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

Computer Technology Review, March, 2004 by Louis Raphael

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.