Intel Licenses Software that Improves Internet Telephony

Electronic News, June 5, 2000 by Jayant Mathew

In a move that could brighten up the tarnished Internet telephony market, Intel Corp. last week introduced software that the company said will reduce latency and improve clarity when calling PC-to-phone over the Internet.

The world's largest chipmaker also said it will license its software to ITXC Corp., a wholesale Internet telephony service provider that leases gateways and offers telephony services to portals, Web communication companies and Internet service providers (ISPs). ITXC intends to incorporate the software in webtalkNOW!, a service that allows end-customers to make calls from Web sites to a phone. Companies like ITXC relay phone calls over the Internet by sending packets of digitized voice over their private networks.

Internet telephony was once touted as revolutionary because users could dial a local ISP and then dial long distance on the Web and chat forever for the price of a local call. The reason: there were no per minute charges.

In reality, Internet telephony has so far not lived up to its hype because there are technical drawbacks such as latency (read: delays) and echoes in networks that can make phone calls a nightmare for customers. Intel's software aims to improve the quality of a phone call over the Net, at least from the PC side of the network.

"Our software sits on the PC and makes it easy for customers to use and is compliant with network standards," said Dan Dahle, marketing director of Internet Building Blocks at Intel's Architecture Labs. "We have wizards that set up the PC client for audio quality, which also make adjustments on the gateways on how best to address the quality."

According to Dahle, most calls on the Internet have latency or delay of about 200 milliseconds to 250ms and Intel's software reduces that to a bare minimum by improving the technology inside the PC.

"Intel understands their processors so completely they have advantages over coding and decoding of packets," said Hilary Mine, executive vice president at Probe Research. "They are extremely efficient with these functions."

The other bottleneck Intel overcomes is echo. "We use acoustic echo cancellation locally on a client and have given a set of guidelines to PC makers to address better audio quality," said Dahle. In addition, the software also eliminates jitter over the network and another "wizard" sets up connections on the network for optimal connections to the Internet gateways, according to Dahle.

The software gives Intel an entry into the intellectual property (IP) telephony market. According to John Cha, analyst at Frost & Sullivan, the market for IP telephony services will grow at an average annual rate of more than 300 percent in terms of units until 2003 and then tapering down to a projected 50 percent increase in 2006. Revenues are expected to reach $129 billion in 2006 from $910 million in 2000. "ITXC is the market leader in terms of traffic and they also have the technology to support it," said Cha. "Intel's technology is not unique but it complements ITXC services."

Analysts believe the deal with Intel will increase ITXC's distribution channel and allow the latter company to enhance its webTalkNOW! service. Intel and ITXC are also working together to establish open standards for interoperability across networks. Although Intel has licensed its technology to ITXC, it will face competition from Microsoft's NetMeeting, NetSpeak Corp., Netscape and Net2phone, which has its own software for Internet telephony.