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Voice Over Internet Protocol(Voip)

VOICE OVER INTERNET PROTOCOL (VoIP) INTRODUCTION: 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 dataÐ'--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. WHAT IS VoIP and HOW DOES IT WORK? 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. WHY IS VoIP AN ISSUE? 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 $1.89 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. THE PLAYERS INVOLVED 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. that 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

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