Sounding Board: VOICE OVER IP GOES MAINSTREAM

Posted 2/01/2002

VOICE OVER IP GOES MAINSTREAM

By Fred Dawson

Mass-market rollout of carrier-grade voice-over-IP services suddenly is getting a lot closer to reality. AT&T Corp., Genuity Inc. and WorldCom Inc. on the enterprise side and the ILEC operations of Qwest Communications International Inc. and Sprint Corp were either in the midst of or planning VoIP rollouts at press time in mid-December. The ILEC moves are strong indicators the migration to toll-class VoIP in the mass market has begun. But it will be a fairly slow process entailing use of ATM packet transport as a first step, with inclusion of VoIP packets in the service mix coming later.

The Soft Switch

Qwest says it will use softswitches to move in-territory voice calls onto its data networks in Albuquerque, Denver, Minneapolis, Phoenix, Salt Lake City and Seattle after a successful trial of Nortel Network's packet softswitch technology in Boise, Idaho. Qwest billed its initiative as a "critical milestone in (its) strategy to carry VoIP to customers everywhere."

Meanwhile, Sprint expects to migrate its entire Class 5 and 4 circuit-switched architecture, now serving 8.3 million customers, to a Nortel softswitch infrastructure during the next eight years. It plans to build out its first central office with Nortel's Succession Communications Server 2000 system by next month. The initial transport structure will be ATM-based.

"I prefer to use the term 'packet' because in our view ATM will be, probably, an interim solution," says Mark Chall, vice president of networks for packet switching at Sprint's local telecommunications division. "When IP quality of service for voice and multiple other services is available, Sprint will be moving to IP."

Chall adds that IP will be important for delivering applications, including voice-components, over ATM as market opportunities for such services arise.

"What we are attempting to do in this network is to be able to carry the IP over ATM and allow it to be, for all intensive purposes, invisible to the end customer," Chall says. "A lot of business customers are moving to IP-PBX, and we fully intend to carry that traffic as we deploy (the packet-switched technology)."

According to Dan Mangelsdorf, vice president of marketing for carrier VoIP at Nortel, "Qwest is the first North American LEC to put IP voice traffic into the core of its network. And the Sprint conversion of all switches to packet softswitches is a major proofpoint that the technology is now carrier class.

"As late as the third quarter, some people were saying such products wouldn't be available for commercial deployment for several years," Mangelsdorf adds.

Nortel is in discussions with all major carriers, some of which now have requests for proposals in circulation indicating they intend to begin moving toward deployments in the near future, Mangelsdorf says.

"We're able to show this strategy produces significant savings in capital spending and operations expenditures," he says. As an example, he notes that it takes 133 circuit switches to handle 3.6 million lines (the targeted line base for the first four-year transition phase at Sprint). "We'll consolidate that to 32 softswitches."

Enterprise Economics

But it was the interexchange carrier launches of VoIP services in the enterprise space -- which started early last year on a limited scale and now are roaring ahead with more aggressive marketing and more advanced features -- that marked the beginnings of actual delivery of carrier-class VoIP services to a large segment of end users.

The key market development on this front is that VoIP performance parameters have reached the point where enterprises are beginning to feel confident that they can exploit the long-touted cost efficiency of integrating voice with data over their private networks safely.

"The motivating factor among our customers right now is that there is some economic advantage to combining voice with data," says Joe Aibinder, AT&T's director of VoIP business services.

"The general view is that the world will be moving to an all-IP environment, and that VoIP will become the predominant mode of delivering voice and collaborative services," he adds. "But, to get customers to make the move, you can't talk about this being the wave of the future. You have to show them there's an immediate economic advantage."

AT&T began offering a converged voice and data transport service at the beginning of last year for customers operating over frame relay platforms as well as those running pure IP, with an off-net capability added to the managed IP services category.

But, while AT&T has drawn a "fair number" of customers from a "limited number" of sites to the service, it's the next wave of capabilities that promise to make the difference in the acceptance of VoIP, Aibinder says.

The carrier is installing heavier duty routers from Cisco Systems Inc. to accommodate cost-effective "hub-and-spoke" distribution of services to building clusters. It also plans to implement MPLS technology to enable customers to combine VoIP delivered over IP and frame-relay platforms into a single infrastructure and to extend the off-net capabilities of VoIP to the frame-relay environment.

This year, AT&T also will be adding a higher level of security via a new VPN system from Nortel that will provide greater protection to VoIP in the managed Internet services arena, Aibinder says.

For WorldCom, which began its foray into IP voice last year by weaving IP communications into its IP VPN, Private IP and web center service offerings, the customer emphasis on cost-effectiveness opens the door to continually adding new services and features even before its initial offerings have had a chance to take hold in the marketplace, notes Henry Sinnreich, distinguished member of the engineering team at WorldCom.

"We're not waiting for the Big Bang," he says. "We're moving to Phase 4 in our IP communications strategy with the addition of IP Centrex, voice mail, instant messaging and unified messaging."

The Fear Factor

And as customers realize the cost savings that can be realized by using services and technologies like IP Centrex and IP PBX, more and larger service providers become more likely to adopt these new technologies to avoid losing business, notes Hilary Mine, senior analyst with Probe Research Inc.

Mine cites the example of SBC Communications Inc. losing a major Centrex customer to an IP-based solution. With voice-over-packet services generating some $2 billion in revenues worldwide in 2001, "our feeling at Probe is that this market is pretty well on track," she says.

The enterprise market, where 70 percent of voice traffic is typically intra-company, is an especially attractive immediate target now that VoIP technology is passing muster as a standardized, carrier-class platform, she adds.

SBC avidly is exploring VoIP solutions, sources say. For example, the carrier is in a pilot project with Lucent Technologies Inc. at the vendor's big office complex in Naperville, Ill., near Chicago, where Lucent subsidiary AG Communications Systems is supplying its iMerge Centrex Feature Gateway to deliver IP voice services to 1,800 employees in a new building.

"All the other buildings in the complex are on the SBC Centrex system, which the iMerge platform ties into seamlessly, giving workers the same five-digit in-house dial access and other features, whether they're on analog, ISDN or IP networks," says Mark Boundy, senior product marketing manage for AGCS.

Boundy hints that SBC soon will be announcing new moves in this direction. "SBC has been involved in giving extensive presentations on this service to a large number of users in order to gauge their interest."

While AGCS is farthest along in pursuing a relationship with SBC, it's in various stages of talks with the other RBOCs as well, Boundy adds.

"One of the most compelling reasons for shifting to IP Centrex is you eliminate station relocation costs as workers are moved from one place to another within a building or to other locations," Boundy says. "A lot of companies move every station during the course of a year, which at about $100 per move, can add up to some serious costs in a big corporation."

Now that IP voice is entering the mainstream in the enterprise space, next-generation carriers like Genuity recognize a chance to begin taking market share from traditional voice carriers, even as the latter move to IP. In Genuity's case, one big advantage has to do with what it sees as its ability to offer voice-level QoS as a specific class of service over its data networks more readily than many competitors, says John Summers, Genuity's director of product strategy.

"Genuity is uniquely positioned in terms of having a next-generation network like some of the new startups but with a customer base and the service support capabilities of the larger IXCs," Summers says. "With our IP network extending over 20,000 route miles and with inbound as well as outbound capabilities in 54 LATAs, we're in a position to deliver the class of service enterprise customers requiring."

After two years of providing VoIP transport and H.323 gateway support for a growing list of Internet telephony service providers such as Dialpad Communications Inc. and Net2Phone Inc., Genuity was close at press time to announcing plans to offer its own VoIP service directly to enterprise customers.

"We're leveraging the backbone capabilities we've built for our enterprise customers who take our IP VPN services so that we can begin offering them VoIP," Summers says. "The launch of the service will be happening very soon."

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