Voice on the Net: Plenty of Promise?

Imagine a phone service that can translate English into Japanese. How about one that can make you sound like a movie star? And another that can tell you when your friends are on the phone?

Those are some of the promised uses of IP telephony that were promoted this
week at the Spring ’98 Voice on the Net conference in San Jose. And,
advocates of the technology say that IP telephony will have to do more than
offer lost-cost phone service, because the low prices may not last forever.

“It has to be the applications that drive IP Telephony, if it’s just about
transport it’s not compelling,” said Francois de Repentigny, an analyst with Frost and Sullivan, a Mountain View, CA-based research firm. “At some point someone has to pay for the infrastructure. What makes the PSTN [Public Switched Telephone Network] more expensive is the regulation.”

Today, IP telephony voice quality may occasionally leave something to be
desired, but the hype at the conference came through loud and clear this
week as more than 1,000 participants flocked to what one analyst described
as a “vendor love-in.”

Joe Rinde, director of switched network architecture at MCI said with
increasing amounts of bandwidth being brought into the home, eventually
phone calls made over the IP network will eventually be made with CD
quality sound.

Rinde said the future of IP Telephony is not cheaper service, but the
ability to develop better quality and functionality than conventional
telephony can offer. For example he said IP Telephony will allow businesses
to replace their Private Branch eXchange (PBX) telephone switching systems
with PC-based software.

“When your PBX system sits on a PC platform the costs will plummet and developers will come up with APIs that allow much more functionality at a lower cost,” Rinde said. “Imagine being able to program your PBX box through a web interface, now you’re in a position to do thing that you were never able to do before.”

Eric Sumner, group ventures vice president in the Switching and Access
Systems Group at Lucent Technologies, said IP Telephony could create a new wave of entrepreneurs. He said vendors could one day offer voice modification, telephone buddy lists, and even, perhaps, on-the-fly language translation.

“Instead of a small number of service providers delivering services, you
can imagine anyone who can build and maintain an IP-based server can add
value-added services,” Sumner said.

But while many of the promises can be written off as speculation, at least
one company is pushing beyond IP telephony service as a way for callers to
save a buck and is building in value-added services that take advantage of
its IP network’s data capabilities.

OzEmail, an Australian ISP, logged one million user minutes of voice traffic in March, said Bryan Rowe, vice president of corporate sales and marketing at the company. Now it’s gearing up to offer a new service in a few months that notifies those using dial-up telephone lines to hook up to the Internet when a caller is trying to reach them on their telephone line, he said. The users receive a message while they are online that they have a telephone call waiting.

Hannu Tuomisaari, manager of integrated communications services for Telecom Finland said he wouldn’t bother with IP telephony if it was just a cheaper way to send a signal. Instead his company is testing a service called Neophone that uses IP telephony to offer business users a sophisticated set of voice communications functions without having to buy expensive telecommunications equipment.

“Our motivation is to move toward solutions integration–and when you’re
integrating information management and voice communications the IP protocol
does the trick,” Tuomisaari said. “I don’t refer to IP Telephony as a cheap
service because I intend to charge more, but its greater efficiency means
I can add more value-added solutions.”

But for the time being, most of the sophisticated applications being
dreamed up for IP telephony remain pipe dreams.

“The maturity of an industry is inversely proportional to the amount of
hype that is in vogue in those industries,” said Tom Peters, General
Manager and executive vice president of network services at ISP Concentric Networks. “We’ve got a long way to go before we turn this into a real business.”

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