January 1, 2004

Sorting Through the VoIP Maze

By Justin J. Junkus, Telephony Editor

It looks like voice over Internet protocol (VoIP) is the latest techno-buzzword to become part of consumer common language. The hype in the media from vendors who offer VoIP products and service providers who are giving consumers the option of free phone calls via VoIP has to be confusing our customers. Some of the alternatives even end up in our own product mix.

The potential for confusion comes from the fact that any vendor or service provider can call a service VoIP if any part of the voice path involved in a telephone call involves IP technology. Because the offering doesn’t have to be a total end-to-end solution, there are numerous permutations, and several of them do not include carrier-grade, primary line telephony. Whether that is necessary to the consumer is another issue, but the key point is that quality of telephony service is now a purchasable option.

Carrier-grade networks

In general, cable is positioning itself as a provider of carrier-grade telephony, the platinum standard of service. We have entered the business via circuit switched technology and continue a migration to network-based carrier-grade VoIP. This differs from second-tier service from providers who package best-effort (no quality of service (QoS) guarantees) telephony over the Internet with a 10-digit phone number and the adapter necessary to connect a standard telephone. Beyond second tier, there are third-tier offerings that require a PC or user-provided adapter.

A carrier-grade VoIP network is built by a cable company either in-house, or by contracting with a hosted network provider. PacketCable provides guidelines. The biggest advantage to a PacketCable network is that by design it gives the cable operator the ability to integrate the triple play of broadband services, with the potential for countless new services made possible by combinations of voice, data and video.

Hosted networks

Hosted networks offer an option for the operator that wants to offer carrier-grade service, but is not ready or able to build its own infrastructure. Net2Phone (www.net2phone.com) and Volo Communications (www.volocommunications.com) are examples of two different types of hosted VoIP.

Net2Phone’s service is built upon PacketCable. The company creates and operates a fully PacketCable-compliant network for an operator, which interfaces with the operator’s cable modem termination systems (CMTSs) and embedded multimedia terminal adapters (EMTAs). On the network side, Net2Phone is tied to offnet terminations in 50 states through a relationship with telecom wholesaler IDT (www.IDT.net). This leased infrastructure can be brought in-house later, as explained by Gerry Pearce, Net2Phone’s vice president of strategic alliances. “Net2Phone realizes that build, operate and transfer is an established business practice in telecommunications, so our agreements typically have transfer or buyout options to allow an operator to own the network, should the business plan require it at a future date.”

Volo Communications is a new entry into the hosted VoIP business. Founded by Shawn Lewis, one of the pioneers of the softswitch, Volo is marketing a turnkey proprietary solution that claims to offer full compatibility with NCS 1.0, MGCP, SIP, H.323, and, per Lewis, “almost 200 different protocols.”

Lewis indicated that his technology works similar to a computer operating system and provides for web-based service creation, as well as billing. Because Volo’s proprietary technology has not been subjected to a certification process, Lewis is relying on field trials to prove that Volo will do the job. Obviously, conversion to an in-house PacketCable-compliant system would require a completely new infrastructure.

Second-tier networks

As an alternative to carrier-grade service, second-tier VoIP offerings are a way to market telephony without QoS guarantees or other primary line features. A cable operator can choose to resell these services under its own brand for additional broadband revenue. Two examples are Vonage (www.vonage.com) and i2Telecom (www.i2telecom.com).

Vonage is probably the most widely known VoIP service. The Vonage customer connects a phone adapter to a broadband access line, chooses an area code, and is assigned a phone number by Vonage. The current adapter is a Motorola VT 1000 combined router and adapter, based upon SIP technology. Calls are completed via the public Internet, using Vonage gateways at 25 regional data centers. The consumer chooses a monthly fee that either can include free regional calls and a package of long distance minutes per month or unlimited long distance and regional service. Calls between Vonage customers incur no minutes of usage under the regional plan. The chief advantage to the consumer is the savings in usage costs.

i2Telecom is similar to Vonage, but uses a different adapter called the Internet Talker. The Internet Talker is a hybrid SIP adapter that must be connected to both data access and a public switched telephone network (PSTN) line. It is assigned a 10-digit phone number for calls between i2Telecom subscribers. Calls to you that do not originate on the i2Telecom network use the existing PSTN number, but outgoing calls are completed over the broadband or data dialup connection.

The network currently consists of two servers, one in Atlanta, and one in China, and minutes of usage are billed at a fixed rate to any point in the United States. I personally have tested the i2Telecom service, and noticed only minimal quality degradation on my long distance calls. Maintaining that level of service will, of course, depend upon the scaleability of the i2Telecom network as additional subscribers generate incremental traffic.

Third-tier providers

Third-tier services complete the VoIP picture. Skype (www.skype.com) and Free World Dialup (www.pulver.com/fwd/) are examples. These services usually offer call completion only between other users of the same service, although some are interoperable with other third-tier providers and relationships with second-tier providers are emerging that facilitate calls to and from the PSTN. Third-tier services are heavily dependent upon downloaded software in the user’s PC and usually do not interface with a standard telephone.

It pays to remember that business strategy is key to long-term success in the broadband business, including VoIP. Anything other than carrier-grade service leaves the door open to the incumbent telephone company, with the potential for later competition in data and video, as well as in voice.

Justin J. Junkus is president of KnowledgeLink Inc. To discuss this topic further, you may email him at jjunkus@knowledgelinkinc.com.