Acronym Defined:
VoIP:
Voice over Internet Protocal
Quick Concept:
How traditional long distance
works:
You pick up your phone and dial a long distance phone
number, the call goes through your local telephone company to your
long distance provider who charges you a connection fee and per
minute charge, billed monthly in your long distance phone bill.
How long distance works with VoIP:
You pick up your
phone and dial a long distance phone number, the call goes through
your local telephone company to a VoIP provider, this is a local
call. The call then goes over the Internet to the receiver's local
calling area were a local call is placed (by the VoIP provider) to
complete the connection. You have just circumvented your long
distance company and eliminated your long distance phone bill!
This "quick concept" is based on phone-to-phone
VoIP services
Overview:
The possibility of voice communications
traveling over the Internet, rather than the PSTN,
first became a reality in February 1995 when Vocaltec, Inc.
introduced its Internet Phone software. Designed to run on a
486/33-MHz
(or higher) personal computer (PC)
equipped with a sound card, speakers, microphone, and modem, the
software compressed the voice signal and translated it into IP
packets for transmission over the Internet. This PC-to-PC Internet
telephony worked, however, only if both parties were using Internet
Phone software.
In the relatively short period of time since then, Internet
telephony has advanced rapidly. Many software developers now offer
PC telephony software but, more importantly, gateway servers are
emerging to act as an interface between the Internet and the PSTN.
Equipped with voice-processing cards, these gateway servers enable
users to communicate via standard telephones over great distances
without going over the "Long Distance" telephone network.
A call goes over the local PSTN to the nearest gateway server,
which digitizes the analog voice signal, compresses it into IP
packets, and moves it onto the Internet for transport to a gateway
server at the receiving end. This server converts the digital IP
signal back to analog and completes the call locally. With its
support for computer-to-telephone calls, telephone-to-computer calls
and telephone-to-telephone calls, VoIP represents a significant step
toward the integration of voice and data networks.
Originally regarded as a novelty, Internet telephony is
attracting more and more users because it offers tremendous cost
savings relative to the PSTN. Users can bypass long-distance
carriers and their per-minute usage rates and run their voice
traffic over the Internet for a flat monthly Internet-access fee.
VoIP provides a competitive threat to the providers of traditional
telephone services that, at the very least, will stimulate
improvements in cost and function throughout the industry.
VoIP could be applied to almost any voice communications
requirement, ranging from a simple inter-office intercom to complex
multi-point teleconferencing/shared screen environments.
Widespread deployment of a new technology seldom occurs without a
clear and sustainable justification, and this is also the case with
VoIP. Demonstrable benefits to end-users are also needed if VoIP
products (and services) are to be a long-term success. Generally,
the benefits of technology can be divided into the following four
categories:
- Cost Reduction. Reducing long distance telephone costs is
always a popular topic and provides a good reason for introducing
VoIP. Today flat rate long distance pricing is available with the
Internet and can result in considerable savings for both voice and
facsimile (at least currently). The sharing of equipment and
operations costs across both data and voice users can also improve
network efficiency since excess bandwidth on one network can be
used by the other, thereby creating economies of scale for voice
(especially given the rapid growth in data traffic).
- Simplification. An integrated infrastructure that supports all
forms of communication allows more standardization and reduces the
total equipment complement. This combined infrastructure can
support dynamic bandwidth optimization and a fault tolerant
design. The differences between the traffic patterns of voice and
data offer further opportunities for significant efficiency
improvements.
- Consolidation. Since people are the most significant cost
elements in a network, any opportunity to combine operations, to
eliminate points of failure, and to consolidate accounting systems
would be beneficial. In the enterprise, SNMP-based
management can be provided for both voice and data services using
VoIP. Universal use of the IP protocols for all applications holds
out the promise of both reduced complexity and more flexibility.
Related facilities such as directory services and security
services may be more easily shared.
- Advanced Applications. Even though basic telephony and
facsimile are the initial applications for VoIP, the longer term
benefits are expected to be derived from multimedia and
multiservice applications. For example, Internet commerce
solutions can combine WWW
access to information with a voice call button that allows
immediate access to a call center agent from the PC. Needless to
say, voice is an integral part of conferencing systems that may
also include shared screens, whiteboarding, etc. Combining voice
and data features into new applications will provide the greatest
returns over the longer term.
Although the use of voice
over packet networks is relatively limited at present, there is
considerable user interest and trials are beginning. End user demand
is expected to grow rapidly over the next five years. Frost &
Sullivan and other research firms have estimated that the compound
annual growth rate for IP-enabled telephone equipment will be 132%
over the period from 1997 to 2002 (from $47.3M in 1997 to $3.16B by
2002). It is expected that VoIP will be deployed by 70% of the
Fortune 1000 companies by the year 2002. Industry analysts have also
estimated that the annual revenues for the IP fax gateway market
will increase from less than $20M in 1996 to over $100M by the year
2002. It is clear that a market has already been established and
there exists a window of opportunity for developers to bring their
products to market, and for consumers to realize significant
savings.
