

For Richard Freemantle, Cisco Systems' VP Asia Pacific, the future is simple: install voice over IP-based networks or go bust.

"I think it is a wake-up call for the large enterprise; if you're thinking of buying a traditional PABX, Mr Enterprise Customer, don't do it," he said.

However, Cisco's view is a predictable one considering it has re-engineered its product line to reflect its heavy Internet and voice over IP focus.

And that's exactly the issue for voice over IP equipment providers such as Nortel Networks, Lucent and Cisco Systems.

Telstra's Data Mode of Operations study is an example of the carrier's plan to invest heavily in IP technology.

Meanwhile, Optus' Wright argues Telstra's biggest challenge is creating IP cultural change across its entire bureaucracy.

Smaller carriers are more flexible, he argues. "It's purely a function of size for Telstra to overcome," he said.

John Rolland, Telstra's general manager of Internet services, defended suggestions the carrier's staff culture will struggle to meet the IP revolution.

"To be honest with you, I think the culture has already changed," he said.

As an example, Rolland said Telstra's head of network technology is actively supporting the carrier's Data Mode of Operations and its plans to create a national IP-based network.

In addition, he said Telstra has actively trialled the technology for the past 12 months.

In fact, Rolland described voice over IP as a "huge opportunity" and said the carrier's strategy is to commercialise voice over IP offerings in the future.

But he ruled out the ultimate demise of the existing voice network.

"We believe [with] the normal phone to phone service, Telstra will focus on integrating the benefits of IP with the existing switched network," Rolland said.

"That's the secret here. It's not an either-or, it's an as-well and a bringing together [of traditional PABX and IP networks]," he said. When asked if Telstra considers the PABX dead, he replied. "I think it could be an IP-PABX.

"The PABX will need to adapt and be IP-compatible; no I don't think it's dead.

Gary Thomas, professional services engineer at network integrator Anixter, raised a point in Telstra's defence -- time. While the Internet is snowballing in speed, the voice over IP revolution is still in start-up phase.

"It's early days right now, it's a case of setting expectations right now," Thomas said.

He said enterprise users who are contemplating the addition of voice capabilities to their IP data networks must understand the complexities of the task ahead.

"People have a preconceived idea they can "pump voice into an existing IP network", he said.

"It's no mean feat at the moment. You really have to understand the network completely."

For example, many users need to work out exactly what they understand is behind the 'Internet cloud' before attempting to introduce voice over IP.

Thomas said a company's connection to the 'Internet cloud' could be via frame relay, ISDN, IP, IP over ATM, or IP over frame relay.

As a result, he labelled the cloud the "most abused symbol" in the industry.

But for the moment Thomas believes most users are concerned about building solid data networks.

If they want to "dabble with voice on the side", then "go for it", he said.

But if you want mission-critical voice over IP, take a serious look at bandwidth requirements and extra switches throughout the network.

So what remains is the question, when will voice over IP eventually gain widespread corporate use?

"It's becoming quite common for people to talk about it," Thomas said. Within five years he predicts voice over IP technologies such as integrated voice and data switches will offer more plug and play features.

"It will be a mature technology by then," he said.

Cisco's Freemantle agrees corporate networks are at least two years away from depending on voice over IP networks.

But as you may expect, he sees an opportunity to attack the status quo.

"Given it's two years away, you have to say 'I better be awfully careful what I spend money on today'," calling for users to re-evaulate PABX purchasing decisions.

It's no small coincidence that Cisco's larger telco-supplier competitors such as Nortel Networks and Lucent derive most of their revenue from the PABX and other telecommunications switching products.

All three companies must fight for mind and market share with the carriers.

Kevin Bloch, Lucent's manager technology and planning, cautioned against following Cisco's lead and dumping the PABX.

He believes data networks are still playing catch-up to the quality of voice.

Bloch said it is still more complicated to use data technologies to provide users with 100 per cent voice reliability: "With data, all the complexity is exposed to the user." But don't expect Lucent to drop the voice over IP development ball.

"If Lucent ignores this, it ignores its future business," he said.

As a result, it appears carriers will spend the next few years investigating the quality of service levels and cost savings of voice over IP before launching a serious attempt at building new markets.

Anixter's Thomas said it might just work in the long term if users consider replacing PABXs in separate capital cities with a voice over IP connection.

"You'd probably find it does work out a lot cheaper," he said.

"As long as people don't think they can get zero cost out of the voice over IP equation.

"You don't get something for nothing in this world."

Over at Nortel Networks, Danny Ng, Internet and telecommunications business group manager, believes the biggest issue for users in the future is confusing IP telephony and voice over IP.

"The industry as a whole, I think, is guilty of focusing on voice over IP, rather than the business requirements," he said.

Ng said IP telephony better reflects the application side of using voice across a data network, such as Web-based call centres, where a URL link connects a user directly to a customer service agent.

"At the end of the day, it's not the technology that drives the enterprise, it's the application," he said.

If a conclusion can be drawn at this early stage, IDC seems to have the answer.

"Vendors and users are advised to adopt a healthy scepticism concerning the promise of the new technology: it is by no means certain that it will sweep away the current circuit-switched PSTN infrastructure," IDC says in a November 1998 voice over IP bulletin titled 'Industry transforming technology or another ISDN?'

And as the report notes, data networks still have a long way to go before they achieve the "five nines" reliability of the existing voice structure.

When asked if IP technology itself will run out of steam and undermine the whole voice over IP movement, Paul Budde concluded: "For the time being it will definitely be IP that drives this whole broadband business."

Why? "It works and it's cheap."

Voice statistic

Over the next five years, telecommunications analyst Paul Budde estimates data traffic will occupy up to 80 per cent of the capacity on existing fixed line networks.

Meanwhile, around 60 per cent of all voice traffic will migrate to mobile networks, while 40 per cent will remain on fixed lines.

Budde estimates these figures will apply across the world.

IP Gateway

Users are starting to introduce IP gateways as the technology to link the corporate PABX with packet-based IP networks. According to IDC, these products will be important for their ability to extend the life of PABXs as they connect the trunk-side of a PABX to LANs, servers and the Internet.

IP Gateway Market ($US)

Year 98 99 2000 2001

Enterprise 50m 300m 500m 680m

Service Provider 180m 700m 1380m 1800m

(Source: Frost & Sullivan Mar 98)

Death to PABXs, says Cisco's Chambers

Sandra Gittlen

WASHINGTON -- Cisco Systems CEO John Chambers told attendees of his ComNet keynote address here that they better not sink any more money into their voice networks.

"It's time to write off those circuit-switched networks and PABXs and move along," he said.

Instead, Chambers said it's time to build up IP networks and add voice capabilities to the mix -- no doubt using equipment built by Cisco.

In one of those keynote demonstrations that actually worked, Chambers had audience members see if they could tell the difference between calls placed over the regular phone system and an IP network. Most couldn't.

Throwing voice onto data lines can save as much as five cents a minute, Chambers said.

But cost isn't the only benefit, he said. In an era when employees switch offices frequently, Chambers said using IP-based phones cuts down on administration costs.

An IP-based phone connected to a router over Ethernet can automatically be recognised anywhere on a network using Dynamic Host Configuration Protocol without having to reassign phone numbers and IP addresses.

Chambers said that phasing out voice networks is just one of many things that companies need to do to prepare for the next stage in the Internet revolution.

Giving customers direct access to information through Internet databases and the like can save a company millions of dollars in support costs.

At the same time, companies have to loosen up on the IS budgets, he said.

Cisco increased its IS spending from 1 to 3 per cent of revenue this year, but it's actually saved the company money because employees can now make critical decisions faster, he said.

Chambers said much remains to be done.

He said he bought his last car over the Internet, but still had to go to the dealership in person to fill out the final paperwork. People will soon begin demanding the ability to do everything online, he said.

And that will let smaller companies compete with larger companies, because they'll be more nimble in developing new online services, he said. "If you fall six months behind, even if you're a large company, you're going to lose," he said.