VoIP: Hype, Hustle, and Heavenly Help

At ISPCON, industry vendors say that VoIP now delivers near PSTN-quality voice service, opening the door to a new array of services, but ISPs remain skeptical.

by Alex Goldman ISP-Planet Associate Editor [May 2, 2003]

At a two-hour marathon session at ISPCON, Voice-over-IP (VoIP) vendors convened last Thursday. Those present represented all stages of deployment and concluded that logistics and politics are the biggest hurdles holding up widescale adoption, not technology or cost.

But ISPs still remain skeptical about deploying the advanced voice service for its customers. A slew of reasons have kept rollout at bay including new business relationships that must be forged with global voice providers, new billing issues raised by the provision of a service that is billed by the minute instead of by the month and even some regulatory issues.

One asked, "I'm based in Cali, Columbia, but I'm like most other ISPs. Most of my customers use dial-up. Can I offer them VoIP over a dial-up connection?"

A representative from Cable & Wireless in Jamaica replied, "we're using little boxes that plug into phone jacks from Net2Phone. They work great in Jamaica!"

For the most part, all members of the panel had their say from Dallas-based chip maker Texas Instruments to Rockville, Md.-based gear-builder sentitO Networks and Fort Lee, N.J.-based VocalTec Communications to Edison, N.J.-based Vonage and Herndon, Va.-based PingTone.

Industry vendors say that VoIP now delivers the PSTN-quality voice service that it wasn't capable of several years ago. The problem is no longer the technology—it works. Even price was no longer a problem because many companies can now afford to buy working systems. But for the average service provider, it is still difficult to decide what equipment to buy, when to buy it, and whether regulation will continue to permit it. Political issues concerning standards, interoperability, and government regulation will continue to hold back IP telephone over the near term future.

sentitO's William Flanagan, vice president of product management, acknowledged: "You're not going to go to one vendor for everything. We work with Cisco, Nortel, and Siemens."

But companies like PingTone have vendor relationships. PingTone works almost exclusively with Cisco phone equipment and also has a relationship with Sun Microsystems.

Delivering voice over the Internet could allow the deployment of new services, the panelists agreed. Texas Instruments is working on 802.11 IP phones for home and even wide-area networks. Vonage allows subscribers to have phone numbers in as many cities as they wish (for a fee). VocalTec claims to make every call a local call, even international calls, saving large or distributed enterprises lots of money. sentitO says that VoIP offers easier management, billing, security. PingTone says that even making in-state but intra-LATA calls can save businesses significant amounts of money, even if their only IP connection is for point of sale credit card verification.

To be sure, vendors did acknowledge that VoIP can represent risk for service providers. With an initial investment in one case of at least $750,000, many service providers seem to still be adopting a wait-and-see attitude.

Part of the problem is that standards do not guarantee interoperability. Protocol battles also have slowed deployment. While sentitO supports the SIP protocol, and that protocol only, VocalTec works with MegaCO, MGCP, and H.323. H.323 is an early protocol that does not support all the features that SIP supports, but there are installations in 160 countries over the past 5 years, especially in VocalTec's sister company, ITXC.

And the stakes are high. At a time when the total number of local phone lines is on the decline—in fact, the first time since the Great Depression—RBOCs seem to be spending more on the provision of data services and less on the provision of voice services. Monopoly phone companies are charging almost $100 per year for value-added services like caller ID and call waiting that are almost free for them to provide. As part of its value-proposition, Vonage bundles those services.

And voice provided as VoIP can be significantly cheaper than the voice services provided by phone companies over the PSTN. VocalTec suggested that companies terminate long distance calls for 1.1 cents per minute and charge their business customers 2.9 cents per minute—a significant profit margin once the equipment is paid for.

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