The voice of the future: VoIP turns voice into manageable data.

VoIP caused quite a ripple to the tranquil seas of the telecom industry last month, when the FCC ruled 4:1 to make it exempt from standard telecommunication rules and restrictions. This controversial stance was a sure-fire victory for vendors and carriers of VoIP, who can continue to provide the same low-cost service by using IP networks to propagate voice, instead of traditional phone lines. But, upon ruling, the FCC policymakers did add the possibility that Internet calling could be regulated in the future, especially for services that charge a fee to customers. Moreover, the agency also voted to open a review specific to governing Internet telephony and related services. Regardless, many are hailing the decision as fair, stating that a tax and fee structure would only impair the growth of this promising new technology. Which, although currently only in its infancy stage, could very well go on to become the next bubble. But why all the hoopla now about VoIP?

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2004: The Year of VoIP

Until a few years ago, VoIP had remained somewhat of an urban legend. The fact that people could talk over the Internet without paying a dime to the phone companies was something that was often talked about but rarely practiced. One of the reasons being that the equipment used was awkward and the software unfriendly. (Talking into a mic that was plugged into your PC while trying to listen to your party through speakers did not provide the same comfort or convenience as a telephone receiver.) Also, VoIP's issues with latency and connectivity made it particularly cumbersome and undependable. But what really impaired the progress of the technology, according to Ronald Thomson, VP of Engineering at Centra, was "the H.323 standard that was first adopted by the carriers; the protocol was very complex, which made the innovation of products a very complex task."

These days, thanks to the adoption of new standards, the technology has matured and is now fully operable on standard phone equipment. In fact, VoIP is such a hot button right now that many insiders are calling 2004, the year of VoIP. IDC forecasts that the total market for VoIP equipment will reach $15.1 billion by 2007, with a compound annual growth rate of 44%. For the service providers, the VoIP services market is expected to reach $11.3 billion by 2007, with a compound annual growth rate of 27.2%, according to Gartner Dataquest. Thomson mentioned big players like Cisco, Lotus, IBM, Avian, and Nortel as all having invested greatly in the service. In fact, last month Cisco Systems announced a partnership with Tandberg to add video capabilities to its IP telephony package--a tool particularly useful at the enterprise level because it will enable real-time live conferencing.

The advancements of the technology, combined with the current debates over regulatory practices, have fueled VoIP's popularity. The debate over the FCC regulations asks the question "Can VoIP be classified as a telephony company?" And if so, should it be subject to the same regulations and taxes imposed on the telephone companies? Those that see the incredible potential for profit that could be generated from tax revenue think that it should. Market representatives of VoIP, on the other hand, challenge that VoIP is not a telephone service but rather a data service. And providers and vendors of VoIP agree that the service needs time to grow before being taxed, to avoid any risks of impairing its growth.

How Can VoIP Help?

The main advantage to implementing a VoIP solution is that it provides the ability to combine voice traffic with data traffic. This, in turn, reduces cost and was the initial drive for the industry. "VoIP provides a sort of choreography control over the expedience of voice," said Thomson.

Some voice-management features of VoIP include:

* Unified Messaging: Provides the user with the ability to consolidate his/her voice messages, faxes and e-mail messages all into one single mailbox.

* Presence: Enables the user to determine whether an individual is in the office or traveling, and figure out the means of communications available to contact him/her. This feature is also found in Instant Messaging.

* Mobility: The ability of a user to access his/her voice mail, e-mail and other communications from a desktop, laptop, or PDA across LAN or WAN networks. With IP phones, a user can carry his or her complete user profile to another location, which can include voice mail, extension number, Web applications and more. This is different from simply forwarding the calls to another extension. A user can actually log into another phone and have all the services that are specific to the user available to him.

* Caller preference: The ability to handle calls depending on who is calling. It gives the user the ability to assign different ring tones to different clients and co-workers so as to know ahead of time the origin of the call.

And then there are all the other Web services available, depending on each particular IP phone. The higher-end Cisco IP phones, for example, have an LCD screen that can display XML-based content, like stock quotes, and e-mail from appropriate application servers. Centra's Web conferencing application provides users with the ability to stage full presentations using an IP device for communication purposes, but also in collaboration with other popular applications. Users are able to directly interact and show visuals in the same way that they would if they were to give a live presentation--all from the comfort of their own offices.

For an organization implementing VoIP from scratch, the benefits include fewer cabling issues, lower costs, and easier transition when changing locations. Reduced cabling costs are real and tangible but are, to some extent, counterbalanced by the higher cost of QoS-enabled switching gear. However, this is an incremental cost. Savings brought about by the value-added features of a VoIP system are subjective and specific to the organization that's using them.

VoIP to Go Mainstream

There are the obvious complications that arise from a network's latency, congestion and jitter. "Not all ISPs provide quality of service," said Thomson. This is where the phone company's longevity and reliability outweigh the competition. If your power fails, or your broadband connection goes down (something that is more common than your phone service going out), you can't make or receive calls. You can get backup power sources, but there's nothing you can do for a failed connection.

Also, the use of enhanced 911-name recognition is not available. Therefore, in a state of emergency, authorities cannot identify the location of a call. This is an issue that the FCC has taken a strong stance on, which will continue to hurt VoIP if it doesn't find a solution.

And who can forget those pesky hacker concerns that we've all grown to love? Apparently, while it's true that hackers can use the same means they use to tap into a network to tap into VoIP conversations, it is actually harder to tap into an IP network carrying voice data than it is to tap into a phone line. Ironically, this was an issue raised at the latest FCC hearings by the Justice Department and the FBI who felt that federal law enforcement agencies might find it too difficult to wiretap VoIP calls.

The Future of VoIP

"The technology has been around for around a decade, but has always had a small user base," said Thomson. Now that the technology has matured, a plethora of new companies are entering the market. Companies like Vonage. Vonage is attempting to bring the technology mainstream with the release of their new phone services at very affordable prices marketed for personal use. Some of the bigger carriers like AT&T already provide VoIP in over 40 countries, and Verizon recently entered into a partnership with Nortel to provide their own brand of service. According to Thomson, the more we see larger carriers making VoIP available, the more it will have the potential of changing the way our telecommunications are relayed. "But it will be a very long time before everyone has access to a capable IP connection," said Thomson. And until that happens, VoIP will remain second in command to the telephone industry, which will do its all to provide more services through their own phone networks.

Convergence

A common theme in 3G products is the pursuit of convergence--trying to combine many applications, functions and features into one. Examples of this are cell phones on which you can play video games, access PDA information and even watch streaming television--as with Sprint's recently released MobiTV. Or take MSN's new Smart watch, which gives users access to stock quotes, news, games, and Outlook planner information. VoIP is walking that same path of convergence as it searches for ways to manage voice with the rest of your data. It walks hand in hand with IM technology by assisting clients with a more cost-effective and productive approach to communication.

Of course, when implementing a solution of this magnitude, factors such as legacy equipment, wiring, applications, user awareness, and time of deployment need to be taken into consideration. But to Mark Eggers of Wyndham Resorts, a hotel chain that has implemented one of Centra's VoIP solutions for the training of its employees, the single most important benefit to VoIP seems to remain that "I no longer have to pay a phone bill to MCI."